Last editedJul 20233 min read
A good payment system is non-negotiable for any business. You need a reliable, secure way to collect payment from customers – but if you’re using a payment gateway, this comes with a potential stack of fees. Whether you’re just starting out or looking for a way to cut operating costs, finding a low-cost, affordable payment system is key to success. Here’s a closer look at the cost of payment processing to help you find the right fit.
What is a payment processing system?
There are multiple parties involved in any transaction beyond the buyer and seller. When a customer submits their payment details, these need to be sent to the bank or card network for authorization and approval. A payment processing system describes the technology and networks used to facilitate this process. Payment gateways offer the customer-facing portal for submitting payment details and receiving confirmation, while payment processors move the information from one financial institution to another.
Many of the best global payment systems act as both gateway and processor for an all-in-one service. This comes at some cost. For card payments, per-transaction fees typically range between 1.4% and 3.5%. For merchant accounts, processing fees also include monthly charges. And for global payment systems, you’ll need to watch out for currency exchange costs and handling fees.
Top 5 affordable payment systems
The best affordable payment systems combine low processing costs with an extensive range of features. Here are a few of the top options for U.S.-based businesses.
One of the easiest ways to cut the cost of card payments is to avoid them where possible. This is where systems like GoCardless come into play. A world leader in bank payments, GoCardless specializes in offering solutions that reduce the cost of collection. Rather than paying by card, customers authorize recurring or one-off bank payments to be taken from their account using the ACH network. Pricing is kept low - for international transactions too. The downside is that GoCardless can’t cover 100% of payer preferences, as some of your customers might still prefer to pay with cash or card.
With the benefit of familiarity, PayPal is a trusted name in the payments sector. If you’re a new business trying to keep costs low, it might be a good option. There are no set-up fees, and it functions as a merchant account as well as a payment gateway, so you don’t need to worry about setting up separate accounts. One benefit is the wide range of payment methods accepted by this platform. Customers can check out with their PayPal account as well as by debit or credit card. Card processing fees start at 2.9% per transaction, but there aren’t any month-to-month fees for a basic business account. Be aware that international processing fees are far higher, due to high conversion rates. If you’re looking for global cheap online payment systems, there are more affordable alternatives.
A third option is Adyen, which is a big name in the payments industry. With monthly minimums to meet, it’s best suited to enterprise-level businesses who need a comprehensive end-to-end solution. While Adyen offers a range of payment methods, it’s ultimately a card-first company optimized for credit card processing. It follows an interchange plus model, which means you’ll pay the interchange rate plus an additional $0.12 per transaction for Visa and Mastercard transactions. For ACH payments, businesses are charged $0.37 per transaction. However, there are no monthly fees, and you can cancel at any time without penalty.
Another card-first payment system, Stripe’s pricing model is a flat rate to keep things simple. The basic per-transaction fee is 2.9% + $0.30 for online transactions, like others on this list. However, fees are lower for in-person transactions making this a good option if you have a hybrid presence online and in stores. You’ll pay an additional fee for card transactions. Stripe is a great affordable choice if you want to customize your payment systems, with a coder-friendly design. If your coding skills aren’t up to scratch, it can be a tad complicated.
Helcim is a great all-rounder offering a variety of payment methods and features. Like Adyen, Helcim’s pricing falls in line with interchange rates, though these depend on the volume of transactions your business runs each month. You’ll pay more per transaction if you make less than $25,000 each month, for example. There are no monthly fees, and you’ll pay 0.5% + $0.25 for ACH payments. Yet with higher fees for lower volumes, it might be an option best suited to larger businesses. Start-ups will struggle to meet the minimum thresholds.
What to consider when comparing prices
When comparing pricing structures, you should not only look at per-transaction rate but also monthly minimums, monthly fees, and cancellation policies.
Of course, choosing cheap online payment systems solely based on cost isn’t the way to go. You should also make sure it fits your business’s needs. Think about your size, transactional volumes, and customer preferences to find the right fit. In many cases, combining a bank payment solution like GoCardless with a card-first solution like Stripe or Adyen ensures you tick all the boxes – provided the fees make sense.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.