The best payment gateway providers offer transparent pricing and post their fees, costs and terms on their websites. Further, their agents are forthcoming with key information and gave our reviewers straightforward answers to their questions. They offer month-to-month service and are up to date with the latest payment technology.
The interchange rate and card-brand fee are set by the credit card networks, and everyone pays the same rate – they're non-negotiable. The processor's markup is the only negotiable part of the rate. These components are combined in different ways to create three main pricing models.
Interchange-Plus Pricing: Best for Most Businesses
Industry experts recommend this pricing model because it promotes transparency. You might also hear the interchange-plus pricing model called cost-plus pricing or interchange-pass-through pricing, because it passes the interchange and card-brand fees on to you and then adds the processor's markup as a percentage and per-transaction fee.
The benefit of this pricing model is that you can see exactly what the processor's markup is, which makes it easier to compare pricing from different companies and to negotiate better pricing.
This is the pricing model we evaluated in our review, as it provides the best basis for comparing rates. In our review, the markup percentage ranges from 0.18% to 0.30%; however, in our testing, some services charge 0.50% or more. The per-transaction fee ranges from $0.07 to $0.25, though most companies on our lineup charge $0.10.
Tiered Pricing: Best for Businesses that Accept a High Volume of Regular Debit Cards in Person
This is the most common pricing model in the credit card processing industry, but industry experts criticize its lack of transparency. One of the biggest complaints experts have about this pricing model is that most companies advertise a very low teaser fee that only applies to debit cards that are accepted in person using a card reader.
The teaser rate, which is classified as a qualified debit transaction, is the lowest of several pricing tiers, which usually include qualified, mid-qualified and non-qualified rates for both debit and credit cards. Qualified rates usually apply to regular cards that are accepted in person using a card reader. Mid-qualified rates usually apply to rewards cards and nonqualified rates apply to premium rewards, foreign, business and government cards.
When a company quotes you tiered rates, you need to ask how many tiers there are; most companies have between two and six tiers, and most have separate tiers for debit and credit cards. You then need to ask which card types and acceptance methods are included in each tier, as companies categorize transactions differently.
Flat-Rate Pricing: Best for Businesses Processing Small Tickets or Less Than $3,000 per Month
This is the simplest pricing model, as you pay a fixed percentage rate for each transaction, no matter what type of credit or debit card you accept. Some processors also charge a per-transaction fee in addition to the fixed percentage rate. This pricing model is popular for mobile credit card processing.
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In our comparison of payment gateway services, we started with a list of 38 credit card processing companies, all of which can set you up with a payment gateway and merchant account. We considered both large and small processors, including new companies and banking institutions. We studied their websites and conducted online searches about each company so we could eliminate those with excessive complaints.
Multiple reviewers then called and emailed each company posing as a small business owner needing to accept credit and debit card payments in person. We requested quotes for rates and fees, including those for a payment gateway. We also asked for complete contracts. With this information, we narrowed our list to 20 companies by removing those that failed to provide rate quotes and those that charge atypical fees such as semi-annual postage and handling fees and quarterly technology fees.
To narrow our list to the top 10, we removed processors from our list that charge setup or cancellation fees, require three-year contracts, charge higher rates or fees than others or only offer interchange-plus pricing to companies with a processing history.
We used the following criteria to evaluate each payment gateway service provider:
Pricing Transparency & Consistency
The best payment gateway providers post full information about their pricing, fees and terms on their websites. Although more companies are starting to post rates on their sites, information about fees and terms is usually harder to find than pricing information. About one-third of the payment gateway services we reviewed don't post their processing costs or service terms, and half of the services don't post a fee schedule.
We assessed how open and forthright representatives were with the key information we requested, and we evaluated how thorough and consistent the information was that they provided. The companies that received our highest scores gave the same information in email and over the phone to multiple testers.
Pricing Options
The interchange-plus pricing model, which is recommended by industry experts, was recommended to us by half of the companies on our lineup. Most of the agents we spoke with first quoted us tiered pricing but were willing to quote us interchange-plus rates if we specifically asked for it.
However, some companies were reluctant to quote this pricing model to us. Some processors require you to process with them for several months under a tiered-pricing plan before you qualify for interchange plus. Others warned against interchange-plus pricing, telling us that it's only good for businesses processing extremely high amounts of credit card transactions each month. You should know, however, that this warning contradicts the advice of industry experts as well as the advice we received from several other companies.
Processing Fees
In addition to processing rates, most merchant gateway service companies also charge several different fees. The most common is the monthly fee, and, depending how you accept payments, a monthly gateway fee. Most of the companies in our review also charge a monthly minimum, which means that you must process enough to generate a minimum dollar amount of transaction fees every month.
Another fee you can expect to pay is the PCI-compliance fee, which may be charged either annually or monthly; PCI compliance helps keep your transaction information and customers' information secure. Some payment gateway providers, like Payment Depot, roll all regular fees into a single charge. They may also allow you to pay this fee annually at a lower cost.
Before you select a processor, it's important to read the full contract (application, terms of service and program guide) to ensure you're aware of every fee you'll be obligated to pay. For a detailed list of fees to look for as you read processing contracts, consult our article, "Credit Card Processing Fees: The Official Guide for Small Businesses."
If you want to accept credit and debit cards in exchange for goods or services, both in person and online, your business needs a payment gateway and a merchant account. The payment gateway providers featured on our lineup can set you up with both and offer favorable terms and competitive rates. After you use our review to identify multiple companies that you want to learn more about, it's important to request pricing quotes and fee schedules so you can compare these companies using pricing information specific to your business. You also want to request full contracts (all three parts: application, terms of service, program guide) to review before signing up with any company to ensure you're aware of all the fees and terms you're agreeing to. Having this information helps you choose the company that can provide your business with the best service at the best price.
The three best payment gateway providers we reviewed charge few fees and offer competitive interchange-plus pricing and month-to-month service to all merchants. They're also among the most transparent with their processing costs, fee schedules and service terms.
We've listed the top three below, along with noteworthy features for each of them. Read on to find out more about payment gateway service providers and to see which companies we recommend for specific types of businesses.
Helcim, Payment Depot and Payline earned top spots in our review, because they offer low rates, few fees and are transparent with their pricing and terms. Here are recommendations for specific business types:
Regardless of which payment gateway service provider you choose, you should be able to accept all major cards, including American Express and Discover. The company should comply with the data security standards set by the Payment Card Industry (PCI) so your system is up to date with the latest security protocols. If you accept cards in person, you should expect the processor to have technology in place that lets you accept EMV chip cards when you purchase an EMV-capable terminal. The service should also provide high-quality customer service 24/7 so that, regardless of what time it is, you can get the help you need to keep your business running smoothly.
A payment gateway is the technology that creates a secure connection between your website or browser and the payment processor, encrypting payment data for each credit card transaction. Some companies on our lineup have proprietary payment gateways, but most set you up with a third-party payment gateway, such as the popular Authorize.net and NMI gateways. Other gateways available through the companies on our lineup include First Data Global, Charge Anywhere, Roam Pay, Transaction Central and Transaction Express.
Although you may not need a payment gateway if you exclusively accept credit and debit cards using a terminal, you need one if you use your computer as a virtual terminal or if you accept cards online through a website. Each time you run a transaction online or a customer makes a purchase on your website, the credit card information enters the payment gateway where it's encrypted and routed through a secure connection to the credit card processor, the card network, the bank that issued the card and your business's bank account. Your customer's card is charged for the transaction amount, and you receive the funds from the sale, less processing costs.
Due to the complexity of this process and the number of parties involved (each one wants a cut of every transaction), payment processing can be confusing and expensive. There are multiple pricing models and fees to consider, and many companies require you to call for quotes, though the best payment processors post their rates and fee schedules on their websites.
Some payment gateway providers are willing to negotiate processing costs and waive fees, depending on your business type and creditworthiness, monthly transaction volume and average ticket size, among other factors. Whether you have an online-only store or a brick-and-mortar store that uses a virtual terminal or you're looking to expand online, it's important to choose a payment gateway and merchant services company that provides you with the best service at the best price.
If you're specifically looking for online processing, you can see additional options on our Accept Credit Cards Online review. If you want to accept credit cards on the go or if your business processes less than $3,000 per month, check out our Mobile Credit Card Processing review. If you have a retail store and need processing equipment, our POS Systems review can help you find affordable options.
