What Payment Processor Should I Use?
It’s one of the most common questions we get.
While we’ve written about the very real impact of an affordable and easy-to-use accounting system, we’ve hesitated to recommend a payment processor and for one simple reason:
There is no one clear winner.
No one offers every payment method at the cheapest price with all the bells and whistles. Each processor has its own strengths and weaknesses, so the choice will depend on the particulars of your business.
None are free.
Some are very cheap, but that low price comes with tradeoffs. Melio, for example, is a new-ish service that processes ACH payments for free. Melio will also pass the credit card processing fee on to your customers automatically if you so choose, which makes the entire service effectively free to the seller. Great, right?
However, Melio only accepts business credit cards, not personal ones, and there is no point-of-sale option or API. Since the only native integration is with Quickbooks, invoices out of Zoho or Squarespace have to be uploaded manually before being sent.
However, just because there’s no clear winner doesn’t mean there aren’t better and worse choices.
Here are a few clear cut cases:
Do you process a large volume of payments?
If your weekly revenue exceeds $50,000, or if you need to process single transactions in excess of $20,000, you may want to stick with the larger players like Authorize.net or CSG Forte. Although their fee structures make them unnecessarily expensive for smaller enterprises, amortized across a large number of transactions, those fees are nominal, and you can often negotiate a lower fee. With good planning and communication, your high-volume account won’t end up locked for potential abuse.
Do you need to autocharge, such as for a subscription-based service?
If so, be sure to check out Zoho Subscriptions, which is a feature-rich recurring-payment platform. Of course, you’ll still need a payment processor. You may want to avoid CSG Forte, which only offers autocharge through a partnership with Chargify, a leading but also very expensive subscription payment service.
Do you maintain a physical location where you are handed credit cards for payment?
If so, you may already be using Square, which has been the leader in point-of-sale (PoS) solutions for some time. If your organization is highly cost sensitive, PayPal’s relatively new Zettle service offers lower transaction fees, but they are not nearly as easy to use. New entrant Helcim is cheaper still, but customers report difficulty using the hardware and mobile app.
If you only process physical cards occasionally, setting up a terminal and separate PoS provider may not be worth it. Services like Stripe let you manually enter a card for a slightly higher fee on in-person transactions but a lower overall cost on all transactions.
Do you transact in many international currencies?
If so, you’re probably looking at PayPal, CSG Forte, or a hybrid service like Bill.com.
The good, the bad & the ugly
If your business doesn’t gross in the millions per year, doesn’t transact in foreign currencies, and rarely collects payments in person, the answer is a little trickier.
But rather than describe all the options in a wall of text, we thought we’d make it easy and collect the information in a handy grid, included below.
The financial technology (“Fintech”) landscape is constantly changing, which means this is a living document. Not only are we continually adding new processors, we also update existing records as new information becomes available, so be sure to check back.
