Payment Gateway Services Review
Choose the Best Payment Gateway Service
The top performers in our review are Payment Depot, the Gold Award winner; Helcim, the Silver Award winner; and Payline Data, the Bronze Award winner. Here's more on choosing a payment gateway service that meets your small business's needs, along with details on how we arrived at our ranking of services.
Payment gateway services let you accept and process debit and credit payments online and in-store in exchange for your product or service. Each time a customer makes a purchase, his or her credit card information enters a secure connection to the credit card payment gateway you've chosen, the bank that the card is issued through and your business's bank account. Your customer's card is charged for the transaction amount, and you receive the funds of the good or service.
Due to the ever-increasing number of customers using credit cards, it's important to choose a payment gateway provider that best fits your small business needs at the best price. Sometimes, however, it can seem that payment gateway services were designed to be confusing and expensive, especially due to the parties involved in this process. Credit card processors and issuers, as well as banks, want part of every transaction that goes through your company. It's also important to note that many payment gateway providers customize their fees and pricing based on your business, transaction volume, typical ticket size and type of transaction.
If you're specifically looking for online processing or you're looking for simple solutions, look at our Accept Credit Cards Online and Mobile Credit Card Processing reviews. If you want more than just a regular payment gateway service or credit card processor, check out our POS Systems review. To learn more about how credit card processing works, look through the articles in our Credit Card Processing Learning Center.
What to Expect From Payment Gateway Services
Regardless of which payment gateway service you choose, there are some basic features you should expect from your relationship with your service. The credit card payment gateway should accept all major cards, including American Express and Discover. This way, you won't lose customers or money due to the fact that your service doesn't process those cards. You should also plan on the company being compliant with the DSS (data security standards) established by the PCI (Payment Card Industry) so that you don't get in trouble for not being PCI compliant.
In the event of a security breach, you also want to make sure you will not be held liable because you use outdated equipment. For this reason, you should expect your processer to have the technology in place that enables you to accept EMV chip and PIN cards when you purchase an EMV-capable terminal. Your service should also provide high-quality customer service 24/7 so that, regardless of what time it is, you can get the help you need to keep your business up and running.
Payment Gateway Services: What We Evaluated; What We Found
In our payment gateway comparison, we looked for credit card processors that provide month-to-month service, rather than companies with long-term contract requirements. Long-term contracts often renew automatically, carry hefty early termination fees and occasionally require you to pay liquidated damages. We also looked for services with no hidden fees and the most economic costs. We considered services that let you process all major cards, including those on mobile wallets and EMV cards.
We researched the services and contacted several different company representatives on multiple occasions by phone and email so we could evaluate what each service offered. Some key things to consider for each service include how transparent the company is with its pricing, the fees and terms on the credit card processor's website, and how available pricing options are.
Pricing Transparency & Consistency
When we tested, we discovered that the best payment gateway services post full information about their pricing, fees and terms on their websites. You should know, however, that this is extremely rare. Although more companies are starting to post rates on their sites and sometimes include a few of their terms in the FAQs pages, fee information is usually rarer to find than pricing information. About one third of the payment gateway services we reviewed have no service term or pricing data posted on their sites, and almost half of the services don’t have fee information posted.
We assessed how open and upfront the representatives we spoke with were with the key information we were asking for. We also evaluated how thorough the information they gave was. We looked for consistency in the information we received by being in contact with several representatives in each company. The companies that received our highest scores were consistent in the information they provided each time we spoke with them.
There are three main pricing models in the payment gateway service industry. The first is the interchange-plus pricing model. According to industry experts, this model promotes transparency. When you use this type of pricing model, your charge is made up of three parts: the card-brand fee, the interchange rate and the processor's fees. You might also hear the interchange-plus pricing model called "cost-plus pricing" or "interchange-pass-through pricing.
Another pricing model is tiered pricing, which is the most common pricing model. It is often criticized by industry experts due to its lack of transparency when compared to the interchange-plus model. Tiered pricing combines card-brand fees, interchange rates and processor fees and then sorts the transactions made at your business into tiers. Qualified, mid-qualified or non-qualified transactions are the most common tiers, though the number of tiers from different companies may range from two to six tiers. Mid-qualified rates are most often applied to rewards cards while non-qualified rates are charged to foreign and business cards.
The simplest pricing model is the flat-rate pricing model. This charges a fixed percentage rate for each transaction. Some processors charge a per-transaction fee in addition to the fixed percentage rate. This pricing model is popular for mobile credit card processing. Most payment gateway services did not offer this pricing model, so we did not consider in it our rankings.
Experts in this industry recommend the interchange-plus pricing model as the most beneficial pricing type. Half of the services in our review recommended this pricing model, though many of the representatives who initially gave tiered pricing quoted us interchange-plus rates upon request. Some companies were reluctant to give this information, however. Some of the company representatives we spoke with claimed that interchange-plus pricing would be available only to established merchants. In other words, you would need to process with that company for several months with tiered-pricing before you could qualify for interchange-plus. Still other companies warned against the interchange-plus pricing and told us that it was only useful to businesses processing extremely high amounts of transactions each month. You should know, however, that this warning contradicts the expert advice in this industry and the information we received from several other companies.
Paying for merchant gateway services doesn't stop at processing costs. You should also expect to pay several different fees to the merchant gateway you choose. The most common fee is the monthly fee. Some payment gateway services, like Payment Depot, let you pay this fee annually instead of monthly, which can end up being less expensive. Merchant One and The Transaction Group charge both annual and monthly fees.
Most gateway services in our review also charge a monthly minimum, which means that you must process enough to meet a minimum dollar amount of transaction fees every month. A yearly fee you can expect to pay is the PCI-compliance fee; PCI compliance helps keep your transaction information and your customers' information secure. If you require an eCommerce payment gateway, you also pay a monthly online payment gateway fee.
Keep in mind that some fees might be flexible. During our testing, we found that some fees may be waived. Most services want your business, and many representatives are paid on commission, so they're willing to give you a good deal. Some of the companies we reviewed offered to waive PCI-compliance fees, early termination fees and monthly minimum fees. Be sure that the fees that are supposed to be waived are waived in writing in your contract. Don't count on a word-of-mouth agreement.
Payment Gateway Services – Our Verdict & Recommendation
The best payment gateway providers offer transparent pricing and post their fees, costs and terms on their websites. Their customer reps also give straightforward answers to your questions about costs. You should be sure to avoid lengthy contracts and look for a month-to-month service that's up-to-date with the latest payment technology.
Payment Depot won a high place in our review because of its wholesale pricing structure. Helcim has the lowest pricing in our review and uses the best pricing model. Payline Data and Dharma Merchant Service are also solid choices if you're interested in interchange-plus pricing. If you prefer tiered pricing, National Bankcard, Flagship Merchant Services, Cayan and CreditCardProcessing.com are good options. National Bankcard is also the payment gateway provider with the cheapest equipment.
Disclaimer: The pricing listed in this article, in the matrix and in our reviews is reflective of the date this review was last updated. Pricing reflects our testing scenario; the pricing you receive may differ due to processing volume and average ticket size, among other factors.