Credit Card Payments for Small Business

Traditional Credit Card Merchant Services

Before the internet, there were limited options for how a business handles a credit card purchase. These days, the possibilities are head spinning with payment acceptance choices. In the first installment of our credit card processing series, we look at the traditional credit card merchant services model and determine if it is still a service worth using.

Can Merchant Services Compete?

Merchant services are still relevant and generally offer the lowest in-person and online processing fees utilizing the transparent Interchange Plus pricing structure (see figure 1). Still, there are some business situations where a traditional merchant method is not suited. Consider the following:

  • Your credit history
  • How you take payment (in-store, online, or in-person through a mobile device)
  • Costs you are willing to incur towards a cohesive web payment portal on your website
Figure 1 Dharma Merchant Services (2.00% +.10) vs. PayPal Online Card Payment Services (2.59% +.49)

Penalty Foul for Newbies and Poor Credit

First, to get the best rates from a merchant service, you must have a good credit rating with the credit bureau and have been in business for two or more years. Anything less, and you risk refusal of service or high rates. If this is the case, no fear. We will cover other solutions for you in our next installment.

Pick Your Gear

Next, consider how you take most of your payments. For example, do you swipe a card at your place of business through a credit card terminal or accept card payments over the phone? Maybe you want to add a payment gateway through your website? The payment method determines how high your fees are because credit card processors take an elevated risk with card-not-present (over the phone) and online transactions. For this reason, taking payments over the phone (keyed-in) and online transactions are more expensive than in-store chip-inserted swipes. However, overall they are still cheaper than payment service providers and peer-to-peer payments, which we cover in the following installments. 

Figure 2

Website Compatibility

So, we’ve learned that merchant services processor fees are generally lower through in-person terminals, but what about if you want to take payments online through your website? Having a payment process on your website that maintains the look and feel of your branding is the best customer experience.

Keeping customers on your site over sending them away to a third-party payment processor, like PayPal, maintains trust. Having said that, If the idea of hiring a web developer to integrate your merchant services through your site makes you squirm, there are (albeit not as thrifty) workarounds like a PayPal or Square widget button which we discuss in the next installment.

End Game

Traditional credit card merchant services have stood the test of time. If you are an established business with good credit, it’s a good idea to compare different merchant services for the best pricing as they generally offer the lowest processing rates. Furthermore, suppose you find a merchant you like. In that case, coding a payment processor into your website is an investment, but a good one that can look professional and offers trust to your customer that you’re not sending them away to a third-party website for payment.

In our next installment, we discuss payment service providers, like PayPal & Square, that offer a little more flexibility but a steeper rate to keep you in the game.

Click here for the overview of this blog series.


PayLine Merchant. (2022). Retrieved from

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