Credit card processing is essential for any retail business. Some 80% of consumers use cards for everyday purchases and spend up to 83% more than cash-paying shoppers. We determined the cheapest credit card processing solutions by comparing monthly and transaction fees, while also considering contract terms and ease of use.
Credit Card Processing Company
Most business processing over $10,000 monthly
Interchange + 5-15 cents; $49 - $199/month
New or small business processing less than $10,000 monthly
2.6% + 10 cents
Established restaurants and retail stores
Interchange + 0.15% + 7 cents
High-volume businesses using invoicing or recurring billing
Interchange + 15 cents, $99 monthly (for online and keyed-payments)
Mobile sales less than $1,000 monthly or nonprofits
2.2% + 30 cents
Not sure which processor offers the cheapest rates for your business? Take this 2-question quiz for our recommendation:
How We Evaluated the Cheapest Credit Card Processing Companies
Accepting credit cards allows you to serve more customers in-store, and is necessary for online businesses. But accepting credit cards comes at a cost. Many payment processing providers have opaque billing practices, and fees can vary wildly. We compared monthly fees, processing fees, startup fees, and more to determine the cheapest credit card processing companies.
It’s worth noting that there are several different types of credit card processing rates. First, almost all processing companies will have different rates for in-person or card-present transactions and online transactions. There are also several different types of processing fee structures: flat-rate, interchange-plus or cost-plus, subscription models, and tiered pricing. For a full breakdown on these terms, visit our guide on How Credit Card Processing Fees Work.
How to Calculate the Cheapest Credit Card Processing for Your Business
This is the general formula we use to calculate credit card processing fees:
(% processing fee x monthly sales volume) + ($ processing fee x # of monthly transactions) + any monthly or other fees = total monthly payment processing costs
If you need to accept cards in-store and online, you may need to do two calculations, as many processors have different rates for card-present and card-not-present transactions.
To find the cheapest credit card processors, we used these formulas on a variety of different business scenarios, ranging from businesses processing $1,000 monthly with a $10 average order value to businesses processing over $100,000 monthly with a $200 average order size. For interchange-plus pricing we used the current interchange rate for Visa Credit swiped retail payments.
You can also do this using your businesses specific metrics, or you can ask processing companies for quotes and estimates to compare. Many processing companies that offer interchange-plus or subscription pricing models only work with established businesses that regularly process at least $10,000 – $20,000 monthly. However, once you reach that $20,000 monthly threshold, you have more leverage to negotiate lower rates, even with companies like Square.
Payment Depot: Cheapest Reliable Credit Card Processing for Small Businesses
Payment Depot offers wholesale credit card processing prices for small businesses by using a subscription pricing model. It’s a traditional merchant account, meaning businesses can expect secure and stable processing. Many traditional merchant accounts come with different fees or subscription requirements for online, in-store, and virtual terminal payments, but with Payment Depot, everything is covered under one subscription and a single transaction fee.
There are no setup or cancellation fees. Every account comes with a free payment gateway and free reprogramming of any existing equipment. Some plans include free mobile readers, terminals, and pin pads. A clear pricing model with extremely low rates that is inclusive of all payment types, and comes with these free add-ons make Payment Depot the cheapest credit card processing option for most small businesses.
Payment Depot Strengths
Payment Depot Weaknesses
Low transaction fees for all payment types
Not suited for high-risk businesses
Transparent pricing model
Businesses processing less than $10,000 monthly may not be approved
Free payment gateway and virtual terminal
Month-to-month billing with no cancellation fee
90-day money-back guarantee
Payment Depot Pricing
+ 15 cents
+ 10 cents
+ 7 cents
+ 5 cents
Monthly Processing Volume Limit
For more information on Payment Depot’s features, read our full Payment Depot review.
Square: Cheapest Credit Card Processing for New Businesses
Square is a cloud-based payment processing and business management software provider. Square has competitive flat-rate processing costs and a robust free mobile POS app that is ideal for mobile or brick and mortar businesses with an average transaction below $20 such as cafes, food trucks, coffee shops, and especially startups. These features make Square not just one of the cheapest credit card processors, but also one of the best.
Square Payments Strengths
Square Payments Weaknesses
Flat-rate predictable fees
Expensive for businesses processing over $10,000 monthly
Instant sign up—no application or approval required
Potential for frozen funds or shut-down accounts
Mobile, in-store, and online sales channels
Not ideal for high-risk or high-volume businesses
Automated chargeback disputes and management
Square Payments Pricing
- Monthly fee: Free
- Card-present transaction fees: 2.6% + 10 cents per transaction.
- Online transaction fees: 2.9% + 30 cents per transaction.
- Keyed-in and recurring billing transaction fee: 3.5% + 15 cents per transaction.
- Chargeback fee: None
Visit our Square Payments review page for more information on why Square is a great option for new businesses.
Dharma: Cheapest Credit Card Processing for Restaurants and Retailers
Dharma is a traditional merchant services provider that specializes in working with independent businesses and offers solutions for accepting online and offline payments. Dharma offers extremely low interchange-plus pricing, particularly for storefront and restaurant payments. Dharma is one of the cheapest options for retail and restaurant businesses processing over $10,000 per month with average transaction sizes above $20.
Low interchange-plus pricing
Strict application process
Free virtual terminal and mobile processing app
Higher card-not-present rates
24/7 tech support
- Monthly fee: $20, additional $20 per month for online payments
- Card-present transaction fees: Interchange plus 0.15% + 7 cents for Visa, Mastercard, and Discover; Interchange plus 0.25% + 7 cents for American Express
- Online transactions fees: Interchange plus 0.2% + 10 cents for Visa, Mastercard, and Discover; Interchange plus 0.3% + 10 cents for American Express
- Chargeback fee: $20 per chargeback
Visit our Dharma review page to learn more about Dharma’s features.
Fattmerchant: Cheapest Credit Card Processing for Professional Services
Fattmerchant is a subscription-model merchant services provider, similar to Payment Depot, but with a slightly different pricing structure and software. Fattmerchant has a higher monthly subscription fee, but lower transaction fees than many of Payment Depot’s plans, making it a good fit for large businesses. Fattmerchant also offers an excellent value with its Omni software that can be used for invoice management, stored and recurring payments, text-to-pay options, and a reporting dashboard.
Fattmerchant’s affordable recurring payment and billing credit card processing, along with user-friendly software programs that are included for free, make it an affordable option for established professional services like healthcare or lawyer offices.
Ideal for businesses processing over $20,000 monthly
Not suitable for small businesses
Best for recurring-billing and invoicing
$99+ monthly subscription fee
Low-cost ACH processing options
Separate subscriptions for card-present and card-not-present payments
- Monthly fee: $99+ for each subscription
- Card-present transaction fees: Interchange + 6 cents or 8 cents per transaction depending on the plan.
- Online transaction fees: Interchange + 12 cents or 15 cents per transaction depending on the plan.
- Chargeback fee: $25
At the time of publication, Fattmerchant has a 5-star rating on our review page. Read our full Fattmerchant review for more information.
PayPal: Cheapest Credit Card Processing for Mobile and Nonprofit
PayPal has a mobile payment solution for accepting credit cards in-store or on the go called PayPal Here. Through this app, PayPal offers some of the cheapest credit card processing for occasional mobile sales with an average transaction below $20 such as market vendors. However, PayPal’s unpredictable fund reserve policies mean it is only a good fit for occasional sellers.
PayPal also offers discounted online payment processing for nonprofits at 2.2% + 30 cents per transaction. Online payments are usually very expensive, but these are some of the lowest rates we have seen from a reliable processor outside of traditional merchant accounts, making PayPal a great option for organizations wanting to add “Donate Now” buttons to their websites.
Weekly limit for swiped and keyed-in payments
Accept PayPal and PayPal Credit payments
30-day hold on funds over weekly limit
Affordable for businesses
Account stability issues
Discounted processing rate for qualified 501(c)(3) organizations
- Monthly fee: Free
- Card-present transaction fees: 2.7% per transaction.
- Online transactions fees: 2.9% + 30 cents per transaction.
- Nonprofit transaction fees: 2.2% + 30 cents per transaction.
- Chargeback fee: $20 (waived for certain transactions)
Visit our PayPal review page to learn more about PayPal’s features.
How to Get the Lowest Card Processing Rates
For many businesses, credit card processing fees are a huge recurring expense. To some degree, they are unavoidable and only increase in volume as your business grows. However, there are a few things you can do to reduce your fees.
Incentivize Cash Payments
The first step in lowering your card processing rates is encouraging customers to pay in cash. Essentially, businesses can offset processing fees by building them into your regular prices and offering a discount for shoppers paying in cash. However, look closely at the laws in your particular state and local area. In many places cash discounts are legal, but credit surcharges are often not.
A common example of this is pricing at gas stations. If you walk inside and pay cash, the per-gallon price is lower than if you pay with a card at the pump.
Accept Check or ACH Payments
After cash, ACH and e-Check payments are usually the cheapest payment method to accept. This option is ideal for businesses that use recurring payments like subscriptions, or charge via invoice. Fattmerchant only charges $49 per month and 25 cents per ACH transaction. For smaller businesses, QuickBooks has an ACH invoicing option that charges 1% per ACH transaction.
See if You Quality for L2 or L3 Processing
B2B businesses can qualify for even lower processing rates known as L2 or L3 processing. These rates are not available to most small businesses, especially B2C businesses. However, if you are a B2B company processing large volumes, check with a merchant account provider like Dharma Merchant Services.
Regularly Shop Around for Quotes
Once your business grows to a place where you are consistently processing over $20,000 per month, you can likely negotiate lower rates with different processors. Actively shop around and request quotes to see if you could be saving several hundred dollars per month by switching credit card processing companies.
Credit card processing and payment processing, in general, is a necessary function of any business, but it comes at an expense. Many different payment processing companies advertise the lowest rates, and many of them have completely different fee structures. Finding the cheapest credit card processing is tricky, but can save your business hundreds, if not thousands of dollars every month.
The cheapest credit card processing for most established small businesses is Payment Depot. Payment Depot offers extremely low-cost subscription payment processing. One subscription includes low rates for online, in-store, and mobile processing, plus a free gateway. All plans also come with chargeback and risk monitoring and next-day funding. Visit Payment Depot to get started with a 90-day money-back guarantee.