Accepting credit card payments is a must for every business, especially as more customers prefer to order online or purchase in-store using contactless payments. The fees associated with accepting card payments can be a large expense for your business. However, choosing the cheapest credit card processing solution based on your business volume and how you accept card payments, can significantly cut costs.
Based on our evaluation, the cheapest credit card processing for small businesses is:
- Payment Depot: Cheapest merchant services for most businesses
- Stax by Fattmerchant: Best overall value for small businesses
- Square: Cheapest credit card processing with no monthly fee
- Dharma Merchant Services: Cheapest for storefronts and restaurants
- PayPal: Cheapest payment processing for occasional sales
- Stripe: Cheapest for online businesses
Looking for something different? If you have a high-risk business, you’ll need to apply for a specialized high-risk merchant account. We recommend PaymentCloud for low rates. Otherwise, see our choices for the best merchant accounts for small businesses.
Calculate the Cheapest Credit Card Processing for Your Business
To calculate the cheapest credit card processing for your business, enter your monthly sales volume and average order value below:
How to Calculate Processing Fees
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.
For interchange-plus pricing, we used the current interchange rate for Visa Credit swiped retail payments.
Cheapest Credit Card Processors Compared
Phone Support Hours
5–15 cents + interchange
6–15 cents + interchange
Next-day, same-day for fee
2.6% + 10 cents*
Next-day, or instant for fee
6 a.m.–6 p.m. Pacific time Monday–Friday
0.15% + 7 cents + interchange*
Next-day for card-present merchants
8 a.m.–5 p.m. Pacific time Monday–Friday
1–3 days, instant for fee
6 a.m.–6 p.m. Pacific time Monday–Saturday
2.9% + 30 cents**
2 business days
24/7, but need to request a call from your Stripe dashboard
*For card-present POS transactions
**For online transactions
How We Evaluated the Cheapest Credit Card Processing Companies
We compared monthly fees, processing fees, startup fees, and more to determine the cheapest credit card processing companies. Based on our evaluation, Payment Depot is the cheapest credit card processor for most small businesses. Payment Depot scored a 4.46 out of 5 on our grading system. It offers affordable all-in-one subscription pricing with low interchange-plus rates for online and in-person transactions.
Click through the tabs below for our specific evaluation criteria.
35% of Overall Score
We prioritized merchant services that offer month-to-month billing and require no long-term contracts. We also considered cancellation and chargeback fees. We only looked at companies that offer flat-rate or interchange-plus pricing and excluded any that use a tiered pricing model.
25% of Overall Score
We awarded points for every type of transaction the merchant account can accommodate: in-person/POS payments, ecommerce & online, virtual terminal, ACH and e-check, stored payments (card-on-file), and B2B or level 2 and 3 processing.
20% of Overall Score
The best credit card processors also offer same or next-day funding, free 24/7 customer support, and flexibility with hardware. We prioritized systems that let you use existing hardware or offer affordable payment plans. Any company that requires equipment leases was excluded.
20% of Overall Score
In this section, we awarded points to systems with transparent pricing, volume discounts, user-friendly interfaces, and integrations with common small business software—like POS, ecommerce, and accounting tools. We also considered the overall value each system offers with any bonus features—like free software and general account stability.
Payment Depot: Cheapest 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.
In other words—it doesn’t charge higher rates for online sales. This is especially important for small businesses in 2021 as more customers are buying online, ordering ahead, or looking for contactless solutions.
Payment Depot also charges 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.
Though Payment Depot earned the highest score in our evaluation, a 4.46 out of 5, a $15 chargeback fee, lack of native card-on-file features for stored payments, and a one to two-day deposit time prevented Payment Depot from earning a perfect score.
Stax by Fattmerchant: Best Value Payment Processing
Stax by Fattmerchant is a subscription-model merchant services provider, similar to Payment Depot, but with a slightly different pricing structure and software. Stax has a higher monthly subscription fee but lower transaction fees than many of Payment Depot’s plans, making it a good fit for growing businesses. Stax also offers excellent value with its proprietary software that can be used for invoice management, stored and recurring payments, customer management, text-to-pay options, and a reporting dashboard.
Stax by Fattmerchant’s affordable recurring payment and billing credit card processing, along with user-friendly software programs and virtual terminal that are included for free, make it an affordable option for all established businesses, but especially professional services.
In our evaluation, Stax earned a 4.44 out of 5. It’s one of the only merchant services that offer all of the payment types we looked at—including ACH, card-on-file recurring billing, and level 2 and level 3 processing, all of which can have a positive impact on a business’s bottom line. Stax’s $25 chargeback fee and high monthly fees prevented it from earning a perfect score.
Square: Cheapest Credit Card Processing With No Monthly Fee
Square is a cloud-based payment processing and business management software provider with competitive pay-as-you-go processing fees and free top-rated POS software. These features make Square not just one of the cheapest credit card processors but also one of the best.
In our evaluation, Square earned a 4.15 out of 5. Instant signup with no application process, contract, monthly fees, cancellation fees, or chargeback fees earned Square high marks. Bonus features like free invoicing software, free online store, and online checkout tools, virtual terminal, and free POS software also contributed to Square’s high score. Limited customer service hours, lack of ACH processing, and account stability issues prevented Square from earning a perfect score.
To see how Square stacks up against other payment processors with no monthly fees, see our guide to the best free merchant accounts.
Dharma Merchant Services: Cheapest for Storefronts and Restaurants
Dharma Merchant Services is a traditional merchant services provider that specializes in working with independent businesses and offers solutions for accepting online and offline payments. It also accepts low-risk business processing more than $10,000 monthly.
Dharma offers extremely low interchange-plus pricing, particularly for storefront and restaurant payments. In fact, in addition to being one of the cheapest, it’s the best credit card processor for restaurants.
In our evaluation, Dharma earned a 3.91 out of 5. It earned high marks for accepting every payment type we looked for, including card-on-file and level 2 and level 3 processing. Of all the merchant service providers on our list that offer interchange-plus pricing, Dharma also has the lowest monthly fee. However, Dharma does charge a $25 account closure fee and a $25 chargeback fee. Next-day funding is also only available for storefront businesses. These limitations prevented Dharma from scoring higher.
PayPal: Cheapest for Occasional Sales
PayPal has online solutions for businesses and a mobile app, PayPal Here, for accepting credit cards in-store or on-the-go. Through both these channels, PayPal offers some of the cheapest credit card processing for occasional sales, especially those with an average transaction below $20.
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. However, PayPal’s unpredictable fund reserve policies mean it is only a good fit for occasional sellers.
In our evaluation, PayPal earned a 3.86 out of 5. No contract or cancellation fees, flexible hardware and payment options (including QR payments), pay-as-you-go pricing, and customer-friendly One Touch checkouts earned PayPal high marks. Limited support hours, processing limits, account stability issues, and monthly fee requirements for features like virtual terminal and ACH processing prevented it from earning a perfect score.
Stripe: Cheapest for Online Businesses
It’s extremely popular because of its developer-friendly platform that supports over 135 currencies and payment methods, and it can be used to create just about any kind of online checkout. Unlike Stax by Fattmerchant, which charges a monthly fee for software solutions like invoicing and recurring payments, Stripe offers free open-source solutions and charges a per-transaction fee.
Every free Stripe account includes a reporting dashboard, simplified PCI compliance, 24/7 support, 3D secure identity authentication, automatic updates to expired customer cards on file, and free payouts in two business days.
In our evaluation, Stripe earned a 3.79 out of 5. Stripe earned high marks for its pay-as-you-go billing, 24/7 support, and free developer tools. Lack of level 2 and level 3 payment options for B2B businesses, additional fees for recurring billing, and the fact that users need technical skills or developers on staff to make the most of the platform prevented Stripe from earning a higher score.
Ways to Lower Credit Card Processing Fees
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.
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.
Learn more: Read our how-to guide on zero-cost processing
After cash, ACH and eCheck 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.
Learn more: Read about ACH processing and the other most affordable ways to accept payments online
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.
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, are necessary functions of any business, but they come 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.