Credit Card Processing Services for SMB

According to a report published by the Reserve Bank of Australia in 2020, credit and debit cards accounted for 63% of consumer payments. For any Australian business, this is worth keeping in mind, as the ability to accept card payments could be key to your business success.

Here’s what to look for when comparing credit card processing services for small businesses, from features to fees.

Types of credit card processing services for small businesses

The first thing to keep in mind when comparing credit card processors is that there are two types of solutions on offer:

1. Merchant accounts

2. General processors

General credit card processors include providers like PayPal that offer an all-in-one service, serving as a middleman between your business and the bank. They take all payment details and handle authorisation and processing, ultimately moving money from your customer’s account to your processing account. Fees are charged per transaction, making this a good option for small businesses and start-ups with lower volumes of sales. Rates typically hover between 2.5% and 3.5% of the total sale price.

The second option is to use a merchant account, which also handles authorisation and processing. However, the difference is that the merchant account provider moves funds directly into your banking account. You’ll pay lower interchange fees, with reduced clearance times.

There’s a fine line between these two types of services, but for small businesses an all-in-one provider is typically easier to set up and manage. Merchant service providers and other credit card processors set you up with the software or app needed to view transactions and chargebacks from a central dashboard. If you handle in-person sales, you could also look for a service that provides a card terminal or mobile reader.

Features to look for in credit card processing services for small businesses

When you start comparing your options, here are a few top features to look for in a card processor:

• POS integration – Does the merchant service provider include a card reader as part of the deal?

• Virtual terminal – Can you take payments online or over the phone with a virtual card reader?

• Payment gateway – Is software included to encrypt and submit transaction data to complete the purchase?

• Fee structure – Does the processor charge per transaction, by the month, or both? Be sure to look at the fine print when comparing costs.

• Customer support – Many small businesses are new to the world of payment processing. Does the solution include comprehensive support?

• Payment methods – A good credit card processor will also allow you to accept mobile and contactless payments.

The best credit card processing services for small businesses

Though there’s no one size fits all solution to suit the needs of every business, here are a few of the top options.

1. PayPal

User-friendly and easy to set up, PayPal is a top choice for small businesses. It integrates easily into most ecommerce platforms like Adobe Commerce and Shopify by copying and pasting its API key. Fees are charged per transaction, and businesses can accept hundreds of different currencies.

2. Stripe

This cloud-based payment processor comes equipped with fraud prevention tools and data analytics. Perhaps it’s best known for its Stripe terminal, which lets small businesses and service providers take card payments in person. Stripe is compatible with multiple currencies to support international transactions.

3. Sage

If you have some existing knowledge of web development and accounting, Sage could be a good option. It offers multiple options for customisation and integrates easily into Sage Accounts. You can combine in-person and online card processing with a virtual terminal and merchant account integration.

4. Authorize.net

This option stands out because it provides both types of card processing services. You can opt into its all-in-one general processing solution or sign up for an authorize.net merchant account. One thing to keep in mind is that while both options incur a monthly charge, the per-transaction fees are higher for the all-in-one service.

Alternatives to using credit card processors

An increasing number of consumers are supplementing card payments with electronic payments and other alternatives. One option is to choose a Direct Debit solution like GoCardless instead, which gives the merchant full control of incoming payments. In other words, you pull the money owed directly from your customer’s bank account on the day it’s due. This saves time and money by eliminating late payments and improving cash flow. It also reduces the awkwardness of chasing up on late payments – a win-win for customer and merchant.

Compared to card payments, there’s less risk of payment failure and far lower transaction costs. Should a payment fail, GoCardless' Success+ feature automatically retries at the optimal time. Time saved adds up: in a survey of 5,000 SMEs using GoCardless, 85% said they now spend less time chasing payments. Another survey found that small business GoCardless users spent only 2.6 hours per month managing late or failed payments – a reduction of 90% in comparison to the average of 30 hours. Furthermore, GoCardless seamlessly integrates with over 200 partners, including major invoicing software like Xero and QuickBooks.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.