Merchant services are probably some the most confusing, jargon-y parts of running a business. And, as a result of all of the imprecise lingo you’ll come across while trying to navigate your merchant service provider options, landing the best merchant services possible for your business is far from easy.
But it’s certainly worth trying—the best merchant services can seriously streamline the way your business accepts payments, and, perhaps most importantly, increase your revenue.
The term “merchant services” encompasses the processes that allow businesses to accept payments from customers. That definition sounds pretty vague precisely because it is pretty vague. With so many rapid innovations in merchant processing services over recent years, the terminology of “merchant services” has expanded to refer to exactly what we need it to—which is a wide array of different merchant processing solutions.
With this guide, we pick apart the details on all four of the best merchant services for small businesses.
Before we dive into the minutiae of what you should expect from a merchant service provider, let’s take a look at the info you came here for—the best merchant services companies for small businesses.
Now, these top four merchant services companies will all offer their own slight variation on merchant services. As a result, your small business’s best merchant services option might be totally different from the next small business’s.
Compare merchant services reviews for our top four picks:
If you’re looking for simple mobile merchant services, then you’re looking for Square. Square if the very best merchant services provider for small businesses who don’t need a dedicated merchant account, as Square is a payment service provider rather than a merchant account provider.
We’ll cover this in more detail later, but being a payment service provider rather than a merchant account provider allows Square to offer up some of the very best merchant services rates on the market: Ranging from 2.5% to 2.6%, plus $0.10 on each transaction you process, with no setup or monthly fees (if you opt for the basic Square POS software).
However, it also makes it tough for larger businesses to work with, so if you’re working with a high monthly transaction volume, we suggest you look in to Cayan or Chase Merchant Services.
That said, Square is the best merchant services option for small business thanks to their wide array of merchant services. Square offers all of the following merchant services:
All in all, although Square doesn’t offer dedicated merchant accounts—which might be necessary for larger businesses—it does provide stellar merchant services rates and the widest suite of merchant services offerings.
Alternatively, if you’re specifically looking for online merchant services to allow your business to accept online payments, then look no further than PayPal. PayPal is primarily an online merchant services provider and offers businesses both a payment gateway and a payment services account.
Much like Square, PayPal is able to offer some of the best merchant services rates because they are a payment service provider, rather than a merchant account provider. But, again, they won’t be able to offer your business an individual merchant account, which could gum up the works for higher-volume businesses.
However, if your business doesn’t need a dedicated merchant account, PayPal online payment rates can’t be beat—online payments will simply cost 2.9% + $0.30 per transaction. And you’ll only have to pay a $30 monthly fee is you want to access a custom checkout experience through PayPal Payments Pro.
Additionally, if you want to be able to accept in-person payments through PayPal merchant services, you’ll be able to do so through PayPal Here. PayPal Here is a free smart device app that allows you to accept card payments through a PayPal card reader—which can be as cheap as $14.99. Plus, these in-person payments will only cost your business 2.7% per transaction.
If you’re primarily looking for affordable online merchant services, but also want to access the option of in-person payments, PayPal will be the very best merchant services provider for you.
If you’re running a larger business that would benefit from a dedicated merchant account, then Cayan is a solid merchant service provider for you to consider. Unlike Square and PayPal, Cayan doesn’t integrate the payment processing necessary for your business to receive the proceeds of its card sales. As a result, you might be able to receive more custom rates and more dedicated customer services.
That said, Cayan, which is owned by TSYS, doesn’t offer its own POS systems, payment gateways, or online shopping experiences. They do offer their own mobile card readers and credit card terminals that start at just $29. But if you’re looking for fully integrated merchant processing solutions, then Cayan isn’t your best merchant services provider to consider.
Nonetheless, of all the merchant account providers, Cayan does integrate most easily with top POS systems and payment gateways. Cayan bases their rates on a quote system, so how much you pay will depend on your business’s needs.
Last but not least, if you’re set on finding a traditional merchant service provider for your business, then Chase Merchant Services will be your best merchant services option. The main benefit of seeking out a bank merchant services provider? You’ll have a two-in-one processor and acquiring bank, which means that the payment processing back-and-forth can move that much quicker.
And, unlike other traditional merchant service providers, Chase Merchant Services is actually doing pretty well at embracing innovation. They offer a mobile card reader along with full point of sale systems.
Chase Merchant Services, however, is still hanging onto the less-than-ideal practice of quote-based pricing. So, you’ll need to request a quote to get an idea of how much this merchant services option will cost your business.
Now that you’ve taken in our merchant services review for our top four picks, it’s time to consider merchant processing services as whole. Again, merchant services have evolved drastically—and continue to evolve drastically. So, from one merchant service provider to another, just what you’re dealing with can vary wildly.
At the core of each merchant service provider’s offerings should be at least one of these merchant process solutions:
Merchant accounts are separate bank accounts that front businesses portions of the revenues from card transactions. The merchant acquiring bank—otherwise known as the bank where you have your business bank account—works in conjunction with whichever company you have your merchant account with to make sure you receive the funds from card transactions.
After a customer pays for a good or service with a card, the card processor sends the transaction information to the business’s merchant account. The merchant account provider then contacts the card processor who, in turn, contacts the card issuer. After confirming fund availability, the card issuer then contacts the card processor who then contacts the merchant account with approval. All of these communications—called interchange—are overseen by the card networks like Visa and Mastercard.
If you can believe it, all of this back-and-forth happens within a matter of minutes. After receiving approval, your merchant account then begins to settle funds and eventually fronts these funds to your business bank account—minus all the fees that the processor, network, and issuer take. Fronting these revenues to your business before the actual funds are settled by the customer paying their credit card bill will involve a modicum of risk. As such, the merchant account provider will also charge a fee of their own on top of all the others. Merchant accounts can get pricey as a result, but can certainly be worth it to avoid the risk and wait that not having one would entail.
On the other hand, other merchant services providers might offer what’s referred to as payment services rather than merchant accounts. In practice, a merchant services provider that offers payment services rather than merchant accounts will work pretty similarly. However, payment service providers pool payment processing into one giant merchant account for all of their customers on their end, so their customers won’t have access to an individual merchant account.
As a result, merchant service providers that offer payment services (rather than merchant accounts) are able to offer the best merchant services rates. That said, many payment service providers also experience more glitches and offer less robust customer service experiences.
If you need merchant processing services for lower transaction volumes, then the better rates and more aggregated processes that merchant payment services provide should do the trick.
Finally, if you’re looking for online merchant services, then you’re likely looking for what’s called a payment gateway. Payment gateways fall into the category of merchant services because they work much like electronic versions of credit card processors. This kind of merchant service is a software that you can plug into your business’s ecommerce platform or website so that your customers can make purchases from your business online.
That said, many payment gateways won’t come set up with the necessary merchant processing services that will allow your business to receive the funds from an online transaction. Unless a merchant services providers offers a payment gateway along with payment services or a merchant account all in one, you’ll need to find those additional merchant services elsewhere. Keep this in mind while looking for a way to accept online payments, as many business owners easily forget about all of the necessary background action that merchant accounts and payment services providers make possible.
On top of these fundamental merchant services that providers can offer, many of the best merchant service providers tack on bonus merchant processing solutions that can seriously improve your business’s sales processes.
In fact, all of the four top merchant service providers that we highlight above offer something beyond your baseline merchant services necessities.
Here are some of the features you can and should expect from the best merchant service providers on the market:
Although payment processing hardware isn’t necessarily a given offering of all merchant service providers, all of the very best providers make it extremely easy for you to integrate payment readers and consoles into your merchant account or payment services account.
Unless you’re specifically looking for online merchant services—which don’t require hardware for reading cards—you should expect merchant card services from your provider. Ideally, these merchant card services include payment reading hardware that can process magstripe, chip, and contactless payments.
Even more, many merchant processing services providers make their own payment processing hardware—this hardware comes integrated and ready, with little setup required. The industry is seeing more and more of this with the advent of the iPad POS system—creating their own card readers that plug into smart devices is pretty much a mandate for top merchant service providers.
Reading your customer’s payments is all well and good, but you’ll also need to make sure the checkout process is an easy one—for your customers and your employees. For this very reason, many merchant services providers also offer point of sale systems. POS systems are like advanced versions of payment readers—they’re able to read customer’s payments, but they’re also able to scan barcodes, calculate tips, track inventory, print receipts, you name it.
Beyond just creating their own card readers, many of the best merchant services companies have created their own point of sale systems. Whether they’ve engineered an app that turns a smart device into a fully equipped POS, or they’ve constructed their own POS out of an entirely new device, merchant services providers have begun to expand to your business’s countertop, beyond just your bank statements.
Payment gateway providers in particular have also begun to offer up online shopping systems, like checkout experiences and ecommerce platforms, for customers. If you want your online merchant services to be automatically integrated into your ecommerce setup, then look into a merchant services provider that offers this additional service.
Finally, many merchant services providers have begun to offer merchant financing to their customers. The step to offer merchant cash advances is a natural step for most merchant service providers—this form of funding relies on access to a business’s merchant account or payment services account. Essentially, merchant services providers have begun offering lump sums of capital to customers in exchange for a future portion of the business’s card sales. If a customer takes on merchant financing from their merchant service provider, then their provider will intercept a certain percentage of sales until this financing, plus the predetermined fee, is repaid.
There you have it! Our complete merchant services reviews of the top four merchant processing companies currently on the market. Whether you’re looking for the best merchant services for small businesses, or you’re searching for merchant services that offer a dedicated merchant account, there’s a top merchant processor out there for you.
Maddie Shepherd is a former Fundera senior staff writer and current contributing writer for Fundera.
Maddie has an extensive knowledge of business credit cards, accounting tools, and merchant services, but specializes in small business financing advice. She has reviewed and analyzed dozens of financial tools and providers, helping business owners make better financial decisions.