When you're running a small business, having a reliable and efficient payment system is crucial to ensure smooth transactions, satisfied customers, and ultimately, business growth. However, choosing the right payment processor can be a daunting task with so many options out there. In this guide, we’ll break down the best payment processing companies for small businesses, compare their features, and help you decide which one fits your needs the best.
Regardless of if you're an e-commerce store owner, a service provider, or a brick-and-mortar business, understanding payment processing for small businesses is key to your success. We hope that by the end of this article, you'll have a better understanding of the best payment processor for a small business and why it’s important to choose the right payment system for a small business.
What Is a Payment Processor for Small Business?
Before diving into the options available, let’s first define what a payment processor is and how it works. A payment processor for a small business is a service that facilitates the transaction between the buyer and the seller, typically by accepting credit or debit card payments. Payment processors work behind the scenes to authorize payments, ensure the security of data, and transfer funds between bank accounts.
For small businesses, using a payment processing company that offers seamless transactions, security, and integration with existing systems is essential. Whether you're dealing with online payment processing for small businesses or in-person card payments, the processor you choose will impact customer experience and operational efficiency.
Read More: Top Payment Providers in the USA, UK, and Australia
Why Choosing the Right Payment Processor Matters
The best online payment processor for a small business can save you time, enhance customer experience, and minimize transaction costs. A poor choice, however, can lead to long transaction times, hidden fees, and even security risks.
When evaluating payment processing solutions, consider the following factors:
- Transaction fees: Different processors charge differently based on transaction volume, size, and industry.
- Ease of integration: The processor should integrate seamlessly with your website, POS system, or accounting software.
- Security: Fraud protection and secure data encryption should be non-negotiable.
- Customer support: Reliable, 24/7 support can make all the difference when troubleshooting issues.
- Global capabilities: If you're looking to expand internationally, you need a processor that supports multi-currency transactions.
8 Best Payment Systems for Small Businesses
Now, let’s dive into the best payment processing for small businesses.
1. Square – The Best Overall for Small Business Payment Processing
Square is often touted as the best payment processing for a small business due to its ease of use, no monthly fees, and straightforward pricing. It’s ideal for both online payment systems for small businesses and in-person transactions. Square offers a free point-of-sale (POS) system, making it a popular choice for both retail stores and service-based businesses.
Pros:
- No monthly fees: You only pay per transaction, making it ideal for smaller businesses.
- Integrated system: Square offers a range of tools, including invoicing, payroll, and inventory management.
- Flexible hardware: You can use Square with smartphones, tablets, and dedicated Square terminals.
- Excellent customer support: 24/7 support via chat, phone, or email.
Cons:
- Transaction fees: While the absence of monthly fees is a perk, Square’s transaction fees (2.6% + 10¢ for swiped cards) can add up over time, especially for businesses with high-ticket sales.
2. PayPal – Best for E-Commerce Businesses
If you're looking for online payment processing for small businesses, PayPal is one of the most recognized payment processors worldwide. It’s an excellent choice if you run an e-commerce business or need to accept online payments.
Pros:
- No monthly fees: You only pay per transaction, making it ideal for smaller businesses.
- Integrated system: Square offers a range of tools, including invoicing, payroll, and inventory management.
- Flexible hardware: You can use Square with smartphones, tablets, and dedicated Square terminals.
- Excellent customer support: 24/7 support via chat, phone, or email.
Cons:
- Transaction fees: While the absence of monthly fees is a perk, Square’s transaction fees (2.6% + 10¢ for swiped cards) can add up over time, especially for businesses with high-ticket sales.
3. Stripe – Best for Online Payment Systems of Small Businesses
Stripe is another leading name in payment processing solutions, particularly for online payment systems for small businesses. It offers customizable solutions and works well for both startups and larger companies looking for a scalable option.
Pros:
- Developer-friendly: Stripe is ideal for businesses with custom websites and those looking for advanced API integrations.
- No setup fees: Stripe charges a transaction fee of 2.9% + 30¢ for online payments, but there are no monthly or setup fees.
- Global payments: Stripe supports payments in over 135 currencies, which is perfect if you're planning to expand internationally.
- Strong security: Stripe uses encryption to keep customer data safe.
Cons:
- Complex setup for beginners: While Stripe is highly customizable, it may be overkill for businesses that are just starting out or lack a dedicated development team.
No physical POS hardware: Unlike Square, Stripe does not provide physical hardware for in-person transactions.
Read More: Amasty Payments with Stripe for Magento 2
4. QuickBooks Payments – Best for Accounting Integration
If you’re already using QuickBooks for your business accounting, QuickBooks Payments can be an excellent payment processing solution for small businesses. It’s designed to streamline accounting and payment processing for small businesses, integrating directly with your QuickBooks account.
Pros:
- Seamless integration: Since it integrates with QuickBooks, your transactions will be automatically recorded in your accounting software.
- Competitive fees: Pay 2.9% + 25¢ for online transactions and 1% for ACH payments.
- Multi-channel support: Accept payments in-store, online, and via invoice.
- Quick and easy setup: Signing up is easy, and the integration with QuickBooks makes the process smooth.
Cons:
- Limited international reach: QuickBooks Payments is only available in the United States, Canada, and the UK.
- Only works with QuickBooks: If you don’t use QuickBooks, this might not be the best choice for your business.
5. Authorize.Net – Best for Established Businesses
For businesses that require more robust features and have higher transaction volumes, Authorize.Net offers one of the best payment processing companies. It's been around for over 20 years and is trusted by small and large businesses alike.
Pros:
- Advanced fraud protection: Authorize.Net comes with built-in fraud detection and security tools to keep transactions safe.
- Flexible payment methods: Accept credit cards, debit cards, e-checks, and digital payments such as Apple Pay.
- Recurring billing: It offers subscription billing options, which is great for businesses with repeat customers.
- 24/7 customer support: Authorize.Net offers excellent customer support via phone and chat.
Cons:
- Setup fee: There’s a $25 monthly fee plus a one-time setup fee of $49, which may not be ideal for very small businesses.
- Transaction fees: The fee structure is more complex compared to other processors.
6. Shopify Payments – Best for Shopify Stores
If you run an e-commerce store on Shopify, you’ll want to use Shopify Payments for your payment processing. It's tightly integrated with Shopify’s platform, making it one of the best payment processing solutions for small business owners using Shopify.
Pros:
- Seamless integration: Shopify Payments integrates directly with your Shopify store, meaning there’s no need for third-party gateways.
- Lower transaction fees: Shopify Payments offers lower fees compared to using a third-party processor.
- Multi-currency support: You can accept payments in multiple currencies, which is ideal for international customers.
- No monthly fee: There’s no setup fee or monthly fee, making it an affordable option for smaller businesses.
Cons:
- Limited to Shopify stores: Shopify Payments is only available for businesses that use the Shopify platform.
- Geographic restrictions: It's only available in certain countries, limiting its international use.
7. Venmo for Business – Best for Small In-Person Payments
For small businesses that deal with in-person payments, Venmo can be a great option. It’s part of PayPal’s ecosystem, and while it’s typically used for personal transactions, Venmo now offers a business account for small businesses.
Pros:
- Instant payments: Venmo transactions are quick, with funds typically available within minutes.
- Easy to use: It’s very easy for customers to pay using the Venmo app, which is especially popular among younger customers.
- Low fees: Venmo charges a 1.9% + 10¢ fee for business transactions.
Cons:
- Limited functionality: While great for in-person payments, Venmo is not as comprehensive as other processors when it comes to online payments.
- Account limitations: Venmo accounts are subject to higher scrutiny, especially for businesses with large transactions.
8. Braintree – Best for Subscription-Based Services
Owned by PayPal, Braintree is a top choice for businesses with recurring billing needs. If you run a subscription-based business or offer memberships, Braintree provides the features necessary to manage these payments.
Pros:
- No monthly fees: Braintree charges only 2.9% + 30¢ per transaction with no setup or monthly fees.
- Advanced features: It supports advanced features like recurring billing, fraud detection, and global payments.
- Flexible payment options: Braintree accepts credit cards, PayPal, Apple Pay, and even Bitcoin.
Cons:
- No in-person POS support: Braintree does not offer physical hardware for in-person payments, which limits its use for businesses that require a full-service POS system.
Read More: The Future of Payments in E-commerce
Wrapping Up
Selecting the best payment processor for small business is crucial for smooth operations, customer satisfaction, and business success. Depending on your needs – handling in-person transactions or global payment capabilities – there’s a payment processor that fits your business.
- Among the options listed, Square and PayPal are great for businesses looking for simplicity and flexibility.
- For those with more advanced needs, Stripe, Authorize.Net, and Braintree offer robust solutions.
- If you already use QuickBooks or Shopify, QuickBooks Payments and Shopify Payments are excellent choices that integrate well into existing systems.
Choose a processor that aligns with your business size, payment needs, and future growth to ensure you're always prepared for the next transaction.
Frequently asked questions
The cheapest payment processor for small businesses often depends on your business type and volume. Square and PayPal are both popular low-cost options for small businesses. Square has no monthly fees, and charges a flat rate of 2.6% + 10¢ per transaction, making it great for businesses with varying transaction volumes. PayPal is free to set up and only charges transaction fees (2.9% + 30¢), but it’s important to compare different processors based on your specific business needs and sales volume.
The best payment method for small businesses will depend on the nature of your business. For brick-and-mortar stores, Square or PayPal provide excellent payment systems for small businesses. If you're an e-commerce store, Stripe and PayPal are great for online payment processing for small businesses. Consider your customer base, payment methods preferred (credit cards, e-checks, etc.), and if you need a mobile POS system or only an online payment processor.
To set up a payment system for a small business, follow these steps:
- Choose your processor: Select from options like Square, PayPal, or Stripe depending on your needs (in-person or online payments).
- Sign up and create an account: Provide business details and verify your identity.
- Integrate with your sales system: For online businesses, integrate the processor into your e-commerce platform. For in-person sales, connect the processor with your POS hardware.
- Set up payment options: Enable multiple payment methods (credit card, mobile payments, etc.).
- Test the system: Make sure everything works smoothly before you start processing live payments.
A typical payment processing fee for small businesses can range from 2.5% to 3.5% per transaction, though it depends on the processor and payment method. For example, Square charges 2.6% + 10¢ for swiped card transactions, and PayPal charges 2.9% + 30¢ for online payments. Additional fees may apply for international payments or large-ticket transactions.
Small businesses can accept online payments by using payment processors like PayPal, Stripe, or Square. These services allow businesses to integrate payment gateways directly into their websites or online stores. By embedding payment buttons or using APIs, customers can securely make purchases with credit/debit cards, e-checks, or digital wallets like Apple Pay or Google Pay. Make sure your payment system is PCI-compliant and encrypted for customer security.
