Start with the fees that actually affect your bottom line

Every payment processor charges you money. The question is how much, and whether you understand where that money goes. Most processors use three separate fees that hit your account after each transaction: a percentage of the sale (usually 2% to 3%), a flat per-transaction fee (usually $0.25 to $0.50), and sometimes a monthly account fee (ranging from nothing to $30 or more).

The percentage and per-transaction fee are the ones that matter most for most small businesses. A processor charging 2.9% plus $0.30 per transaction will cost you differently depending on whether you process one $500 sale or fifty $10 sales. Calculate what you would actually pay on a typical day of your business, not just the advertised rate. Some processors also charge extra fees for things like chargebacks (when a customer disputes a charge), refunds, or monthly statements — read the full fee schedule before you commit.

Monthly fees can actually save you money if you process a high volume. If you're moving $50,000 a month through the processor, a $30 monthly fee plus lower per-transaction rates might cost less than a processor with no monthly fee but higher percentages. Do the math with your own numbers.

Key Takeaways

  • Calculate what you would actually pay on a typical business day using each processor's full fee schedule, including percentage, per-transaction fee, and any monthly charges.
  • Check whether the processor integrates with the tools you already use — your shopping cart, accounting software, or point-of-sale system — because integration problems can cost you time and money.
  • Verify that the processor supports the payment methods your customers actually use, whether that's credit cards, debit cards, digital wallets, or bank transfers.
  • Read the contract for what happens if the processor closes your account or freezes your funds, and understand how long it takes to get your money if something goes wrong.
  • Test the processor's customer support by contacting them before you sign up, because you will need help when a transaction fails or a customer disputes a charge.

Make sure it connects to the tools you already use

A payment processor that doesn't talk to your other software creates extra work. If you use Shopify, WooCommerce, Square, or any other platform to run your business, the processor needs to integrate with it — meaning the two systems can share information automatically. Without integration, you have to manually enter transaction data into your accounting software, which is slow and creates room for errors.

Before you choose a processor, check its website for a list of integrations. If your platform isn't listed, contact the processor's support team and ask whether they offer an API (a technical connection that lets systems talk to each other) or a manual integration option. Some processors integrate with hundreds of tools; others work with only a handful. The more integrations available, the more likely you'll find one that fits your setup.

Also ask whether the integration is maintained by the processor or by a third party. Third-party integrations sometimes break when either company updates their software, and you might not get a quick fix.

Confirm the processor accepts the payment methods your customers use

Not all processors accept all payment methods. Most accept Visa, Mastercard, and American Express, but some don't process Discover cards. Many now accept digital wallets like Apple Pay, Google Pay, and PayPal, but not all. Some processors can accept bank transfers or ACH payments (direct transfers from a customer's checking account), which are cheaper for you but slower for the customer.

Look at your customer base and think about how they actually pay you. If most of your customers are international, you need a processor that handles foreign credit cards and currency conversion. If you sell to other businesses, they might want to pay by bank transfer. If you're selling in person at a market or event, you need a processor that works with mobile card readers.

Check the processor's website for the full list of payment methods they accept. If a method you need isn't listed, ask their support team whether it's coming soon or whether they have a workaround.

Understand what happens to your money if something goes wrong

Payment processors hold your money for a reason: to protect themselves if a customer disputes a charge or if you process a fraudulent transaction. This holding period is called a reserve or holdback. Some processors hold a percentage of every transaction (usually 1% to 5%) in a separate account for 30 to 180 days. Others hold a lump sum upfront and release it gradually. A few hold nothing at all.

The reserve protects the processor, not you. If a customer files a chargeback and wins, the processor takes the money from your reserve to pay them back. If your reserve runs out, they take it from your regular account. Read the processor's contract to find out exactly how much they hold, for how long, and under what conditions they release it.

Also ask what happens if the processor closes your account. Some processors will send you your remaining balance within a few business days. Others take weeks. A few have been known to hold funds indefinitely if they suspect fraud. This is rare, but it happens — read the contract and ask the support team directly about their policy.

Check the processor's security and fraud protection

Your processor handles sensitive information: credit card numbers, expiration dates, and customer names. They need to protect that data from hackers. Look for a processor that is PCI DSS compliant, which means they follow a set of security standards set by the credit card industry. Most major processors are compliant, but smaller ones might not be.

Ask the processor what fraud detection tools they use. Do they flag suspicious transactions automatically? Do they use machine learning to spot patterns that look like fraud? Do they offer chargeback protection, which means they'll fight a disputed charge on your behalf? Some processors include these tools for free; others charge extra.

Also ask whether the processor encrypts data in transit (while it's being sent over the internet) and at rest (while it's sitting in their servers). Encryption is standard, but it's worth confirming.

Test their customer support before you sign up

You will have a problem eventually. A transaction will fail, a customer will dispute a charge, or something will go wrong with your integration. When that happens, you need to reach a real person quickly. Before you choose a processor, contact their support team and see how they respond.

Call their phone number if they have one. Email their support address. Ask a specific question about your use case and time how long it takes to get an answer. Some processors respond within an hour. Others take days. Some have no phone support at all — only email or chat. If you need help at 2 a.m. on a Sunday, that matters.

Also ask what support is included in your plan. Some processors offer 24/7 phone support only to high-volume merchants. If you're just starting out, you might get email support only. That's fine as long as you know it going in.

Compare what you'll actually pay over a year

Create a spreadsheet with three columns: processor name, monthly fees, and transaction fees based on your typical monthly volume. Multiply the transaction fees by 12 and add the monthly fees. That's your actual annual cost for each processor.

Don't just pick the lowest number. A processor that costs $50 more per year but integrates with your accounting software and has 24/7 phone support might be worth it. A processor that costs $20 less per year but requires manual data entry and has email-only support might cost you more in time and stress.

Also ask whether the processor offers a trial period or a money-back may provide. Some let you try them for 30 days with no commitment. That's a good way to test the integration and support before you fully switch.

Frequently Asked Questions

What's the difference between a payment processor and a payment gateway?

A payment gateway is the tool that collects the payment information (like the credit card number). A payment processor is the company that actually moves the money from the customer's bank to your bank. Some companies do both; some do only one. For your purposes, you're usually choosing a company that handles both functions.

Can I use multiple payment processors at the same time?

Yes. Many businesses use one processor for online payments and another for in-person payments, or one for credit cards and another for bank transfers. Just make sure each one integrates with your accounting software, or you'll spend a lot of time reconciling transactions manually.

What should I do if a processor denies my account?

Some processors reject applications from certain industries (like gambling or adult content) or from businesses with high chargeback rates. If you're denied, ask the processor why. Then try another processor — different companies have different risk policies. You might also consider a high-risk processor, which charges higher fees but accepts businesses that mainstream processors won't.

How do I know if a processor is trustworthy?

Check whether they're registered with the Better Business Bureau and read reviews on independent sites. Ask other business owners in your industry which processors they use. Call their support team and see whether they answer your questions clearly. Avoid processors that make unrealistic promises or pressure you to sign up when ready.

What happens if my processor goes out of business?

Your money should still reach your bank account, because the processor doesn't hold your funds — they pass them through to your bank. But there might be a delay while the company shuts down. Read the contract to see what the processor promises in this scenario. Reputable processors have a plan for this situation.