How to Choose the Best Payment Processor

If you are moving your payment system from cash handling to credit and debit cards, then you will require a payment processor. This system allows your business to accept transactions initiated through multiple channels, such as bank accounts, ACH, credit cards, and debit cards.

Here is a guide to choosing the best payment processor for your business.

What Does a Payment Processor Do?

A payment processor is a service provider mandated to authorize and validate payments made via debit or credit card as employed by a merchant. The system acts as the link between the customer, acquirer, issuer, and card networks.

Ideally, the processor verifies if the cardholder’s account has sufficient funds for settlement in the respective merchant account. If the customer’s credit card has enough money, the payment processor instructs the issuer to pay the acquirer, who then transfers the specified amount to the designated merchant account.

What Does Your Business Require?

Generally, your enterprise is required to provide a business licensing certificate, financial statements, and a bank account to be approved for payment processing services. Additionally, you must meet the following requirements to get your merchant account linked to a processor.

Is Your Business B2B or B2C?

The business-to-business (B2B) business model processes payments between two businesses. For instance, Company A pays for goods sold by Company B. On the other hand, Business-to-Consumer (B2C) payments are made between a business and its consumers.

All transactions under the B2C model are categorized under the Level 1 processing standard. This is the level at which credit small- and large-scale card payments are done using a consumer’s personal data.

However, for B2B payments to be verified, Level 2 and 3 processing standards must be followed. This is where additional customer data is required to verify a transaction. In this case, data verification goes beyond the default Level 1 requirement.

Are Your Transactions In-Store or Online?

The difference between online and in-store payment processing is in the assortment of payment methods accepted. For instance, in online payments, buyers are only allowed to complete transactions using debit and credit cards only. In-store transactions, on the other hand, accommodate a wider range of payment methods, including cash, digital wallets, and EMV processing.

While online payments only require your business to have a basic POS system to complete card transactions, in-store transactions demand advanced POS technology built for all methods of payments.

Are You Considered a High-Risk Merchant?

If you are considered a high-risk merchant, then your business must have a high-risk merchant account to accept card payments. Most payment processors are skeptical of companies operating in such industries as firearms and automobiles. As a result, processors only approve card payments to such enterprises through high-risk merchant accounts.

The thing with high-risk accounts for merchants is that you must beat certain standards to operate. These include paying higher processing fees, subscribing to higher chargebacks, cash reserve requirements, and transactional volume caps.

How to Compare Payment Processors

There is never a perfect payment processor. Finding the ideal service provider is determined by your business budget, priorities, and needs. However, when comparing different processors, the following factors should help you identify the best market player.


Regardless of your preferred processor, you will be required to pay a specified fee for every transaction completed. However, this fee varies from one service provider to the other based on such factors as methods of payment applied and interchange charges.

Regarding prices and pricing structures, transparency should always be a fundamental consideration for your business. A processor with a transparent pricing structure makes it easy for you to stay afloat on your costs.

Payment Methods

There is a myriad of payment processing methods available today. You will have to scan through the list and go for the mode of payment that best suits your business.

For instance, most businesses find card payments more convenient, thanks to the growing popularity of the method. On the other hand, online retailers looking to expand payment methods to their global clients can comfortably work with Stripe.

Small merchants operating low-scale accounts or seasonally can leverage the flexible capacity of methods like PayPal and Square.


Payment channels are always a large target for cybercriminals. Your business must never compromise when it comes to the security of your data and account. In this case, you need a processor that offers high-level security and fraud detection mechanisms.

One way to confirm a reliable processor is by verifying whether it is PCI-DSS compliant. Service providers follow this global standard to guarantee credit card data protection.

Contract Terms

Contracts with payment processors are designed to guide the kind of services you should receive. However, entering into a long-term agreement with your service provider is never a good idea. This way, you can sign out from a provider that does not meet your wishes.

The good thing is that there are short-term contract providers that allow you to enjoy their services from month to month or period to period.

Customer Support

With businesses shifting to digital spaces with no time limitations, having 24/7 customer support is crucial. You do not want to get stuck with a payment hitch during extended business hours due to a lack of the appropriate technical support.


Growing your revenue streams from expanded payment solutions is a fulfilling endeavor. You, therefore, need to choose a payment processor that will help you solve and sustain your cash flow concerns. Go for a service provider with transparent pricing structures, reliable payment methods, 24/7 customer support, and one that guarantees top-notch data security.