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How to Compare Merchant Processing Services

How to Compare Merchant Processing Services
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Are you researching merchant processing services? Before you start considering providers, you first need to understand how to compare what is available to you. Merchant processing services differ across providers, and there are certain characteristics and features you should pay attention to when evaluating your options.

We recommend considering the following categories when assessing merchant processing services for your business.


There are two types of providers that offer merchant processing services: Payment Facilitators and Merchant Service Providers.

A Payment Facilitator lends out its own merchant account and shares it with all its customers. They have no application process and help your business get up-and-running with a processing solution in a matter of minutes. A Merchant Service Provider, also known as a Merchant Account Provider, creates individual merchant accounts for its customers. This type of provider adheres to an underwriting process to approve businesses applying for its service.

These providers should not be confused with a Payment Gateway, which facilitates the transfer of information between a payment portal and a processor. Working solely with a Payment Gateway does not enable your business to process credit card transactions.

Rate Plans

There are three types of rate plans to consider when comparing merchant processing services:

  1. Flat pricing: This rate plan is only offered by Payment Facilitators. Because they work off of a single merchant account, facilitators cannot offer their customers different plans. This plan is easy to understand as you pay a fixed rate for every transaction, regardless of transaction method or card type. It’s a great solution for businesses just starting out that require a quick processing solution.
  2. Tiered pricing: With this plan, transactions are bundled into different tiers based on the level of risk or reward associated with the card. Compared to Flat pricing, it’s a better deal because you can qualify for lower processing rates, and it’s still a relatively easy plan to understand. On the downside, Tiered pricing isn’t regulated, so some providers may take advantage of you and add in excessive markups.
  3. Interchange-plus pricing: Known as the most transparent rate plan, Interchange-plus combines the wholesale cost of running the transaction (Interchange) with the provider’s markup. Compared to Tiered pricing, Interchange-plus is a better deal in terms of savings, as it is regulated, but it is a bit more complicated to understand.

Contract Terms

The conditions of merchant processing services can vary greatly from provider to provider. Although they can be loaded with industry jargon and stipulations you may not know or understand, you should absolutely do your due diligence to pick these conditions apart. This means getting a second opinion or analysis of the proposed contract terms. There are two things to look for in contracts: contract length and unethical fees.

Determine the length of terms and whether there is an auto-renew clause or early termination fee in the contract. Burying these terms in complicated contract language is a sneaky way for providers to lock you into continuing service or, at the very least, paying the provider beyond your use of the account.

Unethical fees cover a range of various fee types, but they all have two commonalities: They’re unnecessary and serve as an additional revenue stream for your provider. There are over 15 types of unethical fees that have been identified within the payments space. The provider you choose shouldn’t charge any of them.


Reliable customer service is crucial with merchant processing services. Some providers outsource their support to call centers in various countries, leaving you to speak with an individual that isn’t directly connected to the provider. In-house support teams are available, but rare.

In-house support teams are more invested in customers, as they are part of the organization providing the processing services. They can also take their support a step further by answering almost any question, whether it’s related to the product or the payment processing industry as a whole.

Integration Options

As you expand, you may find a need for additional software particular to your type of business. Merchant processing services use APIs to integrate with other softwares. There is a plethora of them out there, so it’s important to know whether the merchant processing services you’re considering can integrate with what you may need to streamline your daily operations.

An integration might not be an immediate need, but if you’re looking to invest in merchant processing services that will only benefit your business, you don’t want to have limited integration options.


Not all merchant processing services offer equipment with an account set up. This means you may need to consider renting a card reader from a leasing company, which poses a few potential issues including unfavorable leasing terms and expensive rental fees. Third-party equipment providers often falsely advertise their rentals as cost-effective, don’t allow for early contract termination and hide auto-renew clauses.

Additionally, there are a few things to consider with merchant processing services proprietary equipment: security and future-readiness. The payment industry has already shifted to EMV and away from magstripe cards. With chip and PIN just around the corner, a customer-facing terminal is key for the future. Get familiar with a buyer’s guide before settling on any equipment.

Now that you know what to look for to compare merchant processing services, you’re ready to narrow down the providers that will best serve your business. A great starting point is to use your business size to determine your absolute needs.

Choose the best provider for your business size.


Have you compared any providers based on these categories? Tell us how they compared in the comment section below.

About Author
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Ursula Librizzi

Ursula is the sales and marketing operations manager for PayJunction. She oversees daily marketing tasks and liaises between the sales and marketing departments.

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