10 Cheapest Credit Card Processing Services Of 2024 (2024)

You’ll have a hard time eliminating the costs of credit card processing altogether, but you could reduce them using these tips.

Choose the Right Payment Processor for Your Business

Evaluate your options before selecting a payment processor and choose one that minimizes your costs for the services you need. For example, if you don’t need an online store, you don’t need to pay the monthly fee to use Shopify; you could use Stripe or PayPal for free. Also, consider the size and volume of your sales to choose the most economical fee structure.

Use a Merchant Services Provider

Major banks provide many of the same services as payment processing companies, but they tend to charge more. Go with a dedicated merchant services provider, like PayPal or Stax, for better rates.

Use a Mobile Payment Processor

If you’re a very small or brand-new business, start with a mobile payment processor like Square. These services charge a flat rate and use minimal equipment, so you’re not saddled with a contract, monthly fee or setup costs.

You can typically use a mobile payment processor with a free swipe attachment for your smartphone or tablet, and a free app. Apps like Square can grow with your business, so you can always upgrade to add more equipment or capabilities later.

Avoid Lengthy Contracts

Especially if you’re new to business, a years-long contract with a traditional payment processor could lock you into rates that don’t work for your business long term. They can be difficult to get out of and charge high termination fees.

Avoid the costs and keep your flexibility by using a payment processor that lets you pay month to month or doesn’t require a subscription at all.

Cut Services You Don’t Need

If you sign up for a subscription-based service, shop around to make sure you don’t overpay for a bunch of services you don’t need. Subscriptions tend to be tiered, and if you need just one capability that a company includes in its second tier but not the rest, your costs can quickly add up.

Negotiate Discounts

The benefit of using a subscription-based service (if your business processes a large amount in credit card purchases) is the ability to negotiate the processing fee. You’ll usually be stuck with the interchange fee because that’s set by credit card companies. But you could ask to reduce the fee that represents the processor’s cut.

Opt for Flat-Rate Pricing

Avoid tiered pricing, which is opaque and difficult to negotiate. If you’re a small or new business, choose a service that uses flat-rate pricing. If you’re more established with a higher volume of purchases, choose a service that uses interchange plus pricing to get the most affordable rates.

Restrict the Cards You Accept

Most retailers you walk into accept Visa and Mastercard. But you might have a harder time finding a business that accepts Discover or American Express. That’s because the latter two charge higher interchange fees—since they offer greater rewards to their customers.

You could save money by declining to accept payments from networks that charge higher fees. But keep in mind that this could mean losing some potential customers who prefer those payment methods.

Set Minimums for Credit Card Purchases

To combat processing fees cutting into your profits on small-dollar items, you could set minimum purchase totals for which you’ll accept a credit card payment.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (a.k.a. Dodd-Frank Act) allows merchants to set credit card minimums of up to $10. You may not be allowed to do the same for debit cards, however; credit card network rules might prevent minimums, and Dodd-Frank doesn’t affect debit purchases.

Offer Cash Discounts

You can pass the cost of card processing fees onto your customers by raising your prices and offering a discount to those who pay in cash.

Or, if your state allows it (most do), you could add a surcharge to each card transaction at the point of sale. Check the rules of the credit card networks you accept to make sure they allow surcharging.