When’s the last time you paid for something with cash? Americans have been using it less and less, and today, most consumers choose digital payment processor options for goods and services.
As evidence of payment digitalization growth, the Federal Reserve reports credit and debit cards accounted for 35% and 30% of payments in 2024, respectively. Cash was used only 14% of the time. When segmented by generation, adults aged 18 to 24 years used their phones for 45% of all payments. So these payment processors are essential to transactions between customers and merchants.
Learn about how payment processors work, the top payment processing providers, and which factors to consider when you’re ready to pick the payment processing service that’s right for you.
What is a payment processor?
Payment processors facilitate the transfer of funds between bank accounts. They complete business transactions, including credit and debit card payments, Automated Clearing House (ACH) bank transfers, and sales paid with digital wallets.
Payment processing companies manage communication between all parties in a transaction. These include: the payment gateway company, the customer’s credit card company or bank, and the merchant’s bank. In short, payment processors ensure your customers’ payments end up in your merchant account.
How does a payment processor work?
- Payment processor receives payment information
- Payment processor seeks authorization
- It completes the transaction
- The money moves
Here’s how payment processors move money to facilitate transactions:
1. Payment processor receives payment information
After a customer enters their card information in a payment gateway like an online checkout page or point-of-sale (POS) terminal, the payment gateway encrypts the data and securely sends it to the payment processor. Many processors offer payment APIs that let customers enter their billing information directly on your website.
2. Payment processor seeks authorization
The payment processor sends the customer’s payment information to the issuing bank or credit card company for authorization.
3. It completes the transaction
The card network or bank informs the payment processor if they’ll allow the customer’s payment. If the bank approves the payment, the merchant accepts it and completes the transaction. If the bank or card network declines it, the merchant might prompt the customer to try an alternate payment method.
4. The money moves
Once the network or bank authorizes the transaction and the merchant completes it, the payment processor tells the issuing bank to send the funds to the merchant’s financial institution, also known as the acquiring bank.
How to choose a payment processor
- Consider fixed fees vs. interchange plus rates
- Think about where and how you’ll get paid
- Account for chargebacks
- Consider foreign transaction fees
- Factor in payment gateway fees
You’ll need a payment processor if you accept credit card or any other non-cash payments. To choose the right payment solution for your small business, you’ll want to do the following:
Consider fixed fees vs. interchange plus rates
While all payment processing companies charge a fee for each transaction, fee structures vary. Some payment processing services charge fixed fees. This means the cost per transaction is consistent across all payments of a given type.
For example, you’ll pay one fee for all credit card purchases. Payment processors that charge fixed fees tend to forgo subscription fees, a bonus for new business owners with limited capital.
Other companies charge interchange plus fees. Also known as cost-plus pricing, interchange plus fees represent the price a credit card company charges to run a transaction plus an extra per-transaction fee. Interchange plus fees vary by credit card company and can fluctuate throughout the year.
Because the total of these two fees is typically lower than the equivalent fixed transaction fees, payment processing companies with an interchange plus pricing model often charge a monthly subscription fee, too. If your business processes a high enough sales volume that the per-transaction savings outweigh subscription costs, you may find the interchange plus model attractive.
Think about where and how you’ll get paid
Do you conduct your business online, or do most of your sales happen at a physical store? Payment processing transaction fees often vary by where your customers pay. Transactions without physical cards present are more expensive due to higher fraud risk.
If you accept in-person payments, choose a payment processor with an integrated payment gateway POS system. Or one that integrates with your existing POS system.
If you take your business on the go or participate in pop-ups or pay-on-delivery services, choose a payment processor with a mobile app that lets customers pay by tapping a smartphone card reader attachment.
If you primarily sell online, consider a payment processing option with integrated online checkout, like Shopify Payments.
Consider how your customers pay, because the payment method also affects transaction fees. A payment processor may charge different amounts to process credit card payments versus Apple Pay transactions, for instance. Be sure to secure a competitive rate for your most anticipated transaction type. Most payment processing companies share these rates on their websites, but some require you to call their sales team to learn more.
Account for chargebacks
Your payment processor will impose fees for chargebacks and disputes, so account for them. Chargebacks, when customers dispute payments on their cards, are a common enough fraud scheme (called “friendly fraud”) that it’s worth budgeting for them.
In fact, businesses say 45% of chargebacks are fraudulent, according to Mastercard. By 2028, research estimates there will be 324 million chargebacks per year.
Merchants in certain industries, like travel, online gambling, and supplements, might be particularly susceptible to chargebacks. This makes these merchants less attractive to many payment processing companies. If you’re in one of these industries, look for a payment processing company that offers high risk merchant accounts.
Consider foreign transaction fees
Payment processors often charge extra to convert currencies, so be sure to consider foreign transaction fees if you plan to conduct a significant amount of cross-border business. If you know where you’ll be making most of your sales, look for a processor that accepts the most popular payment methods in that country.
Factor in payment gateway fees
Some companies act as both payment processors and payment gateways. Others link to separate payment gateways. In this case, secondary payment gateways also charge transaction fees, which you should consider when choosing your payment processor.
If you’re a Shopify merchant using Shopify Payments, you won’t pay additional gateway fees.
13 top payment processing companies
- Shopify Payments
- Payment Depot
- Square
- Stripe
- PayPal
- Payline
- Finix
- Stax
- Helcim
- Authorize.net
- Adyen
- Clover
- Chase Payment Solutions
There are lots of payment processing companies to serve your business. Here are 13 of the most popular:
| Provider | Transaction fees | Pricing structure | Monthly fees | G2 ⭐️ rating | Who it’s for |
| Shopify | 2.5%–2.9% + 30¢ online; 2.4%–2.6% + 10¢ in-person | Fixed rate | Free for Shopify merchants | 4.4 | Ecommerce businesses |
| Payment Depot | Interchange rate + 0.2%–1.95% | Interchange plus | $49+ | 4.5 | Medium-sized businesses |
| Square | 2.9% + 30¢ online; 2.6% + 15¢ in-person | Fixed rate | $0–$89 | 4.6 | Service businesses |
| Stripe | 2.9% + 30¢ online; 2.7% + 5¢ in-person | Fixed rate | None | 4.2 | Ecommerce merchants not on Shopify |
| PayPal | 2.89% + 29¢ online; 2.29% + 9¢ in-person | Fixed rate | None | 4.4 | Businesses with low transaction volumes |
| Payline | Interchange + 10¢–22¢ | Interchange plus | $10+ | 4.6 | Merchants in high risk industries |
| Finix | Interchange + 15¢ online; interchange + 8¢ in-person | Interchange plus | $250+ | n/a | High risk merchants with high sales volumes |
| Stax | Interchange rate + 8¢–15¢ | Interchange plus | $99+ | 4.9 | Businesses with high average order values |
| Helcim | Interchange + 0.15%–0.5% + 15¢–25¢ | Interchange plus | None | 4.0 | Fast-growing ecommerce businesses |
| Authorize.net | 2.9% + 30¢ | Fixed rate | $25 | 4.2 | Advanced security |
| Adyen | 13¢ + variable fee | Interchange plus and fixed rate | None | 3.7 | International businesses |
| Clover | 3.5% + 10¢ online; 2.5% + 10¢ in-person | Fixed rate | Varies by industry | 3.8 | Restaurants |
| Chase Payment Solutions | 2.9% + 25¢ online; 2.6% + 10¢ in-person | Fixed rate | $9.95+ for ecommerce retailers | 3.8 | Businesses using Chase bank |
1. Shopify Payments
Shopify Payments is the easiest way to accept payments online. You have automatic access to Shopify Payments if you have a Shopify storefront, so no need to deal with a third-party processing company. This easy-to-set-up payment processor runs on a fixed-rate pricing model that charges the same fee across card types.
Shopify Payments accepts a range of payment types, from credit and debit cards to stablecoins and buy now, pay later (BNPL) payments from Shop Pay Installments (in partnership with BNPL company Affirm).
Have a retail location? Use Shopify’s physical POS system, which integrates your payment gateway and payment processing system.
Who it’s for
Ecommerce businesses
Pricing
Shopify Payments is free with your Shopify subscription. Transaction fees depend on your Shopify plan:
- Basic. 2.9% + 30¢ online and 2.6% + 10¢ in person
- Grow. 2.7% + 30¢ online and 2.5% + 10¢ in person
- Advanced. 2.5% + 30¢ online and 2.4% + 10¢ in person
Features
- Fixed-rate pricing
- Free with Shopify subscription
- Full integration with Shopify platform
- Integrated payment gateway
- PCI DSS compliant to protect sensitive financial data
- Processes international payments in your customers’ local currencies
- 24/7 customer support
- G2 ⭐️ rating: 4.4
2. Payment Depot
Payment Depot runs on the interchange plus model, and it offers lower transaction fees than some competitors. The company promises rates between 0.2% and 1.95%, on top of interchange rates, but you’ll need to contact Payment Depot’s sales team to learn the specific rates for your business.
Payment Depot requires businesses to undergo the underwriting process, which can be time consuming. If you’re not satisfied with your setup, however, you can cancel without contract termination fees.
Who it’s for
Medium-sized businesses
Pricing
For each transaction, you’ll pay the interchange rate plus a 0.2% to 1.95% fee. Payment Depot customizes rates to your business, and you’ll need to contact the company’s sales team to learn yours. Monthly fees start at $49, although the company is not fully transparent about its monthly fees on its pricing page.
Features
- Interchange-plus pricing
- Subscription fees
- 24/7 customer support
- PCI compliance
- G2 ⭐️ rating: 4.5
3. Square
You might recognize Square’s signature white card terminal. It’s a popular payment processor for small businesses with physical storefronts, and Square offers several hardware options for POS payment gateways.
Square doesn’t charge startup or subscription fees for its payment processing services, and the company charges fixed-rate prices. Transaction rates decrease when you buy an optional subscription.
Who it’s for
Service businesses
Pricing
The following prices are for Square’s regular plan, but Square charges different prices for industry specific plans.
- Free. $0/month; 2.9% + 30¢ online and 2.6% + 15¢ in-person
- Plus. $29/month; 2.9% + 30¢ and 2.6% + 15¢, with more advanced features like inventory management and appointment booking tools
- Premium. $79/month; 2.6% + 30¢ and 2.6% + 15¢
- Retail Plus. $89/month; 2.6% + 15¢ per transaction
Features
- Fixed-rate pricing
- No subscription fees
- POS systems
- Free invoicing
- Free mobile device card reader
- Sales and inventory analytics
- Retail and restaurant-specific software solutions
- G2 ⭐️ rating: 4.6
4. Stripe
Stripe is a payment processor that merchants can integrate with a number of ecommerce platforms. Stripe is customizable, and web developers can adjust the product’s payment APIs to fit their business’s needs.
Stripe’s online transaction fees are on par with competitors, but its in-person rates are a bit higher than similar payment processors. The company also doesn’t offer as many POS systems as some competitors. This makes it a better choice for ecommerce companies than for retail businesses.
Who it’s for
Ecommerce merchants not on Shopify
Pricing
Stripe charges 2.9% + 30¢ for online card payments and 2.7% + 5¢ for in-person card payments. You can also opt to receive a custom pricing plan for your business. Such plans include features like country specific rates, volume discounts, and interchange plus pricing.
Features
- Flat-rate pricing
- No subscription fees
- 24/7 customer support
- Sales analytics and inventory management extensions
- Accepts payments in more than 135 currencies
- Integrated billing and invoicing
- G2 ⭐️ rating: 4.2
5. PayPal
PayPal is best known for its peer-to-peer payment systems—the namesake PayPal and Venmo, which it acquired in 2013. PayPal also functions as a more traditional payment processor, and can process payments in various formats, including QR codes and invoices. This makes it a viable option for service-based businesses and companies running pop-ups. Plus, some customers might feel comfortable with PayPal because it’s a well-known and trusted brand.
Although PayPal doesn’t charge a monthly subscription, its transaction fees are relatively high, and it might be less appealing for high-volume businesses. If you’re interested in offering PayPal and Venmo as payment options without using PayPal’s comprehensive payment processor, you can easily integrate PayPal into your Shopify checkout.
Who it’s for
Businesses with low transaction volumes
Pricing
PayPal charges 2.89% + a fixed fee for standard credit and debit card transactions. The fixed fee depends on the country, and it’s 49¢ for the US. PayPal takes 3.49% + a fixed fee for PayPal Checkout transactions (meaning payments made with PayPal or Venmo). It takes 2.29% + 9¢ for in-person transactions.
Features
- Fixed-rate pricing
- POS systems
- Advanced security features
- Supports 25 currencies
- G2 ⭐️ rating: 4.4
6. Payline
Payline specializes in merchants processing credit card payments in high-risk industries with higher-than-average dispute rates, like health supplements and travel. (Some payment processing services don’t accept merchants in these industries.)
Payline charges interchange plus rates alongside relatively low monthly subscription fees. Payline Data also integrates with QuickBooks, which can streamline your accounting process if you use the popular accounting software.
Who it’s for
Merchants in high risk industries
Pricing
The company charges $20 per month for accepting online payments and $10 per month for accepting in-person payments. Payline charges the interchange rate plus 10¢ to 22¢.
Features
- Interchange plus pricing
- Subscription fees
- Integrated payment gateway
- PCI DSS compliant
- Processes international payments
- 24/7 customer support
- G2 ⭐️ rating: 4.6
7. Finix
Finix charges steep monthly subscription fees alongside interchange plus rates, making it a viable option for businesses with a high sales volume. Finix accepts clients in high risk industries, including CBD and hemp, gaming and online gambling, and supplements.
To help you get set up, Finix offers support from a dedicated implementation manager. You’ll need to contact the company directly to learn about POS options, which are somewhat limited compared to other payment processors.
Who it’s for
High risk merchants with high sales volumes
Pricing
Finix subscriptions start at $250 per month. You’ll pay the interchange rate plus 15¢ for online transactions and the interchange rate plus 8¢ for in-person transactions.
Features
- Interchange plus pricing
- Subscription fees
- Integrated payment gateway
- PCI DSS compliant
- 24/7 customer support
- No G2 rating available
8. Stax
Stax charges interchange plus fees and a monthly subscription that depends on your sales volume. With its low transaction fees, Stax can be a solid choice for merchants with high sales volume, as long as transaction fee savings cover the monthly subscription cost.
Note that Stax doesn’t advertise the prices of its POS systems, so you’ll need to contact the company’s sales team if you plan to sell in-person.
Who it’s for
Online businesses with high average order values
Pricing
Stax charges the interchange plus rate plus 8¢ to 15¢ per transaction. Monthly subscription costs depend on annual transaction volume:
- Up to $150,000 per year. $99 per month
- $150,000 to $250,000. $139 per month
- $250,000 and higher. $199 or more per month
Features
- Interchange-plus pricing
- Subscription fees
- 24/7 customer support
- POS systems
- PCI compliance
- Accepts payments in US and Canadian dollars
- G2 ⭐️ rating: 4.9
9. Helcim
Helcim charges interchange plus rates and offers volume discounts, so as your sales increase, your fees decrease. This makes it a good option for fast-growing businesses.
For in-person businesses, Helcim sells two pieces of POS hardware—a touchscreen terminal and a more basic card reader. These go along with POS hardware you install on your own device.
Who it’s for
Fast-growing ecommerce businesses
Pricing
Helcim’s transaction fees depend on monthly sales volume. Helcim does not charge subscriptions fees.
- $0 to $50,000. Interchange + 0.5% + 25¢ online; interchange + 0.4% + 8¢ in-person
- $50,000 to $100,000. Interchange + 0.45% + 20¢ online; interchange + 0.35% + 7¢ in-person
- $100,000 to $500,000. Interchange + 0.35% + 20¢ online; interchange + 0.25% + 7¢ in-person
- $500,000 to $1,000,000. Interchange+ 0.25% + 15¢ online; interchange + 0.2% + 6¢ in-person
- $1,000,000 and higher. Interchange+ 0.15% + 15¢ online; Interchange + 0.15% + 6¢ in-person
Features
- Interchange-plus pricing
- No subscription fees
- Volume discounts
- PCI compliance
- POS system
- Accepts payments in US and Canadian dollars
- G2 ⭐️ rating: 4.0
10. Authorize.net
Authorize.net is a payment processor that offers advanced fraud protection. Founded in 1996, it now counts 445,000 businesses as customers. In 2010, Authorize.net was acquired by Visa.
Authorize.net charges fixed rate transaction fees. Those fees are on par with competitors’ fees, but Authorize.net also charges monthly subscription fees. This makes it more expensive than many other payment processing companies.
Authorize.net doesn’t sell its own POS hardware, although it offers POS software that you can link to eligible pieces of hardware. Note that you’ll need to have a Windows computer to set up Authorize.net’s POS software.
Who it’s for
Merchants looking for advanced security features
Pricing
Authorize.net charges $25 per month, then 2.9% + 30¢ per transaction for credit card payments.
Features
- Fixed-rate pricing
- Subscription fees
- Integrated payment gateway
- PCI DSS compliant
- Accepts international payments
- 24/7 customer support
- G2 ⭐️ rating: 4.2
11. Adyen
Adyen is a Dutch payment processor that excels in facilitating international payments: The company accepts a wide range of global payment methods without large additional markups. The company also lets you receive payouts in different currencies.
Adyen counts a number of enterprises as clients, and the company’s setup process is longer than that of some competitors. Adyen offers several POS systems for in-person selling.
Who it’s for
Companies selling internationally
Pricing
Adyen charges 13¢ + a fee specific to the type of card. Sometimes this is the interchange rate plus an additional charge; other times it’s a fixed fee. For example, you’ll pay 13¢ + interchange rate + 0.6% percent for Mastercard and 13¢ + 3.95% for American Express.
Features
- Mix of fixed rate and interchange pricing
- No subscription fees
- Integrated payment gateway
- PCI DSS compliant
- Processes international payments
- 24/7 customer support
- G2 ⭐️ rating: 3.7
12. Clover
Clover is a payment processing company that sells comprehensive POS systems for restaurants. The company also serves service and retail businesses, but the platform is best suited for in-person companies. Clover charges competitive in-person transaction fees, but its online transaction fees are higher than those of competitors.
Who it’s for
Restaurants
Pricing
Clover’s transaction fees vary slightly based on industry. For retail businesses, Clover transaction fees cost 3.5% + 10¢ for online transactions and 2.5% + 10¢ for in-person transactions. In-person transaction fees are lower for restaurants, at 2.3% + 10¢.
Features
- Fixed-rate pricing
- Subscription fees
- Industry-specific solutions
- Shift scheduling, CRM, and analytics
- POS systems
- Accepts international currencies
- G2 ⭐️ rating: 3.8
13. Chase Payment Solutions
Chase Payment Solutions is the payment processing arm of the Chase bank. It offers lower transaction fees than some competitors, and a trusted name.
If your business banks with Chase, using its payment processing service reduces the number of financial vendors you work with. Using a Chase business bank account with the company’s payment processor offers a few other perks, too, like a waived $15 per month fee for your bank account and same-day deposits.
If you run an in-person business, note Chase Payment Solutions only has two card terminal POS options.
Who it’s for
Businesses using Chase bank
Pricing
Chase Payment Solutions charges 2.9% + 25¢ for online transactions and 2.6% + 10¢ for in-person transactions. If you accept payments online, you’ll also need to pay $9.95 per month.
Features
- Fixed-rate pricing
- Integrated payment gateway
- PCI DSS compliant
- Processes international payments in your customers’ local currencies
- 24/7 customer support
- G2 ⭐️ rating: 4.4
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Payment processors FAQ
What do payment processors do?
Payment processors help transfer money between two parties, such as a consumer and a merchant. A payment processor acts as an intermediary, securely moving funds from the consumer’s bank to the merchant’s and ensuring payments are received.
What are examples of a payment processor?
Examples of payment processors include:
- Shopify Payments
- Payment Depot
- Square
- Stripe
- PayPal
- Payline
- Finix
- Stax
- Helcim
- Authorize.net
- Adyen
- Clover
- Chase Payment Solutions
Is PayPal considered a payment processor?
Yes, PayPal is considered a payment processor. PayPal is an online payment service used to send and receive payments for goods and services. Both businesses and individuals use PayPal to process payments for online purchases, bill payments, and money transfers.
What is a payment processor?
A payment processor is software that facilitates the transfer of funds between bank accounts. It completes business transactions, including credit and debit card payments, Automated Clearing House (ACH) bank transfers, and sales paid with digital wallets.
What is the most used payment processor?
The most used payment processors include Shopify Payments, PayPal, Stripe, and Square.
Is Zelle a payment processor?
Yes, Zelle is a payment processor. It only facilitates transactions between consumers though. Because it does not facilitate transactions between businesses it’s different from leading payment processors like Shopify Payments, Stripe, and Square.
