Does it matter which merchant account you choose?
Absolutely! This site was started because of what we saw working with small/medium sized businesses (SMB’s) and the struggles they faced with payment processing. A business exists to sell a product or service, and they have a better chance of succeeding when they don’t have to worry about non-core business functions such as payment processing. If your business sells widgets you should focus on selling widgets, not setting up payment gateways and comparing merchant account contracts.
There are many different types of businesses in the world, and so there is no perfect answer to the question of “which merchant account should I choose?”. Most merchant service providers will gladly take your money, but it’s important to understand the pros and cons of each so we’ve taken the guesswork out of that for you.
Different Types of Merchant Account Services
First, it’s important to understand the different types of merchant service providers that exist. You can break them down into two main groups:
Merchant Account Providers – A merchant account provider will give you an individual business banking account used exclusively by your business to handle credit/debit card transactions. Because this is your account, the underwriting process is based on your business type and credit. This means they are typically harder to set up, but generally cheaper to use and have less likelihood of getting your accounts frozen. There are tons of merchant account providers, with popular ones ranging from small providers like Helcim and Fattmerchant all the way up to huge processors like Worldpay and Elavon, with a lot of others in between.
Payment Service Providers – A payment service provider will give you a sub-account of their own much larger master account. Because of this, the underwriting process and risk-tolerance is different. They are easier to set up, but typically cost more to use and have a higher chance of getting your funds frozen. Some Payment Service Providers are huge names that you’ve heard of like Paypal, Stripe and Square and there are others that aren’t as well known to the general public like Adyen or Payline Data.
A general rule of thumb to follow is that the merchant accounts have a contract associated with them, anywhere from a monthly contract up to 3-year contracts. They will also have monthly costs associated with them, but lower transaction fees. A PSP will not have a contract or a monthly cost, but will have higher transaction fees. Because of this, many businesses will start off using a PSP and eventually migrate to their own merchant account.
So How Does a Business Decide?
So please, read the reviews but before you do that we recommend you download our free Payment Processing Guide to familiarize yourself with how the payment ecosystem works, and what the different terms mean. It will be your best weapon to protect yourself from the vultures out there in the industry!
Our goal is to review all of the options regardless of which type of merchant service provider you need, and present you with unbiased information to help you make the best decision you can for your business.