Choosing the Right Payment Processor for Your Business in 2022

The payment processor you use can determine whether credit card transactions are handled efficiently in seconds or become a source of frustration for both you and your customer.

There is no such thing as an ideal payment processor. The best one for your business is influenced by your specific goals, priorities, and budget. But choosing the right one(s) is important.

With so many options now available, and with transaction fees rising, which payment processor should you use in 2022? Here are some things you should compare and consider before making a final decision.

Transaction Types

The first factor to consider is transaction type. Transaction type refers to the way the payment information enters the payment system and can include in-person, online, keyed, invoiced and mobile-entry transactions. Look at the different ways you take payment information and then confirm that the payment processor can accommodate your needs.

For example, if your business takes phone orders that require credit card details to be manually entered or keyed, then only consider payment processors that offer that feature. If you want to be able to take payments away from your storefront, then a mobile payments option is a must.

Pricing Transparency

Transparency in pricing is crucial since it makes comparing products and services easier. You can select products that are within your budget and have the qualities you value when price details are clearly displayed on a company’s website. That saves a lot of time.

Transparency in pricing can also indicate that a company believes its prices are competitive. However, keep in mind that certain price conditions, such as the processing costs for high-risk merchants, can be complex and difficult to disclose on a website.

Overall Cost

You’ll need to look closely at the overall cost of a processing service. This includes transaction fees, monthly fees, chargeback fees and less-obvious costs such as membership fees, setup costs, PCI compliance fees and cancellation fees. The total monthly cost, not a single fee, needs to be considered when comparing payment services.

At first glance, the cost per transaction offered by a company using an interchange-plus pricing model is typically less than the cost per transaction of a company using a flat-rate pricing model. However, monthly fees and volume minimums may be associated with an interchange-plus pricing model, which adds to the overall cost for the service.

Available Card Readers and Payment Apps

If you want to accept credit card payments in person, you’ll need a card reader and an app to go with it. Magnetic stripe cards, EMV chip cards, and contactless payments should all be accepted by the card reader. Square, for example, offers a free magnetic stripe card reader but charges for an EMV chip and contactless reader. The cost of the service is increased by any costs related with the card reader and app.

In most scenarios, you’ll want a card reader that works on both iOS and Android phones and tablets. Furthermore, an app that allows you to manually enter card information can enable you to accept payments while on the go and without the use of a reader. This can be a real boon for those who sell at flea markets and festivals.

Point of Sale Hardware

While many payment processors offer both payment processing and POS systems, they are not the same thing. POS systems can facilitate card transactions, but they can also record cash payments, manage inventory, generate sales reports, integrate with accounting software and much more.

If you want both payment processing and POS options, confirm that the payment processor offers both. Factor in any fees associated with POS hardware to the overall cost of the service. If you want to keep an existing POS system, confirm that it is compatible with the processor’s system. Some processors may help you integrate systems, while others may want you to purchase new hardware from them.

Accounting Software Integrations

Whether you utilize a card reader and app or a full POS system, the ability to export transaction data to accounting software is critical. Importing or even syncing sales data to QuickBooks, Xero, or other accounting software improves accuracy and eliminates the need to manually enter data. From an accountant’s point of view, this makes everything to do with your small business accounting more efficent, but it should be noted that when you work with an accounting firm like ours we can, and will, adapt to whichever payment system works best for you.

Funds Deposit Timing

The time it takes to receive funds from a credit card transaction should be as short as possible. The following day is ideal, same day is even better. For some businesses, having the option of making same-day deposits is critical.

If you plan to use same-day deposits and there is a fee, remember to calculate the additional cost per month. Additionally, certain payment processors may require you to deposit funds into a specific account. If you prefer, inquire if you can use a bank account of your choice.

Contract Commitments

Ideally, it’s best not to get tied into a long-term contract in case you don’t like the service or something else changes. Some payment providers don’t require a contract and allow you to operate month-to-month. While a company may say you can cancel at any time, you’ll also want to confirm that there are no cancellation or termination fees associated with closing your account.

Customer Support

The best payment processor customer service option is live 24/7 assistance, but it may not be a priority for every business. However, if you operate an online retail business, have extended business hours, accept key-in payments from across the country, or accept mobile payments during weekend events, a payment processing error might result in the loss of a sale and the revenue associated with it.

Need help with making a payments processing choice and with small business accounting in general? Contact us today, we’ll be happy to put our extensive accounting expertise to work for you.