Every business needs a credit card processor. Plastic money is so much more convenient and offers a lot of flexibility and advantages to the customers. However, small or high-risk businesses that have more probability of shutting down find it hard to find a reliable credit card processing service.

Different processing rates, terms of contract and variation in fees tends to bewilder the merchants in finding a suitable and cheap processing service. Small or new businesses need to save money and for this reason they look for cheap credit card processing companies. A business owner can either opt for a traditional merchant account or choose a payment service provider (PSP) to process payment. Let’s understand what these are:

Merchant Account

A merchant account is the traditional way of going about payment processing. As a merchant you are given a unique identification number. They are costly in the sense that you would have to keep paying a certain recurring fee apart from the other transaction fees and chargebacks. It also provides a lot of ancillary services like customizable gateways for payment, ACH (eCheck) payment support and a few others.

Payment Service Provider (PSP)

A PSP is an aggregate account in which multiple accounts are clubbed into a single one. PSPs have a poor service record and these accounts may get frozen at the first hint of a fraud or trouble. A PSP account can be your option in the beginning when you are fairly new in the business but it is not a reliable way to process funds.

It is essential to understand that a company offering low fees for payment processing might not be your cheapest option as a business and a cheap payment processor isn’t always good. Payment processing is an integral part of business and it needs to be of a certain standard to avoid major losses. The best bet for small and new businesses is a flat-rate pricing system. It doesn’t charge a monthly account fee or any other fees that other traditional merchant accounts charge. Companies like PayPal, Square, Payline etc. offer great options.

When does flat rate pricing work well?

Flat rate pricing works immensely well for small to medium sized businesses. Newly started businesses that don’t have a lot of funds to process and don’t want to end up paying high monthly fees can opt for these. So, if you have just started a business and want to flatten out your payment processing expenses, flat-rate pricing makes it fairly easy to accept credit cards without the commitment and hassle of a full service payment processing service.