Choosing the right payment processor can make or break your business. The right system keeps transactions smooth, costs low, and everything synced up with your existing tools. In this guide, we’ll walk you through what really matters – how aggregators differ from direct processors, which fees to watch for, and why seamless integration with your POS and CRM can save you time and headaches.
One of the first decisions you’ll need to make is whether to use a payment aggregator (also called a third-party processor) or a direct payment processor.
Payment Aggregators (e.g., Stripe, PayPal, Square, etc.)
Aggregators allow businesses to accept payments without setting up a dedicated merchant account. Instead, they pool transactions from multiple businesses into a single account.
✅ Pros:
Quick and easy setup
No need for a dedicated merchant account
Ideal for small businesses, startups, and online stores
❌ Cons:
Higher transaction fees compared to direct processors
Less control over chargebacks and disputes
Funds can be held or delayed without warning
Direct Payment Processors (e.g., First Data, Worldpay, TSYS, etc.)
Direct processors require businesses to set up their own merchant account, giving them more control over transactions.
✅ Pros:
Lower transaction fees, especially for high-volume businesses
Faster access to funds
More control over payment disputes and chargebacks
❌ Cons:
Lengthy application process
May require underwriting and credit checks
Monthly fees and stricter compliance requirements
Which One Is Right for You?
For small businesses, e-commerce startups, or those needing a quick setup, a payment aggregator like Stripe or PayPal is the easiest choice.
For larger businesses, retail stores, or restaurants processing high transaction volumes, a direct processor offers better cost savings and reliability.
Payment processing fees can add up quickly, so understanding the pricing structure is essential. Here are the main types of fees you should look out for:
Transaction Fees
This is the most common fee, usually charged per transaction.
Aggregators (e.g., Stripe, PayPal): ~2.9% + $0.30 per transaction
Direct processors: Can range from 1.5% to 2.5% with interchange-plus pricing
Tip: If your business processes high volumes, negotiate lower rates with a direct processor.
Monthly Fees
Aggregators: Typically have no monthly fees.
Direct processors: Often charge $10–$50/month for access to lower transaction rates.
Chargeback Fees
If a customer disputes a charge, you’ll likely pay a chargeback fee ($15–$25 per dispute).
Some processors offer chargeback protection, but it comes with additional fees.
Hidden Fees to Avoid
Early termination fees: Some providers charge if you cancel before your contract ends.
PCI compliance fees: Some processors charge a fee ($99–$199/year) to ensure your business follows security standards.
Batch processing fees: Some direct processors charge a small fee per batch of transactions settled at the end of the day.
For brick-and-mortar stores, restaurants, and hybrid businesses (physical + online sales), a payment processor must do more than just process transactions – it should seamlessly integrate with your Point-of-Sale (POS) and Customer Relationship Management (CRM) systems. Here's why:
POS Integration: The Key to Efficient Operations
Your POS system is the backbone of in-store transactions. If your payment processor doesn’t integrate well with it, you could experience:
Slow transactions
Manual errors from entering totals separately
Issues tracking sales and inventory
What a Good POS-Integrated Payment Processor Can Do:
Faster Checkout: Payments sync instantly with orders, reducing wait times.
Automatic Inventory Updates: Every sale adjusts stock levels in real-time.
Omnichannel Sales Sync: If you sell in-store and online, an integrated system ensures all payments are recorded in one place.
Better Analytics: You can track revenue, average transaction size, peak sales times, and other useful insights.
Example: A restaurant using Toast POS can have customers pay at the table via a handheld terminal, and the system instantly updates sales data and tips.
Example: A retail store using Square POS can accept payments in-store and online, while syncing transactions across both platforms.
What Happens If Your Payment Processor Doesn’t Integrate with Your POS?
Manual entry: Employees will need to enter sales into the POS separately, increasing errors.
Double work for reporting: Sales reports won’t match up, leading to extra admin work.
Limited payment options: Some processors only support basic card transactions, missing out on features like contactless payments (NFC), digital wallets, or QR codes.
CRM Integration: Why It’s Important for Business Growth
Your CRM system (such as Salesforce, HubSpot, or Lightspeed) stores valuable customer data. If your payment processor integrates with your CRM, you can:
Track customer purchase history to offer personalized discounts
Automate invoices and recurring billing for memberships or subscriptions
Offer loyalty rewards based on previous transactions
Example: A coffee shop using Square and a CRM can automatically enroll customers in a loyalty program and send personalized discounts based on their order history.
Example: A high-end restaurant using Toast POS and a CRM can keep track of VIP guests’ favorite meals and offer them personalized experiences.
What Restaurants Should Look for in a Payment Processor
A restaurant’s payment needs are unique. Whether you run a quick-service, fine dining, or multi-location chain, your payment processor should:
Support Table-Side, Online, and Mobile Payments – Customers should be able to pay at the table, via QR codes, or through a mobile app.
Seamlessly Integrate with POS & Online Ordering – Syncs with DoorDash, UberEats, Grubhub, and other delivery platforms.
Process Tips and Split Payments Smoothly – Allows tip adjustments after payment and easy bill splitting.
Offer Offline Payment Processing – In case of WiFi outages, payments can still be processed.
Low Fees for High-Volume Transactions – Some processors have better rates for restaurants processing large ticket volumes.
Best Payment Processors for Restaurants: Toast, Square for Restaurants, Clover, SpotOn
What Retail Stores Should Look for in a Payment Processor
For retail businesses, speed and flexibility are key. Look for:
Fast, Contactless Checkout – Supports Apple Pay, Google Pay, and Tap-to-Pay.
Seamless Omnichannel Integration – Syncs in-store and online sales in real-time.
Flexible Payment Options – Supports installment plans (BNPL), gift cards, and store credit.
Detailed Sales Reporting – Tracks best-selling products and busiest hours.
Affordable Transaction Fees – Look for interchange-plus pricing instead of flat-rate fees.
Best Payment Processors for Retail: Shopify Payments, Square, Clover, Lightspeed
How to Choose the Best Payment Processor for Your Business
When selecting a payment processor, consider:
Business type: Restaurants and retail stores have different needs than e-commerce businesses.
Costs: Understand transaction fees, hidden charges, and whether you need a monthly subscription.
POS & CRM compatibility: Choose a processor that integrates seamlessly with your existing systems.
Payment flexibility: Ensure it supports contactless, mobile, and online payments.
Customer service & reliability: A strong support team is critical for resolving payment issues quickly.
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