To choose a merchant services provider, compare total cost on your own statement, not advertised rates. Ask for interchange-plus pricing, get every monthly fee and the contract terms in writing, avoid equipment leases and big early termination fees, and make sure the provider works with your software. Then ask about dual pricing or surcharging, which can cut fees the most where your state allows it.
Key takeaways
- Compare providers on your real effective rate, not their advertised rate.
- Interchange-plus pricing is the most transparent model for established businesses.
- Read the contract: termination fees, equipment leases and rate-change notice.
- The provider must work with the invoicing and point-of-sale software you already use.
- Support matters: a dedicated rep saves time when payments stop working.
What a merchant services provider does
Your provider sets up the merchant account your card sales flow into, gives you card readers or payment software, moves money from the card networks to your bank, sends your monthly statement, and supports you when something goes wrong. Some are banks, some are large processors, and some, like our processing partner, are independent agencies that pair processing with hands-on service.
The pricing models you'll be offered
| Model | How it works | Watch out for |
|---|---|---|
| Interchange-plus | The card brands' actual cost plus a fixed markup | Monthly fees on top of the markup |
| Tiered | Qualified, mid-qualified and non-qualified rates | Most cards landing in the expensive tiers |
| Flat rate | One rate for every card | Overpaying on cheap debit cards as volume grows |
| Subscription | Interchange at cost plus a monthly fee | The fee outweighing savings at low volume |
| Dual pricing / surcharging | Customers paying by credit card cover the cost | State rules and how it's displayed |
More detail in what normal credit card processing fees look like.
10 questions to ask before you sign
| Question | What you're looking for |
|---|---|
| What pricing model will I be on? | Ask for interchange-plus. Be cautious with tiered pricing. |
| What will my effective rate be on my actual statement? | Get a written projection based on your real volume and card mix. |
| What are all the monthly and annual fees? | PCI, statement, gateway, minimums, annual and 'regulatory' fees. |
| Is there a contract or early termination fee? | And for how long, and how much. |
| Do I have to lease equipment? | Equipment leases are often non-cancelable and expensive. Buying or using provided equipment is usually better. |
| Can rates change, and how will I be told? | Ask how much notice you get before any increase. |
| Does it work with my software? | Invoicing, accounting, point of sale and industry tools like DSI, Jobber or practice software. |
| Do you offer dual pricing or surcharging? | And will you handle compliance with card network and state rules? |
| How fast will I get my money? | Next-day funding is common; ask about weekends and cutoffs. |
| Who do I call when something breaks? | A dedicated rep beats a 1-800 queue. |
Red flags
- A quote that only shows a "qualified" rate.
- Non-cancelable equipment leases.
- Early termination fees in the hundreds of dollars, or "liquidated damages."
- Pressure to sign the same day.
- No written projection of your effective rate.
How to compare offers fairly
- Pull one recent monthly statement and work out your effective rate (see how to read a merchant statement).
- Send the same statement to each provider.
- Ask each for a written projection: effective rate, all fees and contract terms.
- Compare total annual cost, then service and software fit.
Want a head start? Run your numbers through the credit card processing fee calculator, or send your statement for a free fee review and get a written breakdown from our processing partner. If you're comparing app-based options, see Square vs. Stripe vs. Clover fees.
Frequently asked questions
What does a merchant services provider do?
What's the difference between a merchant account and a payment processor?
What pricing should I ask a merchant services provider for?
Should I sign a long contract with a merchant services provider?
How do I compare merchant services providers?
This article is general information, not legal, tax or financial advice. Card network rules and state laws change; confirm the rules for your business before changing how you charge customers.