A Beginner’s Guide to Payment Processing

Every business needs to accept payments. No matter if it’s credit cards, cash, or checks, payment processing is a necessity to exchange the goods or services you provide. However, with so many different processors out there, it can be difficult to know if you’re getting the best deal. Below, we’ve provided a few examples of the types of payments you might see and explain how to shop for the perfect solution.

The Basics

Payment processing comes in many forms; some forms are cheaper but take longer, while others might be more expensive up front but process instantly. Other factors include security and management of accounts and services. Some companies are able to handle credit cards, ACH, and even NFC payments all in one place, but others prefer to separate them. Here’s a quick rundown of the payment processing mediums you might see:

Credit/Debit Cards

Credit and debit cards are by far the most popular choice for payment. The cost can vary depending on transaction volume and the processor you use. Transaction fees also vary per the card issuer; for example, Visa charges 1.4 percent to 2.4 percent per transaction. Sometimes you’ll be charged a flat rate.

When shopping for a credit/debit card processor, look into your current or anticipated transaction volume. Next, decide if going for a processor that does both debit and credit card transactions would be worth it, or if everything should just be run as credit. It’s worth noting that debit is generally cheaper per transaction and guarantees the funds, but it might have some upfront costs associated with renting more sophisticated equipment. The name of the game is finding a provider that offers a good rate while giving you the most options.


Another excellent payment choice is eChecks, which are an awesome tool for accepting payments online. Although a relatively new phenomenon, these can be an excellent option if you’re doing a lot of online transactions. For example, the Deluxe eChecks system offers instant payment and is still being cheaper than traditional paper checks or ACH. Furthermore, Deluxe also integrates with accounting portals like Quickbooks, and your business won’t need to store sensitive data. Overall, these are great to include in the mix, giving you flexibility at an affordable price.

Paper Checks

Although often overlooked, paper checks are still excellent for your business. While their overhead of $1.22 per transaction is a little pricey, checks are good for large-scale purchases and post-dated payments. Based in ACH (Automated Clearing Houses), paper checks have been a sound system for a long time. However, if you’re someone who deals with major purchases or feels their business is at a higher risk for fraud, then be mindful of collecting the person’s ID or other security measures that can help mitigate a significant loss.

NFC Payments

Perhaps the biggest newcomer, NFC (Near Field Communication) payments are among the fastest growing in the world, reaching 166 million users in 2018. NFC-based payments are when you use Apple Pay or other “tap to pay” systems; they utilize a cell phone and receiver. The benefits of NFC include security (because payment information is tokenized and never stored, unlike credit cards) and ubiquity (because people can pay with all sorts of sources, including credit/debit cards, PayPal, Venmo, etc.). This is beginning to be included in most payment processing systems, so this is one to include in your POS mix.

How to Choose

When it comes to choosing payment processors, you have to look at the pros and cons of each and how they’re going to help your business. Ask yourself what kind of store you have, how much you can afford to spend on payment processing, what types of payments you’re expecting, and so on.

Remember that in accepting payments, there are going to be certain inevitabilities, such as processing fees and chargebacks. Chargebacks are when a card issuer charges a business for accepting a fraudulent transaction or a return is processed. Chargebacks have been increasing 20 percent every year, so if you don’t have the right carrier, these can get expensive quickly.

In the end, your processor should be a tool that empowers your business to grow. Although we’ve touched on the initial points, do some research into which companies fit best with your goals. Accepting payments is necessary, so it’s worth it to invest time into researching the perfect processor for your business.

What payment processors are working well for your business? Share your insights in the comments.