The Best Online Credit Card Payment Processing Companies
So you’re a merchant and you want to start an ecommerce business. That’s great! You’re going to need, at minimum, three things: Products/services (of course), a website (obviously), and an online credit card payment processing company.
Not just any old merchant account or credit card payment processor will do. You need one that’s tailored for online businesses, with decent rates and compatibility with your website as well as your business model.
No matter where or what you sell, who you choose to process credit cards with shouldn’t be a decision that you make lightly. You need to compare rates, quality of service, reliability, and the variety of features available. You’ll also need to be prepared to potentially make tradeoffs in order to get the features you need the most.
Fortunately, there are more options than ever for business searching for an online payment processor, from traditional merchant accounts to third-party, pay-as-you-go processors. Let’s take a look at what you need to look for in an online credit card processor, as well as the top options for web-based businesses.
The Best Online Credit Card Processing for 2018
Check out our favorite options to find a good fit for your business.
Table of Contents
- How to Accept Credit Card Payments Online
- The Best Credit Card Processors for Online Businesses
- Other Popular Online Payment Processing Options
- Final Thoughts: Which Online Credit Card Processor is Right For You?
How to Accept Credit Card Payments Online
Not all online payment processors are the same. They vary in their pricing, their business model, and the features they offer. And yes, some providers do offer a lot more features than others. That could save you money versus choosing third-party add-ons. But before you dive into all of the options, you need to know how to spot the differences and what some key terms mean.
Third-Party Payment Processor vs. Merchant Account
Credit card processors fall into two categories: direct (also called merchant accounts) or third-party (also called aggregators).
Direct processors — the ones who issue merchant accounts — typically offer a greater degree of account stability. Unless you have a high chargeback rate or otherwise do something to violate the processor’s rules, you don’t have to worry too much account the risk of an account hold or termination. The trade-off is that setting up a merchant account takes more time and the company will go through a detailed underwriting process to access your business and how much of a risk it faces in onboarding you as a merchant. Typically, the costs associated with merchant accounts mean you need a monthly minimum of $5,000-$10,000 in card transactions to justify the monthly and annual fees, and rates may vary depending on your business model, industry, and other factors.
Third-party processors are also called aggregators because of the way accounts are set up. Whereas with a merchant account you are subjected to a great deal of underwriting and risk assessment even before you establish the account, a third-party processor does only a cursory vetting before approving the account. That’s because less information is needed — rather than setting you up with a unique account, a third-party processor lumps all of its merchants into one large merchant account (hence the term “aggregating”). This type of processing agreement has advantages: the pricing is usually flat-rate and thus very predictable and the processor works on a month-to-month agreement rather than a multi-year contract. Usually there are few, if any, monthly or annual fees to deal with and you don’t need a monthly minimum to qualify. However, the compromise is account stability. Because so little underwriting is done beforehand, the processor analyzes your activities with greater scrutiny afterward, and you are more likely to encounter an account hold or termination, usually with little to no notice.
- Recommended Reading: The Truth About Third-Party Payment Processing
If you plan to sell online, you need a payment gateway. In the simplest terms, a gateway allows you to accept online credit card payments. You can’t sell online without one. However, the concept of a gateway can become somewhat fuzzy because third-party processors such as PayPal and Stripe combine their services with a built-in gateway. Merchant account providers may have their own gateways available for an additional fee, or they may choose to set you up with a third-party gateway (not to be confused with a third-party payment processor). Authorize.net (read our review) is one of the best-known third-party gateways. It’s compatible with just about everything, which is a major reason why it remains so popular.
- Recommended Reading: The Complete Guide to Online Credit Card Processing With a Payment Gateway
eCommerce software, also called shopping cart software or just a shopping cart, is online software used to create a web-store. Typically, ecommerce software comes in two forms: Software-as-a-service (SaaS), or self-hosted. For a monthly fee, SaaS shopping carts offer a complete package — web hosting and storage, SSL certificates, and other tools to build and maintain a website. Self-hosted solutions are typically free to download because they are open-source, and they offer a lot of features and customizability — if you have the technical know-how to pull it off. In addition, the lack of a monthly fee is negated by the need to obtain web hosting, purchase your SSL, and other costs associated with maintaining a website. In both cases, you must also choose a payment processor and find a compatible gateway. Since many payment processors either provide their own gateway or integrate with a third-party option such as Authorize.net, you’ll typically have several options for payments.
- Recommended Reading for Shopping Carts: Shopping Carts 101: How to Choose a Shopping Cart for Your Business. Questions to Ask Before You Commit to a Shopping Cart
Recurring Billing Tools
Not every online business sells a physical product. More and more businesses are using a monthly subscription model either in place of or as a supplement to one-time sales. And of course there are plenty of Software-as-a-Service (SaaS) businesses that need to be able to charge their customers on a regular basis.
Not all credit card processors are designed to cater to businesses that need recurring billing. Some, like Stripe and PayPal, build in the tools you need. Others, like Square, are way more limited. Some don’t provide any tools for this at all. However, you can opt for a third-party service such as Chargify or Cheddar to add this functionality to your business.
If your processor does offer recurring billing tools, you should make sure they have all the features you need, whether that includes metered billing based on usage or the ability to upgrade mid-month to a higher tiered plan or just the ability to add a free trial. You should also make a note of any costs associated with using those tools! Do the same with any third-party add-ons. The most important thing is that you understand what you will pay for using these features.
Additional Concerns for Online Businesses
In addition to the essentials discussed above, as a business owner you have other matters to consider as well, from your own technical skills to how much you can afford to maintain your website:
- Technical Knowledge: How much do you know about building a website? Do you feel comfortable buying a domain, setting up your website, loading products or creating subscription plans, and integrating your processor? What about web design? The good news is that a lot of shopping carts make it very, very easy for you to create a website, set up payment processing, and fulfill orders. If you are doing more than a simple ecommerce store, you’re going to need more technical knowledge. If you don’t have the foggiest idea how to go about creating your website, you can hire a freelancer to do it for you. However, if you think you’ll need constant support or frequent changes to the site, it might be worth bringing someone on board at least part-time to help ensure the site stays running and there are no issues with any integrations you choose.
- Alternative Payment Methods: Credit cards are far from the only payment method for online businesses. Ask yourself whether your customers would prefer to use any of these methods and see about implementing them. ACH processing is fairly common (and popular among B2B companies), but not always offered as part of a standard credit card processing contract. You may be able to add this feature through your processor, or use an alternative such as Dwolla to incorporate ACH acceptance. You should also consider whether you need to offer a PayPal checkout option, as well as Visa Checkout, MasterPass, Apple Pay for the Web, Google Pay, and more.
- Reliability and Customer Support: This applies to both your shopping cart/recurring billing provider as well as your credit card processor. You should expect both reliability and excellent customer support from whatever provider you choose. That means infrequent service outages, if any, and quick response times for questions. It’s hard to vet these aspects of a business beforehand, so do a little bit of research to see what other merchants have had to say. Check that the available support channels match your preferences. The more reports tell a consistent story, the more likely that is the truth of the experience. There are always outliers, however, and most people are way more inclined to talk about negative experiences than positive ones. So you need to learn to read between the lines and take the volume of complaints into consideration along with the overall size of the business.
- Budget: It costs money to run a website of any kind, so you need to have a budget. How much can you afford to pay upfront for a developer or web designer or an SEO, or even just data entry to create your products? Do you have the funds and confidence to pay for everything a full year in advance, or do you need to go month by month? How much can you afford on a monthly basis for a webstore or hosting, plus any additional services? You should have a pretty good idea before you start how much you can afford to create and maintain your website.
The Best Credit Card Processors for Online Businesses
Merchant accounts are the gold-standard for businesses that want reliable credit card processing. However, not all merchant account providers will accept all merchants who apply. It helps to have an established processing history, and you’ll need to make sure any costs that you incur are justified by your payment volume. And it may take a bit more time to get your account approved and established, especially if you’re asking for special pricing. The best merchant account providers work on a month-to-month basis with no yearly contracts and few, if any fees. You should also make sure your online credit card processor provides access to a gateway, preferably for free or at a very low cost.
On the other hand, one of the biggest draws for third-party processors is that merchants can get approval and set up their accounts quickly — sometimes within a matter of minutes. They tend to work on a pay-as-you-go model, which is ideal for low-volume businesses that may not be able to justify monthly fees. With no contracts, no minimums, and no wait times for account approval, it’s safe to say, flexibility is a major advantage to choosing a third party processor. Many usually bundle their own payment gateway as a core element of their services. However, the trade-off means you face a risk of account holds or closures if your processor flags a suspicious transaction. That doesn’t mean your account will automatically be in danger, and the reality is that processors that operate this way approve and maintain far more accounts than they terminate. But it is something you should be aware of.
- Type of Processor: Merchant Account
- Typical Rates: 1.95% + $0.30; $10/monthly support fee
- Highlights: Flat-rate pricing for low-volume merchants, free Authorize.net gateway, excellent customer service
CDGcommerce (see our review) gives you the standard features you’d expect from online payment processing services, but it’s not what I would call a cutting-edge company. Still, there’s a lot to make CDGcommerce appealing to merchants. For starters, with your online merchant account, you also get your choice of free payment gateways: Quantum or Authorize.net. Between the two you’ll be covered for nearly endless integrations. It’s also worth mentioning that use of the gateways is completely free — there are no setup fees, no monthly fees, or per-transaction fees, which are pretty common.
In addition, CDG will support you if you need a credit card terminal, countertop POS, or mobile POS. You get a virtual terminal at no extra charge, as well as detailed online reporting. It’s nice to be able to say CDGcommerce goes well beyond the minimum in this regard. The reporting may not be the most advanced out there, but it’s much more than many other processors offer by default.
CDGcommerce offers two pricing plans: Simplified (for low volume merchants) and Advanced (for merchants processing $10k/month or more). The Simplified plan for online merchants includes flat-rate pricing at 1.95% + $0.30 for most transactions, plus a $10 monthly fee. International, corporate cards and premium cards process at 2.95% + $0.30. For the Advanced plan, merchants get interchange-plus pricing with a 0.3% markup + $0.10 per transaction. The good news is that simplified pricing will work for all but the lowest-volume merchants. Stripe, Square, and PayPal charge 2.9% + $0.30 per transaction. With CGDcommerce charging $10/month for its service fee and just under 1% less per each transaction, the break-even point where CDG actually becomes the better offer is about $1,000/month.
In addition, CDGcommerce charges no fees beyond the transaction and monthly support fees (including no PCI compliance fees). You can opt to add a $15/monthly security service that will give you $100,000 worth of data breach insurance as well, but it’s entirely optional. And finally, one of the biggest draws for CDGcommerce may be the excellent customer service, including 24/7 phone support.
- Type of Processor: Merchant Account
- Typical Rates: $99/month + $0.15 per transaction
- Highlights: All-in-one payments, Authorize.net gateway access, PCI compliant, API available
Fattmerchant (read our review) isn’t your typical merchant account. Instead of a percentage markup and a per-transaction fee along with various account fees, FattMerchant charges a single monthly fee and a per-transaction fee. (The fee depends on the type of transactions processed: For online customers, it’s $0.15; for in-person transactions, it’s $0.08.) No percentage markups, no hidden fees. Everything is bundled into one convenient pricing model, which makes it more like a membership club than anything else.
With Fattmerchant’s online pricing plan, you get access to the Authorize.net gateway (I did say it was a popular option) with a completely PCI compliant solution. Plus, you can get access to Fattmerchant’s API for custom integrations, as well as other tools to create an all-in-one payments set up. This all-in-one approach, combined with advanced analytics and the ability to integrate with thousands of third-party providers, are what make Fattmerchant a powerful solution for businesses. Merchants also get access to a comprehensive dashboard with all their information as well as free invoicing from within the dashboard. Throw in FM’s 24/7 phone and email support, and you’ve got the makings of a great payment processor.
However, while Fattmerchant pricing could be very good for mid-size to large enterprises, it could also be prohibitively expensive for others. It’s important that you do the math and ensure you’re actually saving money. Fattmerchant isn’t suited to low-volume businesses that are just starting out and building a customer base. Instead, a pay-as-you-go processor might be better suited.
However, if you are doing consistent business (especially above the $10k/month mark), Fattmerchant has the right combination of services and customer support to be the perfect processor for the right company.
- Type of Processor: Third-Party Payment Processor
- Typical Rates: 2.9% + $0.30; 3.5% + $0.15 for recurring billing
- Highlights: All-in-one platform, lots of value-added tools, integrations with major ecommerce software
Square (read our review) is primarily known for its free mobile payments app, but for quite a long time it’s had a (very basic) free online store. These days, Square has really stepped up its eCommerce offerings. You can still use the plug-and-play online store (though it’s not really anything to get excited about) or choose one of the various ecommerce integrations. While the list of supported integrations for Square isn’t quite as large as some of the other processors on this list, it does cover the most popular options. In addition, you can use the various Square APIs to create your own custom setup for payments on the web.
Square doesn’t support native in-app payments, and it has no marketplace tools. Its recurring billing options are limited, requiring the addition of a third-party integration if that’s what you need. It’s also a third-party processor, meaning merchants run the risk of account terminations and holds.
All of that said, Square’s greatest strengths lie in its ecosystem — a suite of compatible apps and software add-ons that function seamlessly with one another and with Square’s Point of Sale products. That includes inventory management for online and in-person sales, timekeeping, payroll, invoicing, a virtual terminal, advanced reporting, and more. If you are looking for a payment processor to handle multi-channel sales, Square is up there with the best and brings a host of value-added services and features to the party at no additional charge. And if you just want to sell online, you can still benefit from Square’s dashboard and tools.
Apart from any of the optional add-on services, which Square will bill you monthly for, you only pay 2.9% + $0.30 per transaction. There are no PCI compliance fees (though Square handles PCI compliance for you), no statement fees, no monthly minimum fees — Square doesn’t even assess a chargeback fee and offers up to $250 in chargeback protection (for eligible transactions) per month. All of that make it a very competitive offering.
- Type of Processor: Third-Party Payment Processor
- Typical Rates: 2.9% + $0.30 (lower for higher plan tiers)
- Highlights: Retail focused, Shopify-exclusive, supports all-in-one sales, processing discounts available
Shopify (read our review) built its reputation as powerful shopping cart software, but these days, the company has branched out to launch its own branded payments service, a countertop POS system for retailers, and a mobile POS system. Now, to be fair, Shopify Payments is actually just white-label Stripe Payments service, and Shopify is far from the only company to go this route. It does mean that your business is still in the hands of Stripe, not just Shopify, and Shopify Payments merchants do complain about the same account holds and terminations that regular Stripe merchants also rail against. However, on the whole, Shopify seems to deliver on customer service.
Still, Shopify Payments integrates seamlessly with the Shopify platform, and you’ll pay only the transaction fees plus your monthly subscription fee — 2.9% + $0.30 with the Basic Plan ($29/month), 2.6 % + $0.30 for the standard plan ($79/month), and 2.4% + $0.30 with the Advanced Plan ($299/month). If you want the retail POS, you’re looking at another $49/month, though the mPOS is free to use, and you’ll pay 2.7% per swipe to start (less with the higher tiered plans). The pricing is competitive and you’re essentially getting volume discounts with the higher tiers, which is something Stripe typically doesn’t offer until you reach enterprise level. There’s no PCI compliance fees, no monthly minimums, or any other hidden costs to worry about.
Shopify does allow you to connect an external gateway processor, though you’ll pay 0.5%-2% per transaction to Shopify on top of your processing fees. Given the costs, it makes more sense, especially at the lower tiers, to use Shopify’s integrated payments rather than an alternative. Conversely, you also can’t use Shopify Payments with any other sort of shopping cart software. So Shopify Payments really only makes sense if you’re set on using Shopify as your software. And of course, there are plenty of great reasons to do that, from the centralized control panel for running shops on Facebook, Pinterest, and Amazon, to the single buyable buttons and the full-fledged, easy-to-build online shop. Shopify sweetens the deal with USPS shipping discounts and built-in SEO and marketing tools. And don’t forget, you can sell in-person as well as online thanks to the Shopify POS and mobile POS app.
Other Popular Online Payment Processing Options
- Type of Processor: Merchant Account
- Typical Rates: 2.9% + $0.30 for cards and mobile wallets, 0.75% for ACH transactions
- Highlights: Extensive developer tools, support for alternative payment methods, global reach, “white glove” customer support
Braintree (read our review) is owned by PayPal, so it should come as no surprise that one of the biggest draws for merchants is the seamless integration with PayPal. With Braintree you can accept all sorts of payments, from PayPal and Venmo transactions to ACH and Apple Pay on the web, for starters. Its developer tools are powerful and well documented, allowing everything from recurring billing to advanced customized reporting. Merchants can also build payment forms into their native mobile apps. Combined with its support for merchants in some 40 countries and its global currency options and it’s easy to see why Braintree is a popular option for online payments. Plus, Braintree offers its gateway bundled with payment processing, or as a standalone option for merchants who already have a processor.
Like PayPal, Braintree handles PCI compliance for you, and the company will also let you (securely) take your consumer data with you if you decide you like another processor better. Braintree has a solid list of integration options as well. The company also promises “white glove” customer support, and seems to mostly deliver on that promise according to merchant reports.
The drawback? Because you’re dealing with a proper merchant account here, you can’t get set up as quickly as you can with PayPal. Braintree doesn’t work with all kinds of businesses, though as far as high-risk businesses are concerned, it says it makes decisions on a case-by-case basis. However, there’s no monthly minimum and no ideal business size (thanks to a pay-as-you-go processing), so Braintree could work for even low-volume businesses.
The best part is that businesses get all of these features for a standard 2.9% + $0.30 per card or PayPal transaction. There’s no monthly fee, no monthly minimum volume, no PCI compliance fee, nothing beyond your processing costs. ACH transactions cost just 0.75% per, capped at $5 maximum. If you choose to implement the PayPal integration, you’ll pay your PayPal standard rates (also 2.9% + $0.30 in most cases).
- Type of Processor: Third-Party Processor
- Typical Rates: 2.9% for cards and mobile wallets; 0.8% for Bitcoin and ACH
- Highlights: Global reach, support for alternative payment methods, excellent developer tools, strong fraud prevention tools
Stripe (see our review), like PayPal, has reached the point where its name is synonymous with internet commerce. Stripe’s developer tools and documentation have become the gold standard by which all others are judged, which is no doubt a major contributor to the platform’s popularity with developers.
Stripe has a lot of similarities to Braintree regarding features and international approach. Stripe is open to merchants in 25 countries with global currency options and support for quite few alternative payment methods and local payment options across the EU and Asia; you’ll also find a great selection of marketplace tools and recurring billing options. Stripe gives you a gateway, hosted payment page, PCI compliance, and the ability to keep your migrate your customer data if you ever decide to leave. One major difference is that Stripe’s gateway is permanently coupled to its payment processing. You can’t access the Stripe gateway or tools without also using the company’s payment processing. In addition, Stripe doesn’t support a virtual terminal.
Stripe charges just 2.9% + $0.30 per transaction. There’s no monthly fee, no monthly minimum, and no PCI compliance fee. You will, however, pay small fees to access Stripe Billing, which includes its subscription management and recurring billing tools, as well as for Relay, its SQL-based custom reporting system. The cost for these services is reasonable, but a departure from its earlier flat-rate pricing where everything was bundled together.
Because Stripe is a third-party payments processor, merchants do face a risk of holds and account terminations. However, Stripe does handle PCI compliance and offers access to a powerful suite of fraud management tools. There’s an 80% chance that your customer’s card has previously been used on the Stripe network, and Stripe uses that data to analyze patterns and spot suspicious transactions. That’s actually pretty awesome and Stripe’s fraud management tools are some of the most robust and customizable out there.
Pay with Amazon
- Type of Processor: Third-Party Payment Processor
- Typical Rates: 2.9% + $0.30
- Highlights: Customizable and ready-made checkout options, consumer trust and widespread adoption, flexible for different business models
Amazon Payments (see our review) is a pretty simple idea: let people use their Amazon accounts to make purchases on other websites. It’s a good idea, too, because Amazon boasts about 100 million Prime members, not to mention all the other non-Prime shoppers. So while it’s not quite PayPal, Amazon Payment (also known as Pay with Amazon) is certainly a force to be reckoned with, and you get the benefit of using a name consumers trust.
Pay with Amazon integrates with some major shopping carts as well as other web services. Developer tools are available for a custom integration; it’s worth noting that in addition to one-time purchases, Amazon’s API actually supports recurring payments, donation buttons, and Alexa tools. (Essentially, you can create a function that will allow your customers to make purchases via Alexa voice commands.) That last bit is nifty, though I am not sure how many merchants will take advantage of it — or how many should, for that matter. There’s no invoicing option, no mPOS, and no full-fledged POS option, but you do get Amazon’s one-click ordering and PCI compliance is handled for you.
Amazon Payments is a pay-as-you-go service, with the standard rate of 2.9% + $0.30. You won’t have to worry about any monthly fees, monthly minimums, PCI compliance fees, payment gateway fees, or early termination fees. Nonprofits are eligible for a discount and will pay 2.2% + $0.30 per transactions. However, because Amazon is another third-party processor, merchants may encounter the same sort of account stability issues that you would face with Stripe or PayPal or Square. However, the complaint volume overall seems lower than some other processors featured in this list.
One interesting thing is that merchants who use Amazon Payments get access to Amazon’s Seller Central dashboard. If you already sell on Amazon as well as your own site, it’s a convenient way to centralize control of your orders. Like PayPal, Amazon offers an option to direct customers to an Amazon-hosted page to complete the checkout process. Or, you can create your own customizable form on your own website — though unlike PayPal, Amazon doesn’t charge anything extra for this.
All in all, Amazon Payments is a surprisingly functional and fairly priced payments option for online merchants, with enough “extras” to make it more than just a standard processor. Throw in the massive trust behind the Amazon name and it’s easy to see why it could be a great option for merchants.
- Type of Processor: Third-Party Payment Processor
- Typical Rates: 2.9% + $0.30; hosted payment page $30/month; recurring payments $10/month
- Highlights: Widespread adoption, consumer trust, global reach, works as primary or supplemental payment method
PayPal (read our review) is pretty much synonymous with online payment processing at this point, and its suite of services for merchants is extensive. In addition to being able to accept online payments and send invoices, PayPal has a mobile payments app (PayPal Here) and integrates with POS systems, accounting software, shipping software, and all major shopping carts. PayPal uses its own gateway, which you can use independently of its processing services for a per-transaction or monthly fee. In addition, the APIs and developer tools allow for custom setups, mass payouts, and even marketplace creation. Nonprofits are eligible for a discount and can set up a donation button on their site with hardly any work; merchants with an average transaction size under $10 can get on a microtransactions plan to reduce their processing costs.
PayPal is by default PCI-compliant. However, as a trade-off, unless you have your own hosted payment page, PayPal redirect customers to its site to complete their transactions. If you’re using the hosted payment page or the virtual terminal, you aren’t automatically compliant, but PayPal does offer tools to reduce the amount of work required on your end.
Because PayPal is a third-party processor, merchants do face a greater risk of account holds and terminations. Fortunately, it seems that PayPal is willing to work with its customers to find a solution. Merchants have also said that the company’s customer service is spotty and inconsistent, but unless you have an account-specific issue you can usually find an answer without having to reach out to PayPal directly.
All of that said, why does PayPal make the cut? Well, for one, there’s that little matter of PayPal’s 237 million users worldwide. It’s a trusted payment option for people who like to shop online (being the default payment option on eBay for so many years will have that effect). In addition, PayPal powers payments for 17 million merchants all over the globe, too — that’s far more than, well, just about any other merchant account provider out there.
That’s largely because of how easy it is to get started, the lack of any monthly minimums, and the absence of any fees beyond transaction costs (2.9% + $0.30 for online transactions; 2.2% + $0.30 for nonprofits). You can integrate PayPal as a supplemental option with PayPal Express, or make it your primary processor. PayPal is also quick to point out the research that says merchants who offer PayPal as a checkout option are likely to see a boost in sales, too.
Final Thoughts: Which Online Credit Card Processor is Right For You?
If you want to start an eCommerce business, there is no shortage of excellent payment processors to help you put money in your bank account. Whether you are just starting out and need a flexible, pay-as-you-go provider with no minimums or have a high volume of transactions and just want a better processing rate or more reliable processor, this list is the best starting point for your search. Don’t compare on price alone, though! Be sure to consider all the features you need, as well as compatibility with shopping carts and other services you may use in your business. Keep an eye on what features you absolutely must have now, as well as what you would like to have further down the line as your business starts to grow.
What are your favorite online payment processors? What have your experiences with the processors on this list been like? We’d love to hear from you, so leave us a comment if you have a question or just want to let us know what you think.
Thanks for reading, and good luck!