Credit card processing is a sophisticated service that includes financial bodies, regulatory institutions, networks of payments, advanced technologies, and multiple moving elements. (1)

Credit card processors

A credit card processor, also known as acquiring service provider or merchant service provider, provides service to a merchant in accepting payments via credit cards. It offers software to monitor chargebacks, fees, and transactions on a single platform. Typically, owners lease or purchase hardware such as a mobile reader or card terminal. Any business, whether it is a retail shop or a restaurant, accepts credit cards by using devices and services of credit card processing.

Working of credit card processing

In the traditional method of paying cash in hand, the money directly goes into the penny bank. No other party is involved in the transaction. In credit card processing transaction happens with services of multiple parties. First is a merchant who accepts the payment. Then comes a cardholder or a customer, who pays for the product. The third is an issuing bank that provides the card to a cardholder. In the end, is an acquiring bank that provides credit card processing assistance and accepts the payment.

Methods to accept credit card payments

Several methods are there to accept payments via credit cards from customers. The owner needs to familiarize himself with the method that best suits his company. Following are some predominant methods:

  1. Traditional POS system

POS system stands for point of sale system, which is appropriate for companies that are selling their services and products in brick-and-mortar settings. It helps in governing customer interactions and allows the owner to receive multiple payment forms including credit and debit cards. While choosing a POS system following factors must be considered:

  • Sales volume or company size
  • Quantity and quality of features
  • Potential of development
  • Specific industry
  • Software and hardware costs
  • Customer support and service


  1. Mobile POS system

This system behaves as a register for payments via credit cards. This system requires a tablet, smartphone, or any other device to perform the function. This eliminates the customer’s inconvenience to stand for a long in the checkout counter queue. Employees of the store hold tablets to swipe credit cards and conduct transactions on the spot. This method is also appropriate if the goods are being sold off-site such as in festivals or farmer markets.


  1. Payment aggregators

These are also known as online payment processors. It helps companies in accepting online payments. Famous options such as stripe, Pay Pal, and Square assists business owners in sending invoices or developing a connection between the payment aggregator and e-commerce shopping cart. Through this, a merchant can accept payments via debit or credit cards without having a merchant account.

Pros of payment aggregators

  • It is a modest application process. It is tedious to set up a merchant account because it requires tax returns and more. Whereas, payment aggregators eliminate the inconvenience of paperwork.
  • Owner with new business set up requires to accept payments quickly. For that purpose, an online aggregator accepts the application and provides online payment services immediately.
  • Online aggregators charge a specific percentage of sales, transaction fee, and a monthly fee but no hidden or applicationfee.
  • It eradicates the stress of long-term contracts and charges monthly.

Cons of payment aggregators

  • Delayed funding is one of the major drawbacks of payment aggregators. They hold the payment for two or three days or maybe longer.
  • A payment aggregator directly holds on the customer’s account when finds any suspicious activity.
  • Transaction fees increase with the transaction volumes. Some aggregators set the transaction frequency, which a customer may find difficult.

Costs involved in credit card processing

The financial bodies; issuing banks and acquiring banks, charge fee on every transaction, which means a merchant cannot get the actual money he charged from a customer. A discount rate and interchange fee are charged by acquiring bank and issuing bank respectively. Both charges are a transaction percentage. However, many banks have set a flat fee rate on each transaction.

Top providers of Credit Card processing (2)

  1. Helcim


  • It includes inventory management and CRM tools
  • Offers multiple support options
  • Offers volume-based discounts
  • Easy sign-up by an online approval


  • Provides only a single plan
  • Provides a single type of hardware

Fee rates

  • $0-25k volume/month:
    • Interchange fee is $0.3% and $0.5% for in-person and online respectively
    • Transaction rate is 0.08% and 0.25% for in-person and online respectively
  1. PayPal


  • Quick and free of conflict set up
  • Provides in-storemobile wallets choices
  • Free of contracts or monthly fee


  • Not relevant to transactions of high volume
  • The company can hold the account in case of any fraud
  • Does not provide phone support 24/7

Fee rates

Per payment fee structure of PayPal is as follows:

  • 7% plus $0.30/payment on in-store sales
  • 9% + $0.30/ payment on online transactions




  1. National Processing


  • It does not require any monthly minimum percentage
  • Offers multiple plans
  • Includes transparent pricing
  • Has the lowest cost


  • One can face an initial termination fee
  • Does not show equipment costs on the website
  • No list of eCheck/ACH processing fee

Fee rates

  • $10/month restaurant plan
    • 14% interchange fee and $0.07 transaction fee
  • $10/month retail plan
    • 18% interchange fee and $0.10 transaction fee
  • $10/month e-commerce plan
    • 29% interchange fee and $0.15 transaction fee
  • $59/month subscription plan
    • No interchange fee and $0.09 transaction fee
  • $199/month subscription plus plan
    • $0.05 transaction fee only
  1. Square


  • Quick set up
  • POS software is free
  • Several choices for equipment


  • Phone support is available during working hours only
  • Able to hold funds in case of suspicion of fraud

Fee rates

  • Card payment: 26%
  • Online payment: 2.9% interchange fee and $0.30 transaction fee
  1. Stripe


  • Integrates with company software
  • Pricesare customizable
  • Accept payments through all mobile wallets


  • Delayed funding
  • Phone support is provided on request
  • Able to hold funds in case of fraudulent action

Fee rates

  • Domesticcardpayments
    • 9% + $0.30/transaction
  • In-store payments:
    • 7% + $0.05/transaction