Comparing credit card payment fees for small businesses
Written November 2023. CAUTION: could be out of date at time of reading, and fees can change fast!
Big Players for Small Businesses
There are a few payment-processing companies offering ways for small businesses to accept credit card and online payments without the traditional monthly fees of a full-blown merchant account.
These services usually charge the seller a fixed-fee per transaction and a percentage of the total sale.
The table below shows popular payment services from PayPal, QuickBooks, Square and Stripe, though there are more out there (comment below if there are other services you think I should include). The QuickBooks Go payment service is only available for QuickBooks users (and it integrates with their accounting software seamlessly).
To collect payment in person, you’ll need a card reader ranging from $29 to $59. Stripe also have an option to use ‘tap to pay’ on your phone so you don’t need a reader, but at the cost of 10 cents per transaction. PayPal Zettle and Square offer Tap to Pay with no extra charges.
Who has the lowest charges?
In general, taking credit cards in person (tap, swipe or insert card) incurs the lowest fees. Invoicing online is slightly more costly, and keying in a card number without the card present incurs the highest fees because it is the riskiest transaction type for the payment processor.
A general trend is that for in-person payments in the order of $40 and under, Quickbooks is the least expensive because there is no fixed fee, only a slightly higher-than-average percentage fee. Stripe and Zettle are not far behind. This would benefit stores like coffee shops which have a high volume of sales for relatively small amounts.
For sales in the order of more than $40, PayPal Zettle becomes the least expensive because they have the lowest percentage fee. QuickBooks follows closely in price.
If you primarily take payments through invoicing (without the customer storing a card with you), then QuickBooks is the way forwards right now.
Other Considerations!
One important thing is that the fee difference for card-swipe transactions is minimal between companies. For example, the difference between the highest and lowest fees for an in-person $10 transaction is 10 cents, and for a $1000 transaction it is $4.06. Not a massive amount, in the grand scheme of things (but it can add up…). Invoicing your client online adds a few dollars to that fee. However, manually keying-in a card number comes with the highest fees.
The information in this blog post may become outdated/incorrect at any time. Do your research before deciding on one of these card services.
Comparing the fees between these companies is only one metric. Other considerations might include customer reviews of the service, extra fees, the ways you can integrate the service into your workflow and your personal preferences for certain companies compared to others.
These companies also have a selection of card readers differing in capability and price.
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