Merchant service providers connect you to the credit card network to process your customer’s credit card payments while protecting you from fraud. In this guide, we looked at the the best merchant services providers and decided to review Square, Payline, and Vantiv. These companies cover the range for small businesses in terms of rates, services and customer support.
Best Merchant Services Provider for Most Small Businesses: Square
We recommend Square to small businesses that are earning less than $22,500 per month in card sales because it’s more cost-effective than Payline and Vantiv, it’s the easiest option to setup, and the only option that comes with its own feature-rich free POS software.
Best Merchant Services Provider Summary Table
|In-store credit card processing rate|
|2.75%||Interchange + 0.3%+ $0.20|
(e.g. 1.81% + $0.30 for Visa swipes)
|2.25% + $0.10 (or higher)|
|None||$9.95 per month||$30 per month|
|Good range of POS and accounting programs||Integrates with a few major POS systems and Quickbooks||Integrates with over 500 programs, including many POS and accounting systems.|
|Service Contract Terms|
No early cancellation fees
|No early cancellation fees||3-year contract(negotiable)
$295 early cancellation fee
|Time to clear funds|
|1-2 days||1-2 days||1-2 days|
|Mon to Fri, 6am to 6pm PST phone, email and live chat||24/7 Phone, email and live chat||24/7 Phone, email live and chat|
Why we Chose Square as the Best Merchant Services Provider for Small Business
We recommend Square to most small businesses because it costs less than Payline and Vantiv if you are doing less than $22,500 in card sales per month.
Despite the low cost, Square provides powerful and feature-rich software, which is perfect for brick and mortar businesses. It not only helps you manage payments, process refunds, accept gift cards, etc. but you can also manage backend tasks like inventory too. As you grow, you can also take advantage of a range of add-ons to customize Square to suit your needs. For instance, email marketing ($15/month), employee management with clock-in/out ($5/employee/month) and payroll ($20/month).
Square makes money by charging a small fee per credit card transaction (2.75%). While this fee is slightly higher than Payline and Vantiv, when you factor in Square’s free POS tools and lack of monthly fees, it makes Square the most cost-effective option for businesses processing less than $22,500 per month in credit card transactions.
Like Payline and Vantiv, Square offers phone and email-based customer support. However, it doesn’t run 24/7 — only from 6am to 6pm PST. Another potential downside to Square is that it places accounts that it considers ‘high-risk’ on hold. For example; direct marketing services, travel agency services and outbound telemarketers. To avoid this, check first to make sure you are not on Square’s list of excluded high risk enterprises.
When to use Payline
We recommend Payline when your card sales exceed $22,500 per month or you are considered a high risk business by Square. This is because Payline tends to become more cost-effective as you process a greater volume of credit card transactions.
Payline integrates with a growing range of popular POS software providers including; ShopKeep, LightSpeed, TouchBistro and Lavu. What’s more, Payline has the best phone and email-based customer service and support when compared to the other two options. It’s the most patient and responsive and it’s also the best rated by its customers.
Like Square, Payline is one of the few merchant services providers that offers transparent rates without any hidden costs like application fees, monthly minimum processing, or early account termination fees. We find this reassuring in an industry historically known for dodgy practices and hidden costs. What is quite exceptional is that Payline donates 10% of its earnings to charitable causes, which provides you with a real insight into how they do business and how they are likely to treat you.
Payline is a great option when you go over $22,500/month in card sales. However, it is more difficult to setup than Square and also harder to track what you are paying in credit card fees. If you are processing less than $22,500/month, Square is generally the simpler and more cost-effective solution.
When to use Vantiv
Vantiv becomes cost effective over Square when your credit card sales exceed $50,000 per month. Although Payline will typically always be a more cost-effective solution at this point, Vantiv does have one key advantage: They integrate with over 500 different software partners. If your preferred POS isn’t supported by Payline, then Vantiv can be a good alternative.
Unlike Square and Payline, Vantiv is one of the traditional merchant service providers that has been around a long time with annual revenues well over $3 billion per year. This has some advantages, like reliability, and a strong stock of integrations, including Vend, LightSpeed and TouchBistro. However, Vantiv are not as open and transparent as Square and Payline. For instance, you have to negotiate out things like early termination fees and other hidden costs, which are not something you have to worry about if you choose Square or Payline. This is why it’s important to fully understand how credit card processing fees work before moving forward with Vantiv.
In-Depth Review: Square vs. Payline Data vs. Vantiv
Merchant Services Rates & Fees
Before comparing our three options, it’s important to understand the different payment structures used by credit card processing companies:
1. Flat Rate
Flat rate is when you pay a single flat rate regardless of the type of credit card being processed. With flat-rate pricing, it’s easy to track what you are being charged, as the rate stays the same. Square charges a flat rate of 2.75% per transactions.
2. Interchange Plus
With interchange plus pricing, you pay a fixed percentage and a fixed dollar amount above the interchange rate, which is set by the credit card companies. With interchange plus, it’s harder to track what you are being charged, because the rate varies. However, interchange plus providers tend to offer more competitive rates.
Here’s some examples of interchange plus processing fees (using Payline). Note how there’s 3 components to the fee: the interchange rate, card brand fees and merchant fees.
|Card Type||Interchange Rate||Card Brand Fees||Merchant Fees||Final Rate||Total Fees|
|Paid to your customer’s bank||Paid to Visa/MC Discover||Paid to Payline Data (Pro Plan)||Paid to Payline Data (Pro Plan)||For $100 Sale|
|Visa Reg. Debit||0.05% + $0.22||0.11% + $0.02||0.30% + $0.20||0.46% + $0.44||$0.90|
|Visa CPS Retail||1.51% + $0.10||0.11% + $0.02||0.30% + $0.20||1.92% + $0.32||$2.24|
|Visa Rewards||1.61% + $0.10||0.11% + $0.02||0.30% + $0.20||2.02% + $0.32||$2.34|
|MasterCard World||2.05% + $0.10||0.12% + $0.02||0.30% + $0.20||2.47% + $0.32||$2.79|
|Total (Average)||1.72% + $0.35||$2.07|
3. Tiered Pricing
With tiered pricing, the amount you are charged by the merchant account provider varies widely depending on the type of card you are processing. With tiered pricing, it’s very difficult to understand what you are being charged, as a result, we do not recommend it to small businesses.
|Card Revenue per Month ($)||Ave. Sale ($)||Vol. of Sales||Square cost / month ($)||Payline with LightSpeed cost / month ($)||Annual Saving from moving to Payline|
|Visa Retail Swipe||17,500||35||500||481.25||495.75||-174|
|Visa Retail Swipe||20,000||35||571||550||555.29||-63.43|
|Visa Retail Swipe||22,500||35||643||618.75||614.82||47.14|
|Visa Retail Swipe||25,000||35||714||687.5||674.36||157.71|
|Visa Retail Swipe||27,500||35||786||756.25||733.89||268.29|
As your monthly revenue from card sales increases, the cost of Payline compared to Square starts to decrease. Once it goes over $22,500 per month, Payline becomes more cost-effective and you start to save money by switching from Square to Payline.
|Card Revenue per Month ($)||Ave. Sale ($)||Vol. of Sales||Square cost / month ($)||Vantiv with LightSpeed cost/ month ($)||Annual saving from moving to Vantiv|
|Visa Retail Swipe||30,000||35||857||825||856.5||-378|
|Visa Retail Swipe||40,000||35||1143||1100||1109||-108|
|Visa Retail Swipe||50,000||35||1429||1375||1361.5||162|
|Visa Retail Swipe||60,000||35||1714||1650||1614||432|
|Visa Retail Swipe||70,000||35||2000||1925||1866.5||702|
As your monthly revenue from card sales increases, the cost of Vantiv compared to Square starts to decrease. Once it goes over $50,000 per month, Vantiv becomes more cost-effective and you start to save money by switching from Square to Vantiv.
Vantiv’s lowest cost is 2.25% + $0.20, whereas the cost of processing a Visa Retail Swipe with Payline is 1.81% + $0.30 per transaction. While Payline is generally going to be the better value, it will also depend on the average size of your transactions. For small transactions (<$10), the flat $0.30 fee of Payline will add up significantly. On the contrary, for the large orders (>$100), the extra 0.5% charged by Vantiv will cost you.
It is important to note that Vantiv’s sales reps may recommend tiered pricing to you as a better alternative than interchange plus. However, with tiered pricing the amount you are charged by Vantiv varies hugely depending on the type of card you are processing. This makes it very difficult to understand how much you’re being charged. For this reason, we strongly recommend you avoid tiered pricing unless you are a finance expert.
POS & Accounting Software Integrations
It’s important to know that your merchant services provider can integrate with a POS system that suits your business needs. You may also want to integrate with accounting software, payroll software and other business programs as you grow.
The merchant services industry has a poor reputation for duping its customers with hidden costs and other dubious practices, which has begun to improve in recent years with the advent of more transparent pricing like Square and Payline provide. Let’s see how each of our three options compare.
We all know that cashflow is king for small businesses, as a result it’s important to know that your merchant services provider is not going to hold onto your cleared funds from credit card payments for any longer than necessary. Let’s see how our three options compare:
Customer Service and Technical Support
Customer service doesn’t seem very important until something goes wrong and you really need it. Let’s see how our 3 options compare.
All Merchant Service Provider Options
We reviewed 50 merchant service providers and rejected most due to their lack of transparency, and in some cases, their dubious business practices. We then took a closer look at 6 that have a good reputation and finally we reviewed 3 of these in more detail.
|Square||Most small businesses.|
|Payline Data||Small businesses doing more than $22,500 per month in card sales and looking for competitive pricing and a transparent approach.|
|Vantiv||A good option for businesses doing more that $50,000 in card sales a month in the absence of more competitive options like Payline.|
|Dharma||A good alternative to Payline for small businesses doing more than $22,500 per month in card sales and looking for competitive pricing and a transparent approach.|
|Cayan||A good option for businesses doing more that $50,000 in card sales a month in the absence of more competitive options like Payline.|
|QuickBooks Payments||Businesses that use QuickBooks as their accounting system.|
The Bottom Line
Most small businesses will be best served by Square if they are doing less than $22,500 per month in card sales. This is because it’s the most cost-effective solution once you also take POS software costs and monthly admin fees into consideration. It’s also the easiest to setup and get started.
Beyond $22,500 in card sales per month, Payline become the most cost-effective option and like Square you will find that their approach to pricing and contracts is open, honest and transparent. A good alternative for Payline is Dharma if the option of integrating with Payline is not available to you.
If a more competitive and transparent option like Payline or Dharma is not available to integrate with, Vantiv or Cayan are two of the most reliable, traditional merchant services options around. However, you have lookout for unreasonable contract terms like early termination fees and negotiate them out of your contract.