Cash Conversion Cycle Formula: How to Calculate & Improve
Learn the cash conversion cycle formula and how to use it to improve your business’s cash flow and financial health.
Best Merchant Account Providers: Top 5 Options
A merchant account provider allows your business to accept debit and credit card transactions alongside other key services, such as payment processing and technology integrations.
Merchant account providers often support the entire card payment process, from supplying you with Point of Sale (POS) terminals to processing payments and transferring the funds to your business account.
Let’s look at the best merchant account providers in the market.
| In this article: |
|---|
Top Merchant Account Providers in the Market
| Quick overview: |
|---|
PayPal
There are more than 325 million active PayPal users across the world.¹ PayPal’s well-known name can increase customer conversion rates and prevent abandoned carts.
Features and Services Offered by PayPal's Merchant Services
| Main features of PayPal’s merchant services: |
|---|
|
Pros and Cons of Using PayPal for Merchant Accounts
The PayPal Business account comes with strong multi-currency support, as well as the ability to integrate with many eCommerce platforms and accounting softwares.
But, despite its popularity, PayPal isn’t in the strict sense a merchant account provider. Instead, PayPal is a payment aggregator and merchant services provider. This comes with certain pros, as well as cons.
As a payment aggregator, PayPal aggregates all of its seller accounts into one single merchant account.
To apply for a traditional merchant account, the acquiring bank needs to underwrite your business. This makes it a lengthy process involving the exchange of business documentation, and the risk of denial.
With PayPal, you avoid this lengthy process. It can be easier and quicker to open a business account with PayPal, as you don’t have to wait for approval. This can make it an option for small businesses starting out, businesses with a lack of credit history, or occasional sellers.
No long-term contracts are required with PayPal, so you won’t need to worry about Early Termination Fees (ETFs).
However, as there isn’t any underwriting process with PayPal, this means your transactions are scrutinized to a higher degree. This can make account holds more likely with PayPal compared to an actual merchant account provider. Sudden changes in revenue, for example, could cause an account freeze, even though they don’t go against PayPal terms of usage.
PayPal also doesn’t offer merchant services to any businesses involved in high-risk industries.
While PayPal may be free of many merchant account fees, the more services you want access to, the more you’ll pay in extra fees. For instance, PayFlow - PayPal’s payment gateway - comes with a variety of extra fees.⁵ There are also processing fees per transaction.
If you’re a high-volume sales merchant with a good credit score, you’ll have the ability to negotiate lower fees with actual merchant account providers. This possibility doesn’t exist with PayPal, which can restrict your long-term growth strategy.
| 💡 While PayPal may be the cheaper option for occasional sellers, or low-volume sales merchants, it can eat into your profit as a high-volume sales merchant. |
|---|
Stripe
Stripe is a merchant services provider supporting millions of businesses. ⁶ It offers both merchant account functionality and a payment gateway.⁷
Stripe's Merchant Solutions and Capabilities
| Stripe’s main merchant services: |
|---|
|
Advantages and Limitations of Stripe as a Merchant Account Provider
Stripe is one of the leading merchant services providers out there. It supports businesses of all sizes, offering both standard flat-rate and interchange plus pricing. It’s also free of monthly fees.
A flat-rate pricing structure is offered by Stripe:
- 2.9% + 0.30 USD per online transaction (plus 1.5% for international cards and plus 1% for currency conversions)
- 2.7% + 0.05 USD per in-person transaction (plus 1.5% for international cards and plus 1% for currency conversions)
- 0.8% for ACH Direct Debit
- 0.4% chargeback protection fee per transaction⁸
Stripe supports international business. It offers a range of local payment methods and checkout in 30+ languages.
| You can also connect Stripe to your Wise Business account, allowing you to receive international payments for less. |
|---|
ACH payment support, chargeback protection and 24/7 customer service are also standout features of Stripe.
One place Stripe may be faulted is in payout waiting times. For high risk businesses, it can take up to 14 days to receive payment. Likewise, your first payout, regardless of your risk level, usually takes 7-14 days.⁹
Similarly, as Stripe is a payment aggregator and merchant services provider like PayPal and Square, there is always a higher risk of account freezes.
Square
Square is a merchant services provider focusing on small to medium-sized businesses. It supports everything, from secure credit card processing to offering a range of POS terminals.
Square's Merchant Account Offerings
| Square’s primary merchant account features: |
|---|
|
Pros and Cons of Utilizing Square for Merchant Services
Square makes accepting credit and debit card payments easy for small businesses. As a merchant services provider, opening an account is quick and free of set-up fees.
Square has a wide range of POS terminals, enabling you to accept online and in-person payments, from contactless to BNPL transactions.
Square also comes with extra features, such as payroll, automated tax filings, reporting and analytics, as well as instant transfers for a fee of 1.75%.
Square offers simple flat-rate pricing:
- 2.6% + 0.10 USD per in-person transaction
- 2.9% + 0.30 USD per online transaction
- 3.5% + 0.15 USD per keyed-in transaction
- 1% for ACH
- 6% + 0.30 USD per BNPL transaction¹⁰
Their processing fees include PCI compliance and chargeback assistance. But, flat-rate pricing could cost your business more than interchange plus pricing if you’re earning more than $5,000 in annual sales.
That said, for merchants who make more than $250,000 in annual sales, Square does offer custom pricing options.
Unfortunately, Square POS terminals can’t accept payments in foreign currency. The only option for accepting foreign currency is to open a second Square account in the new currency.¹²
Similarly, being a merchant services provider like Stripe and PayPal, account freezes are more probable than with an actual merchant account provider.
Authorize.Net
Authorize.Net is one of the most well-established payment gateways in the eCommerce world. Under its All-In-One plan, you get access to its payment gateway plus a merchant account provided by third-parties.
Features and Services Offered by Authorize.Net
| Features offered by Authorize.Net: |
|---|
|
Benefits and Considerations of Authorize.Net's Merchant Solutions
Authorize.net is a popular payment gateway service for eCommerce businesses, which also offers a merchant account(see Authorize.net alternatives).
It supports a range of currencies, as well as payment types.
You’ll be billed $25 monthly for its payment gateway, but as there is no long-term contract, you don’t need to worry about early termination fees.
The downside to Authorize.net is its pricing. The All-In-One plan flat-rate pricing costs 2.9% + 0.30 USD per transaction and $25 USD per month for payment gateway.¹³
Despite its lack of setup fees, its flat-rate pricing for merchants processing under $500,000 USD in annual sales could cost you profit.
When signing up for a merchant account, you can either sign up directly online, or first talk to Authorize.net over the phone.
Authorize.net works with many merchant account providers, so it’s better to speak directly with a representative to understand which provider is best suited to your business. After all, these merchant account providers are free to set their own terms and conditions.
In some cases, it may be cheaper to work directly with a merchant account provider, and then apply for Authorize.net’s payment-gateway-only option. By doing this, you’re free to negotiate better pricing with your merchant account provider, rather than having to accept that offered by Authorize.net.
FIS Global (Formerly Worldpay)
FIS Global (formerly Worldpay) is a market leading global payment processor. It supports a range of payment methods and offers merchant accounts.
Worldwide Merchant Account Services by FIS Global
| Features of FIS Global merchant account services: |
|---|
|
Advantages and Limitations of FIS Global for Merchant Accounts
As a global payment processor, FIS Global has a lot to offer(see FIS Global/Worldpay alternatives).
You can convert your android devices into POS terminals and accept in-person payments by downloading the SoftPOS app. FIS Global also offers virtual POS terminals for online payments, and accepts 300+ payment methods across 120 currencies.
FIS Global also comes with reporting and analytics tools, so you can make data driven decisions.
However, one of the biggest limitations of FIS Global merchant accounts is their early termination fee. A standard contract lasts three years and has annual automatic renewal thereafter.
If you cancel your account after one year or less, you’ll be charged $295. If you cancel after two or three years, you’ll be charged $195 and $95, respectively.¹⁶
Considering that very few merchant account providers today still charge early termination fees, this is a disadvantage of FIS Global, and something that you should negotiate during the application process.
Likewise, FIS Global doesn’t advertise any of its merchant account fees publicly. Instead, you’ll need to contact them for a quote. This lack of transparency makes it difficult to compare merchant account providers with FIS Global.
Factors to Consider When Choosing a Merchant Account Provider
When selecting a merchant account provider, there are some factors you need to consider.
Transaction Fees and Pricing Structure
One of the major differences between merchant account providers is pricing.
| There are four different pricing systems merchant account providers offer: | |
|---|---|
|
Interchange Plus pricing is the most transparent pricing system. It can also save you money compared to using a flat-rate pricing system.
Interchange plus pricing consists of a variable percentage plus a fixed fee. The percentage is the interchange fee applied by the credit card company. This varies depending on the type of card used. The fixed fee is the markup applied by the credit card processor.
Subscription pricing is a variation of interchange plus pricing. For subscription pricing, the per transaction markup fee is removed. Instead, you’ll be charged a fixed monthly subscription fee. This means you’ll only need to pay the direct interchange fee plus a small authorization fee per transaction.
Subscription pricing is beneficial for high-volume sales merchants, while disadvantageous for merchants with lower sales volumes.
A flat-rate pricing system is where you’re charged a fixed fee for every transaction. It’s best suited to businesses with lower sales volumes.
While it’s a more simple and predictable pricing system, it generally costs you more than interchange plus pricing. This is because you’ll always pay far more than the direct interchange fee, as merchant account providers need to ensure they always make a profit.
Tiered pricing organizes credit and debit cards into three tiers:
- Qualified
- Mid-qualified
- Non-qualified
Different tiers receive different processing fees.
For example, qualified cards are generally debit cards used in card-present (CP) transactions. These transactions will have the lowest fees.
Mid-qualified cards may be reward and cash back cards, while non-qualified cards are usually considered high risk, card-not-present transactions. These will have the highest fees.
Tiered pricing is common. Unfortunately, it’s also one of the most expensive pricing systems, as providers set high base rates and hide the real interchange fee.
More often than not, merchants end up paying inflated fees on this pricing system. It can be difficult to predict what transaction will fall into which tier.
Payment Methods Supported and Flexibility
It’s important that your merchant account provider supports the preferred payment methods of your customers. Having payment flexibility reduces the likelihood of cart abandonment.
Being able to accept these payment methods will increase your sales. Not being able to accept these payment methods will lose you customers.
Compatibility with E-commerce Platforms
Being able to integrate your merchant account provider with eCommerce platforms will make your operations smoother.
Integrations with eCommerce platforms allow for the efficient transfer of data, speeding up processes and reducing the need for manual data entry.
Transactions may also be faster, as your merchant account integrates with your payment processing and POS terminal.
Benefits of Merchant Account Providers
Here are the main benefits of partnering with a merchant account provider.
Accepting Credit and Debit Card Payments
One of the main benefits of having a merchant account provider is being able to accept debit and credit card transactions.
As of 2021, at least 191 million Americans have a minimum of one credit card. On top of this, half of the US population have a minimum of two credit cards while 13% have five or more cards.²²
| 🔍 Did you know? | |
|---|---|
| In recent years, cash payments have declined, with only 9% of Americans using cash as their main payment method.²² |
For these reasons, being able to accept card payments is crucial for every business today. This is only possible with a merchant account provider.
Streamlining Online and In-Person Payments
Many merchant account providers integrate with payment processing services and POS terminals.
This streamlines your online and in-person payments. It also promotes multi-channel selling, increasing revenue while keeping things simple.
Merchant accounts also integrate with third-party software, such as accounting softwares, making business processes more efficient, saving you time.
Improving Customer Experience and Conversion Rates
Streamlined online and in-person payments will make your business run smoother. Likewise, offering your customers’ preferred payment methods will improve their overall experience.
These two factors combined will increase conversion rates, boosting your sales and growing your business.
Receive International Payments With Ease: Try Wise Business
With a Wise Business account, you can receive international payments with ease.
Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can get 9 major currency account details - from IBANs to Routing Numbers - for a one-off fee to receive overseas payments without cross-border fees.
You can also connect your Wise Business account to your merchant account, enabling you to withdraw foreign currencies.
And if you do need to convert your funds, you get access to the mid-market exchange rate, without any hidden fees.
| Read next: | |
|---|---|
Sources:
- Merchant Services | Business Payment Solutions | PayPal PW
- Accept all major credit cards on your website | PayPal PW
- accounting software PayPal integrates with
- Accept Payments Online and In-Store | PayPal US
- Fees | Merchant and Business | PayPal US
- Stripe | Payment Processing Platform for the Internet
- Merchant accounts: What merchants need to know | Stripe
- Pricing & Fees | Stripe Official Site
- Payouts - Stripe
- Payment processing with Square.
- POS Systems | Point of Sale for Small Businesses | Square
- Can I accept Multiple Currencies with Square? | Square Support Center - US
- Merchant account fees and payment gateway pricing | Authorize.net
- Authorize.net
- Which Currencies Does Authorize.net Support?
- CUSTOMER PROCESSING AGREEMENT PROCESSING FEE SCHEDULE
- In-store Payment Processing | Worldpay from FIS
- Online Payment Processing | Worldpay from FIS
- In-store Payment Processing | Worldpay from FIS
- Data Solutions | FIS
- https://online.worldpay.com/pricing
- Credit Card Statistics And Trends 2023 – Forbes Advisor
All sources checked August, 2023.
*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
Money without borders
Find out more
Buying Business Property in a Foreign Country: A Comprehensive Guide
Thinking about buying business property in a foreign country? Explore key considerations, legal requirements, and tips for success.
Cost of an Accountant: What to Expect for US Small Business Services
Wondering about the cost of an accountant for your small business? Find out what to expect and how to budget for professional services.
Small Business Bookkeeping: Essential Tips for Success
Get essential bookkeeping tips for small businesses, from tracking expenses to managing cash flow and preparing for taxes.
Paypal Business vs Wise Business (2025 Guide)
Discover the key differences between PayPal Business and Wise Business. Compare features, fees, and benefits to find the best solution for your business needs.
How to Set Up Direct Deposit for Employees (Overview)
Want to know how to set up direct deposit for your employees? Let’s go into the steps, costs/fees, documents, and tools you can use.
