The 5 Best Credit Card Processing Companies For New Businesses & Startups

All of these processors are well suited for startups, as they are easy to sign up for and have no contracts, but none of them take on high-risk businesses.

• Frank Kehl Frank Kehl has been researching and analyzing merchant services, payment gateways, and international money transfer services since 2015. He has a Bachelor of Science degree from Penn State and a Juris Doctorate from the Ventura College of Law.

  Expert Analyst & Reviewer

• 
  Feb 22, 2022

  UPDATED

When starting a new business, it’s easy to focus on things like what goods or services you’ll offer and whether you’ll have a physical store or an online store or both. Setting up credit card payments or choosing from among the best credit card processing companies is often an afterthought.

It can be overwhelming to find a payment processor, so it helps to narrow your options to just a few top choices. If you wish to stay with the processor once your business is running smoothly and you have time to breathe, great, but if you don’t, you can also easily change processors.

So let’s get started.

Learn More About Our Top Picks

Company	Best For	Next StepsBest For
Square Read More	Best for businesses with a physical location.	Best for businesses with a physical location. Visit Site Read More
Stripe Payments Read More	Best for online/eCommerce businesses.	Best for online/eCommerce businesses. Visit Site Read More
CDGcommerce Read More	Best for US-based merchants with a physical and/or online store.	Best for US-based merchants with a physical and/or online store. Visit Site Read More
Helcim Read More	Best for businesses at any stage, from startup to mature.	Best for businesses at any stage, from startup to mature. Visit Site Read More
Dharma Merchant Services Read More	Best for businesses that process more than $10,000/month.	Best for businesses that process more than $10,000/month. Visit Site Read More
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Read more below to learn why we chose these options.

The Best Credit Card Processing For Startups

Below are six payment card processors that we think fit the unique needs of a new business. They’re perfect for a startup but might not be the best fit as your business matures. Fortunately, they’re easy to sign up and easy to leave, so you can’t go wrong with any of them.

To compile our list, we picked a mix of third-party processors, traditional merchant account providers, and a new type of hybrid provider (quick signup like a third-party processor, but eventually, you’ll have your own merchant account). Some are better for online businesses, and others are better for physical stores. We also know that because your business is new, your sales projections might be off, so the processors below are well-designed to fit the unpredictable needs of a new business.

Before we move on, and because you’re new to credit card processing, let’s quickly go over some business/pricing models used by payment processors. A basic understanding of each will help you pick the best processor for your business.

• Traditional Merchant Account Provider: This model requires you to give a lot of your company’s and your personal financial records just to apply for an account. It might be a little difficult for a new company to get approved, but once you are, your credit card processing tends to go fairly smoothly. This model also has the most variation in pricing, so you can either get a great deal or a really bad one (the bad ones typically also mean you can’t get out of the contract for several years). If your bank tries to sell you their payment card processing services, this tends to be the type of account they’re selling. You can accept credit card payments without a merchant account, however.
• Third-Party Processor/Payment Services Provider (PSP): This is a relatively new business model for the processing industry. With this model, you can sign up and start processing right away, but because they haven’t (and might never) do a credit check on you or your business, they’re extremely cautious about the money moved through them. That means if you do something out of the ordinary in your processing (e.g., get a large order), they might freeze your account, so you can’t withdraw money from it. In extreme cases, they might even suddenly terminate your account. As to pricing, they’re probably near the higher end, but this one price covers a lot of miscellaneous items that a merchant account provider tends to nickel-and-dime you for. Also, with this model, you aren’t required to process a minimum amount every month through them (unlike with most merchant account providers). They also tend to give you a fairly robust suite of free software/services. The best online payment processors are usually month-to-month agreements, so if you find that you don’t like doing business with them, you can leave any time.
• Hybrid Model: Some processors have recently begun to use a hybrid model that combines the quick approval of a third-party processor with the stability of a merchant account. After signing up, a merchant can start processing but likely will have a per-transaction/per-day dollar limit. At some point, you’ll have to provide your financial records, but the processor will also help your business build a financial history related to card processing so that eventually, you’ll have enough of a record to get a merchant account. Typically, the processor will charge one rate for the quick-signup type of processing and a different rate after you move to a merchant account. While this new model sounds ideal in many ways, we’re still gathering data on how well it works. However, the processors we recommend below that are using this model are highly rated for their merchant account business. So if you decide to try this business model, you’ll be working with reputable companies with a great customer service team that we know will do their best to help you set everything up.

Another thing to note is that none of our recommended processors here will take on high-risk businesses. Examples of these include businesses in the pharmaceuticals/supplements industry, the firearms industry, and those that provide online gambling services. There’s an extensive list of what constitutes a high-risk business, and, sometimes, what one processor considers high risk, another processor does not. If you have a high-risk business, we recommend you check out the best high-risk merchant account providers and read up on high-risk businesses in general.

As we like to say here, your business is unique, so your processing needs are unique as well. There’s no one-size-fits-all solution, so be sure to look through each of the recommended processors carefully and make the best decision you can to take care of your business’s needs. The six recommendations below are in no particular order of preference.

1. Square

Square	Visit Site Read our Review

Get Started With Square

Read our in-depth review

Jump back to comparison chart

2. Stripe

Stripe Payments	Visit Site Read our Review

Get Started With Stripe Payments

Read our in-depth review

Jump back to comparison chart

3. CDGcommerce

CDGcommerce	Visit Site Read our Review

Get Started With CDGcommerce

Read our in-depth review

Jump back to comparison chart

4. Helcim

Helcim	Visit Site Read our Review

Get Started With Helcim

Read our in-depth review

Jump back to comparison chart

5. Dharma Merchant Services

Dharma Merchant Services	Visit Site Read our Review

Get Started With Dharma Merchant Services

Read our in-depth review

Jump back to comparison chart

Are You Ready To Shop For A Credit Card Processing Company? Nine Dangers To Be Aware Of

The credit card processing industry is complex, both in how the industry is organized and also in the way the services are packaged and sold to merchants. Because of its complicated pricing structure, it’s easy — both for the merchant and sometimes the sales staff — to become confused about how a merchant is charged. Many dangers spring naturally from the complexity of the situation itself.

However, because a large number of sales personnel in the industry are independent sales agents who don’t get paid until they sign a merchant and even might receive bonuses based on their number of signups — some folks are unscrupulous enough to try to trick you. We’ve seen a lot of complaints about that, both on our website and on sites such as the Better Business Bureau. Some sales agents will push you to sign up by lying to you that a formal contract with a high early termination penalty is “just an application” that doesn’t go into effect unless you give a final authorization. Others might entice you with a low processing rate when they know, with your specific business, you’ll never be able to process at that rate. Some will even tell you that you get “free” equipment that turns out not to be free at all. Once you sign, they get their commission, and if anything goes wrong, it’s the credit card processor that has to deal with you.

So with these things in mind, here are some dangers to be careful about when you pick your processor:

• Long Term Contracts: We at Merchant Maverick typically don’t like long-term contracts because we think it’s good for businesses to be nimble. Being tied to a contract of, say, three years with penalties for early termination is generally just a bad idea. We dislike long-term contracts even more for new businesses. As you operate, you’ll come across unexpected things, requiring you to adjust to keep your business going, and a long-term contract can complicate these adjustments. Fortunately, these days, the processing industry is shifting away from long-term contracts, so you’ll have plenty of processors to choose from. So stay away from long-term contracts if you can.
• Early Termination & Cancellation Fees: The early termination fee typically goes hand-in-hand with a long-term contract. Be aware that the cancellation fee is often in addition to the early termination fee. While the cancellation fee is often a fairly reasonable flat amount, the early termination fee can be significant if you have to cancel early in the term. As a new business owner, you are especially vulnerable to having to terminate early, so be careful about these fees and ask about them if they’re not mentioned by the salesperson.
• Leasing Arrangements: This is one of the worst scams in the processing industry. Other than the fact that you might be paying several times the sale price for the equipment over the term of the lease, you might have to pay a lot more to buy the equipment outright at the end of the lease. Another trick we’ve seen is that the leases are not cancellable but are for a lengthier term than the processing agreement. Thus, even if you pay your early termination fee to get out of the processing agreement, you’d still have to pay a lump sum for the equipment to get out of that lease too. Stay away from leases. If you don’t have enough cash on hand, small business startup loans so that you can buy the equipment. You’d be better off in the end.
• Proprietary Hardware/Software: Some of these processors such as Square make their own hardware and software. This means that if you buy the equipment or keep your data in their system (e.g., inventory, employee payroll information), you won’t be able to re-use the equipment or data if you switch processors later on. Another such processor is Fiserv and its Clover equipment — you typically will have some choices in the processor you use, but they all have to be able to connect to Fiserv in the back end in order for your equipment and software to work. So be sure to consider your flexibility in changing processors before you spend the money to buy hardware or the time to enter the data into the software database.
• Pushy Sales Agents: As already mentioned, some sales agents get confused about the pricing structure, and other agents don’t care as long as they get the commission. If they’re being honest with you, then they shouldn’t be afraid to let you read the contract, answer your questions, and give you enough time to decide if you’d like to sign up with them. The better sales agents are typically salaried, so at least you know that if they make a mistake, it’s more likely they were just confused about the pricing structure. The best approach, though, is to always verify for yourself what the sales staff said and, if necessary, make them put everything down in writing and attach it to the contract. That part is important because boilerplate contract language usually says anything agreed to, either verbally or in writing, before the signing of the contract that doesn’t get included in the contract is nullified (meaning it no longer counts). If you detect pressure sales tactics, think about finding another processor to work with. There’s no way to accept credit card payments instantly.
• Misleading Pricing Structure: We’ve seen some seemingly sweet deals turn out to be not so sweet at all. Sales agents tend to give you the best-case scenario but won’t tell you that, say, 90% of the time, your case falls outside of that. This trick is especially prevalent under the “tiered pricing structure” plans that depend on what type of card your customers use and how they charge (e.g., in-store, online, manually keyed, etc.). Other times, the price quoted to you won’t include all sorts of miscellaneous charges that will come with your first billing summary. (You don’t get an invoice with credit card processing. The processor has already taken all their charges before you’re allowed to take the money out.) If you offer a low-margin product or service, it’s crucial that you understand the pricing structure before you sign with a processor.
• Bad Customer Service: By the time you have to call customer service, you’re probably already in the middle of some sort of disaster. A pleasant and knowledgeable customer service person who can quickly help you resolve your problem would be worth his or her weight in gold. The opposite is true too — a rude and/or ignorant customer service person would make an already bad situation worse. This is why we always pay attention to customer service when we rate processors on this website, so be sure to take this into account when considering your processor.
• Hidden Fees: This one goes hand-in-hand with the Misleading Pricing Structure bullet point above. The credit card associations (Visa, Mastercard, American Express, Discover, etc.) like to pass their costs downstream, which means that these costs tend to be passed to you. Some of these costs — called assessment fees — are charged every time, but other fees are per-incident charges that you don’t see unless some triggering event happens. The great processors we recommend either absorb some of these fees or are very transparent on how they charge these fees. The bad ones just charge you and surprise you with them. No business likes to be surprised by extra charges, so be sure to understand if/how you’re charged these fees before you sign with a processor.
• “Free” Anything: We all know that “free” often is not free. Free credit card processing is mostly a myth. It’s merely a sales tactic to bring you in the door so that they can upsell you a product or service. In the credit card industry, watch out for “free” card terminals or readers because often they’re used to get you to sign a longer contract or purchase more services. This is not to say all free offers are bad — some of our favorite processors offer free software, and, as of this writing, one of our recommended vendors above is offering a free six-month membership just for signing up with them. We just mean that when you see “free,” make sure you read and understand the fine print, so you won’t accidentally sign up to a bad deal.

7 Must-Have Qualities In A Startup-Friendly Processing Company

A startup business has unique needs because of the growth stage it’s in. Focusing on the needs of a new business, below are some qualities in a processor that we think are particularly important to have. Note some of these are the opposite of the dangerous qualities already discussed in the section above, but it makes sense that the opposite of qualities to stay away from would be desirable traits to look for.

• Ease Of Termination/Month-T0-Month Billing: This is probably the most important quality to a startup business — or businesses at any stage, really. When you’re starting a new business, you’re basing your projections of monthly or annual sales on, basically, guesses. As your business matures, you’ll have actual data to use to make better projections. A startup might have to change or tweak its business model a few times before finding the right niche, so not being tied to a long-term contract and having the flexibility to change processors quickly and without penalty is highly important.
• Option To Purchase Equipment: Getting payment processing hardware (if you’re running a physical store) can be tricky. If you have too many units to buy, your costs can go up pretty fast, which makes equipment leasing a tempting choice. However, equipment leasing is almost always a bad idea. Whichever processor you go with, make sure you have the option to buy the equipment instead of just lease. There are some good leasing deals out there (and we point those out in our reviews), but they’re so few and far between that probably the best rule of thumb is to have the ability to buy the equipment outright, even if you have to take out a bank loan.
• Excellent Customer Service: A business owner new to credit card processing tends to need plenty of help understanding the business of and setting up the equipment/software just to take credit cards. A great customer service representative (whether dedicated or on a per-call basis) can make for a better experience. A processor with an excellent reputation in customer service is something to keep in mind when selecting your processor.
• Easy Signup: Getting a merchant account can be complicated, especially for a startup. Typically, you’ll have to submit a lot of business and personal financial records, and most startups lack at least the business records because the business is new. Even when you do have all the records, it might take weeks before you’re approved for a merchant account. Fortunately, some processors allow you to sign up and start processing in minutes and won’t look at your or your business’s financial records. So if you have to set up card processing quickly and/or do not wish to show the processor your personal financial records, keep these criteria in mind as you decide your processor.
• Transparent Pricing (Both Rates & Fees): Every business owner needs to know their profit margin, and with so many ways the credit card industry charges for transactions, this can get tricky, especially for a new business owner who doesn’t have the years of sales data to help figure out an average rate. The best a new business owner can do is make a guess based on the various charges listed by the processor, so the easier it is to understand and figure out the cost of processing payment cards, the better it is for a new business.
• Transferable/Portable Software Services: Many of the free software offered by a processor can analyze sales data and keep track of your inventory. Some can even keep track of your employees’ hours. You’d also have the option to pay a little more to get even more functionality. While the technology can save you a great deal of time, be aware that they might also tie you to a particular processor (or acquiring bank). So while you might want to test out the technology, don’t get too attached until you decide whether your current processor is right for you in the long term.
• Honest Marketing/Advertising: Honesty in marketing or advertising goes deeper than just disclosing the actual processing price. It’s a reflection of the company’s culture — i.e., how the business is run both internally and externally. After all, if a company favors dishonest marketing or cleverly-phrased advertising that turns on a technicality instead of the actual truth, how else will they be treating you in areas not involving advertising? This is why we think processors that deal with you in an honest way is important.

Which Payment Processor Is The Best Fit For My New Business?

When you’re starting a new business, there are just two paths you can follow when setting things up:

1. Do the minimum to get the business up and running, so money can start coming in, then go back to make more permanent adjustments when you have the time, or
2. Do everything right the first time

Any successful business will do both at various times for various things. The question is, which path should you follow for credit card processing?

The answer comes down to personal preference. With the way we picked our recommended processors for this article, you can take either approach without getting yourself into permanent trouble. These processors all have month-to-month contracts, so you can change processors at any time. They’re also all highly rated, so there’s very little chance that you’ll go wrong with any of them. And if you’re the do-it-right-the-first-time kind of person, we recommend you start with the complete guide to credit card processing rates and fees.

If you have any adventures/misadventures setting up your credit card processors, please share them below. We’d be interested in finding out whether our recommended processors worked out for you.

In Summary: The Best Credit Card Processing For Startups

1. Square: Best for businesses with a physical location.
2. Stripe Payments: Best for online/eCommerce businesses.
3. CDGcommerce: Best for US-based merchants with a physical and/or online store.
4. Helcim: Best for businesses at any stage, from startup to mature.
5. Dharma Merchant Services: Best for businesses that process more than $10,000/month.

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Frank Kehl

Expert Analyst & Reviewer at Merchant Maverick

Frank Kehl has been researching and analyzing merchant services, payment gateways, and international money transfer services since 2015. He has a Bachelor of Science degree from Penn State and a Juris Doctorate from the Ventura College of Law.

@fjkehl2

View Frank Kehl's professional experience on LinkedIn.

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• Merchant Services Fees Explained: Everything You Need To Know About Credit Card Merchant Fees - August 25, 2022

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