The Best Merchant Services Of 2023

The Best Merchant Services Of 2023

The Best Merchant Services Of 2023

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A merchant services account is essential if your customers will regularly pay by credit or debit card. Merchant services is a term that often encompasses a payment gateway and payment processor (that facilitates the credit card transaction) and the merchant services account where the proceeds of a businesses’ credit and debit card sales are deposited. 

Here’s how to find the best merchant services for your business. 

How Do I Start Accepting Payments For My Small Business?

If you want to accept debit card and credit card transactions for your small business you’ll need to use a service that lets you process those payments. Merchant services providers allow you to accept credit cards and other types of payments online, as well as in-person, often using optional card reader devices or Point of Sales (POS) systems. 

Merchant account providers will often package payment processing and merchant accounts with other services such as an optional POS system or credit card reader for in-store transactions, or an online shopping cart or virtual terminal for online payments.

Learn more about credit card processing services here. 

What Is A Good Merchant Service Rate?

Each time a credit cardholder uses a credit card or debit card to pay for purchases, a fee passes through the payment processing system. Interchange fees are the fees that acquiring banks (the seller’s bank) and the customer’s bank (the issuer’s bank) pay; these are not the fees the individual businesses pay to accept cards. Visa describes it this way:

“Visa uses interchange reimbursement fees as transfer fees between financial institutions to balance and grow the payment system for the benefit of all participants. Merchants do not pay interchange reimbursement fees; merchants pay “merchant discount” to their financial institution. This is an important distinction, because merchants buy a variety of processing services from financial institutions; all these services may be included in their merchant discount rate, which is typically a percentage rate per transaction.” 

As a small business, you won’t pay just the interchange rate set by Visa or MasterCard, instead you’ll pay a rate that includes interchange and includes the amount the merchant services provider charges. That rate will also typically be based on the way the customer pays for a purchase, for example: 

  • Swipe/Chip/Tap fee (for in-person payments): the cheapest transaction cost since these represent less risk.
  • Online transaction fee (for online payments): often more expensive since they represent higher risk than card present transactions. 
  • Manually entered transaction fee (where the business enters the card info): typically the most expensive, though not always.

Payment processing rates often fall under one of three pricing models:

Interchange-plus pricing: Interchange cost plus a markup (usually a percentage of the interchange fee) plus a transaction fee. This is considered a transparent pricing method, but understand that there are many different interchange rates. (Here are Visa’s and here are Mastercard’s.)

Flat-rate pricing: The rate is set regardless of the type of transaction. PayPal is an example of a payment processing provider offering flat-rate pricing. It currently charges 2.9% plus a fixed fee that is currently .49 for payments in US dollars. However, even then some transactions may carry a different rate. For example, PayPal Checkout transactions carry a 3.49% fee plus the transaction fee. 

Tiered-pricing: With this type of pricing, there are three types of transaction pricing tiers starting with non-qualified transactions the highest risk (and highest cost) and qualified transactions the lowest risk and lowest cost. 

In addition to processing fees, these services may charge an annual fee, monthly fees, and fees for additional services such as chargeback fees. 

A good merchant services rate for your business will depend on:

  • Your type of business. (High-risk merchants pay more and have fewer choices of services.) 
  • The types of cards your customers use to pay. (PIN-based debit transactions are often cheapest, for example.)
  • The types of sales you process. (Interchange for fuel transactions are cheaper than travel transactions, for example.)
  • Sales volume. (High volume merchants may get further discounts.)
  • Transaction amount. (Again, you may save money with higher average sales amounts.)

Another example: a startup may not be able to qualify for a merchant account through a lower-cost provider, and may have no choice but to use a service that’s easier to qualify for, such as PayPal. That small business must go with the flat-rate pricing PayPal offers, but as their business establishes a transaction history they may be able to find a provider offering lower rates.

How Do You Avoid Merchant Service Fees?

The easiest way to avoid all merchant service fees is to accept cash or checks. But your customers may want other payment methods available to them.

That said, some businesses may be able to accept ACH payment processing (bank transfers directly into a business bank account), especially if they have B2B clients. ACH fees will be lower than accepting business credit cards. Or the business may be able to use invoicing software to invoice and collect payments from clients.

Some small business owners may use a mobile payments platform like Venmo or CashApp and pretend the payment is a personal transaction, but that’s not a long-term solution and certainly won’t work for higher volume sales. Once you upgrade to the business version of those payment services, you’ll pay more.

Top Merchant Services

Following are top merchant services providers that provide a wide range of solutions for small business owners. Use this resource for everything you need to know about merchant services. 

Pilothouse Payments

The most cost effective solution, Pilothouse Payments offers merchant services with no transaction fees.

Pilothouse Payments

Pilothouse Payments is committed to providing payment solutions that help your business ELIMINATE your credit Learn More


One of the most popular payment processors, Chase offers a variety of plans and card readers. Online transactions are processed through BigCommerce. 

Chase Payment Solutions℠

Never miss a sale with powerful new ways to accept credit cards, anytime, anywhere. Accept Learn More


Many online stores have been created using a Shopify store. It allows small businesses online or in person to accept payments through multiple sales channels. 

FAQ’s About Merchant Services

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