The Credit Card Processing Companies Guide

What Your Business Needs to Know


There’s no such thing as the “best” credit card processing company—only companies that are a better or worse match for your business’s payment processing needs.

This means you’ll need to do your homework before choosing a credit card processing company for your business. You’ll need to examine the company’s services, its rates, its pricing models, and its contract terms, and you’ll be wise to consider the company’s reputation as well.

This free guide on some of the main credit card processing companies (including Square, PayPal, and Helcim) can help get you started.

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What is a Credit Card Processor?


A credit card processor or credit card processing companies (also called payment processors or a merchant service providers) is a business that handles most technical aspects of credit card processing for merchants. This typically includes providing the equipment and software the business needs to process payments, but the main purpose of a payment processor is to communicate card data and transaction information to banks and credit card networks.

The details can get a little messy, but the basic role of a credit card processing company is clear: to provide the necessary link between your bank and your customer’s bank, such that the money from every card payment ultimately makes its way to you.

But that doesn’t mean all credit card processing companies or payment processors are the same.

  • Some have specific areas of specialization (such as mobile processing or online credit card processing).
  • Some charge notably higher or lower markups on each transaction.
  • Some offer transparent pricing models (such as interchange-plus or “cost-plus” pricing), while others bury their markups in obscure flat-rate or tiered-rate pricing plans.

Their common element is their purpose and the fact that you (the merchant) can’t get along without one. Indeed, the credit card processing company or payment processor you choose will be the single most important decision you make when it comes to accepting credit card payments at your business.



Types of Credit Card Processing Companies


We won’t cover all the general details about credit card processing companies in the guide below (you’ll find that at our comprehensive guide on payment processors), but there’s one crucial distinction worth repeating here before we move on to discussing specific companies:


Payment Aggregators vs. Merchant Account Providers


There are basically two types of credit card processing companies—payment aggregators and traditional merchant account providers—and they exist to serve very different processing needs.

Payment aggregators (such as Square and PayPal) are third-party providers process credit cards and other types of payments through what is called an aggregated merchant account. This simply means that the processor has its own merchant accounts with its acquiring bank and uses those accounts to process payments for multiple businesses at the same time.

The distinguish feature of merchant account providers, on the other hand, is that they provide dedicated merchant accounts to their clients. Merchant account providers include Helcim, Elavon, and Worldpay (among numerous others), and you can think of these companies as providing the more “traditional” way for merchants to accept credit and debit card payments.

Which is better—a merchant account provider or a payment aggregator?

It’s hard to say definitively because so much depends on the services you need, your type of business, how quickly you need to start processing payments, and the fees your business can afford.

But here’s a common rule-of-thumb: if your business is very small, you have poor credit, or you simply need to start accepting credit card payments right away, a payment aggregator is probably your best bet. If your business is more established, has a consistently high sales volume, or needs customized services, a traditional merchant account provider is probably the way to go.

Now, let’s take a closer look at a few well-known examples of each.

Payment Aggregators


In that following section, we’ll provide brief overviews of two prominent payment aggregators: Square and PayPal. Our purpose here isn’t to “review” of either company or to suggest that these two companies are better than the other payment aggregators (again, “better” or “best” is relative to your company’s processing needs).

Instead, we’re providing these overviews because looking at the details of a few specific companies will help you make sense of how abstract concepts like “payment aggregator” and “transaction fees” actually play out in the services offered by specific credit card processing companies.

So think of the sections that follow as stepping stones toward doing your own due diligence and research. You’ll find links to more expansive pages on these and other credit card processing companies at the tail-end of this guide.



Square is one of the best known payment processors because it has historically catered to individuals who wouldn’t otherwise have had access to credit card processing. It specializes in mobile credit card processing (using its handy card readers that can plug directly into phones and other mobile devices) and provides one of the more easily accessible credit card processing services out there.

Square is a payment aggregator, which means you won’t need to set up a merchant account of your own with an acquiring bank, and there are no start-up fees, no long-term contracts, no hidden fees, and no ongoing monthly fees to deal with unless you choose one of their numerous service upgrades. Their basic software (the Square app) is also free, and you can use Square to accept every major card brand.

In fact, simplicity is pretty much Square’s calling card. It takes almost no time to sign up, pretty much everyone qualifies, and you can start accepting payments as soon as you download the app and your hardware arrives in the mail.

Square's Rates & Fees


Square uses a simple flat-rate pricing model that stays the same regardless of your business type and the card type used to make a payment, so credit cards, charge cards, debit cards, Visa cards, consumer rewards cards, American Express cards—you name it—will all carry the same rates.

The only factor influencing these rates is how you accept or receive the payment. Card-present transactions have lower rates (which is consistent with the industry as a whole), while card-not-present and manually keyed-in transactions have higher rates:

Transaction Type

Square’s Rate

In Store/Mobile Payments

2.6% + $0.10

Keyed-In Payments

3.5% + $0.15

Online Payments

2.9% + $0.30

Note that the percentage applies to the transaction total and the dollar amount that follows it applies in the case of every transaction. So, if you swipe your customer’s card using, say, Square’s mobile swiper, the transaction qualifies for the 2.6% + $0.10 rate, and the cost of the transaction is as follows:

2.6%($10) + $0.10 = $0.36.

By contrast, a keyed-in payment for the same amount (imagine that the card was damaged and wouldn’t swipe) would come to:

3.5%($10) + $0.15 = $0.50.

Are these good or bad rates? Again, that depends. If you’re a bigger company that processes a lot of debit card transactions, for instance, you might not benefit much from Square’s flat-rate pricing because it doesn’t distinguish debit card payments (which carry a lower interchange rate) from credit cards (which come with higher interchange fees). Instead, Square charges the same rate for both payment types.

But if you’re running a smaller outfit, the free software and hardware Square offers can get you into the credit card payment game fairly quickly, and even Square’s fairly high transaction fees might be a good trade-off because you won’t get stuck in a long-term contract with monthly minimums and other obscure service fees typical of contracts offered by more traditional merchant service providers.

Learn More About Square



PayPal is one of Square’s main competitors and has been historically associated with person-to-person payments (hence the name “PayPal”) and online credit card processing (versus Square’s emphasis on mobile payments). Of course, like Square, PayPal has long since branched out into other aspects of the card payment industry and offers solutions for in-store and mobile payments.

PayPal is also a payment aggregator, so you can sign up and start accepting payments without setting up a dedicated merchant account with an acquiring bank, and (again, like Square) PayPal uses a flat-rate pricing model that dispenses with monthly fees unless you upgrade to some of their more advanced account options. With PayPal, you can easily set up payment options through your website, mobile payments through the PayPal Here app, or in-person payments through the company’s various point-of-sale options.

PayPal's Rates & Fees


Setting aside PayPal’s more sophisticated payment options (such as their virtual terminal, which comes with a $30 a month fee), PayPal’s typical rates are as follows:

Transaction Type

PayPal’s Rates

In Store/Mobile Payments (U.S.)


Keyed-In Payments (U.S.)

3.5% + $0.15

Online Payments (U.S.)

2.9% + $0.30


But notice something:

PayPal’s rates are pretty close to Square’s rates (for these types of transactions anyway), differing mainly in their flat rates for in-store and mobile payments.

This isn’t too surprising (PayPal and Square are neck-and-neck competitors after all), but it also indicates something important to notice about third-party payment aggregators: they’re focused on providing options and pricing models that appeal to merchants who want to accept credit card payments without much fuss.

Indeed, it’s fairly easy (again, like Square) to start accepting payments through PayPal. PayPal’s barriers to entry are low, the application process doesn’t take much time and doesn’t require boatloads of information about your business, and it’s possible to start accepting credit card payments (and other forms of payment) within just a few days at most.

But the types of problems commonly associated with payment aggregators—account holds, limited customer support, and high processing rates overall—tend to apply to both Square and Paypal.

Learn More About PayPal

Merchant Account Providers


In the section below, we’ll overview a single credit card processing company: Helcim. Again, this isn’t because we’re trying to push you toward Helcim (we are not affiliated with Helcim in any way) but because Helcim is a well-known example of what people mean by “merchant account provider.”

And even a quick glance over the ways Helcim approaches its business will reveal the most important differences between a traditional merchant account provider and payment aggregators like Square, Stripe, and PayPal.



Unlike Square and PayPal (both payment aggregators), Helcim is a true merchant account provider. When you sign up with Helcim, you’ll get a dedicated merchant account (along with a merchant ID unique to your business) that processes card payments for you and you alone.

This comes with fairly distinct advantages and disadvantages.

  • On the one hand, Helcim (like pretty much every merchant account provider) charges a monthly fee: $15 for its brick-and-mortar business retail package, and $35 for its online plan.
  • On the other hand, Helcim offers interchange-plus pricing (also called “cost-plus pricing”), which isn’t even available through payment aggregators like PayPal and Square.


What is interchange-plus pricing?


Interchange-plus pricing allows your transaction fees to fluctuate depending on the base costs (interchange fees plus card network assessments) that apply to each transaction, so you’ll pay more when the transaction costs Helcim more and less when the transaction costs Helcim less.

This is a distinct advantage for any business that processes a lot of payments each month. Instead of paying the same flat rate for payments involving debit cards, basic consumer credit cards, rewards cards, and card brands with very different interchange-rates (like Visa versus the pricier American Express), Helcim passes those costs directly to you and adds its markups along the way.

This makes more a far more complicated fee structure, but it’s also more transparent. You can actually see the difference between the interchange-fees you’re paying to your customer’s card issuing bank for each transaction, the assessment fees that go to the credit card networks, and the markups Helcim adds to each transaction for the privilege of using their services.

Note: Interchange rates also apply to transactions processed by companies that use tiered pricing and flat-rate pricing (like Square and PayPal). The difference is that these companies charge you the same overall rate regardless of what the interchange rate actually is for the specific transaction.

Helcim's Rates & Fees


Because Helcim uses interchange-plus pricing, your actual rates will vary depending on the card brand, card type, transaction type, and your type of business.

The key factor, in every case, will the interchange rate that applies to the transaction. This isn’t a rate set by Helcim or any other credit card processing company. Interchange rates are actually set by the various credit card networks (Visa, Mastercard, etc.) and the fees are paid to your customer’s card issuing bank. Depending on the risk posed by the individual transaction, the interchange rate will change, and Helcim’s use of interchange-plus pricing means that the overall rate you’ll pay will change as well.

Consequently, it’s difficult to summarize the various processing rates you’ll pay with Helcim or any other credit card processing company that uses interchange-plus pricing. However, Helcim does advertise its average rates on its website, and these averages are generally categorized according to the type of sale and the business’s average monthly sales.

Those categories are fairly extensive (ranging from $0 – 25,000 to 5,000,000 or more), so we’ll only include the first several categories to indicate how Helcim’s rates differ from the rates of the two payment aggregators, Square and PayPal, described above:


Monthly Sales

In Store Credit


Keyed & Online

$0 – 25,000

1.92% + $0.08

0.91% + $0.08

2.38% + $0.25

$25,001 – 50,000

1.87% + $0.07

0.86% + $0.07

2.33% + $0.20

$50,001 – 100,000

1.82% + $0.07

0.81% + $0.07

2.28% + $0.20

$100,001 – 250,000

1.80% + $0.06

0.79% + $0.06

2.23% + $0.15


Notice that even the highest of Helcim’s average processing rates (the keyed-in/online rates for businesses earning between $0 and $25,000 each month) is actually lower than the lowest rates applied by Square and PayPal. This is a general characteristic of traditional merchant account providers when compared to payment aggregators: merchant account providers typically charge lower fees per transaction, and their rates tend to get better and better the more money your business makes.

That doesn’t mean Helcim or any comparable merchant account provider are necessarily cheaper than every payment aggregator. “Cheaper” in the card payment industry is a relative term. If your business is fairly well established, consistently processes a lot of payments each month at a fairly high sales volume, and doesn’t get suckered into every service upgrade offered by the payment processor, it’s very likely that a merchant account provider’s lower transaction fees will translate into lower overall costs for your business (commonly called your business’s “effective rate”).

But if you’re running a small operation, the case might be very different. Consider, for instance, that Helcim charges a $15 monthly fee for its retail package and $35 a month for its online package. If you’re running an online side-hussle and only processing, say, an average of $200 a month in online credit card payments, that $35 is actually 17.5% of your monthly sales, and Helcim’s low online processing rates would be completely irrelevant to the company’s overall value for your business.

Of course, even if you decide a company like Helcim is right for you, your business won’t necessarily qualify. In general, merchant account providers vet their potential clients far more rigorously than payment aggregators like Stripe and PayPal. They’re going to be interested in your business history, your average ticket, your credit history, and more.

Learn More About Helcim

Where Can I Go From Here?


Of course, merely reading about three well-known companies is just the tip of the iceberg when it comes to researching and evaluating the numerous credit card processing companies out there. So where can your business turn?

You needn’t go far. Below, you’ll find a list of credit card processing companies to help your research, including both payment aggregators and merchant account providers.

And, as you peruse these options and offerings, try to keep one thing firmly in mind:

The credit card payment industry is practically designed to screw small businesses.

That’s why the “easy accessibility” of payment aggregators so often translates into higher processing rates disguised as “simple flat rates.” And it’s why merchant account providers offer their choicest options and rates for the largest businesses and yet typically charge the same monthly service fees regardless of how much money your business makes.

Which isn’t to say that accepting credit cards at your small or mid-size business is a futile enterprise. The perks (higher volume, more satisfied customers) often outweigh the costs involved. But you’ll need to smart. Whether the issue is understanding how the credit card payment process works, anticipating the credit card processing fees you’ll pay, or evaluating how to accept credit card payments at your business, it’s always good to know help is out there when you need it.

Our goal in this free guide on credit card processing has been to provide the information and guidance you need.

Other Credit Card Processors
Chase Paymentech
Dharma Merchant Services
Intuit GoPayment
National Processing

Payline Data
Payment Depot
Spark Pay