Overview of Payment Processors
With the significant number of payment processors on the market today, finding the cheapest credit card processing company can be daunting. Each company operates in different countries, offers unique services, and sells various products made to work with their own devices. There are several payment processing businesses to choose from. But for this article, we will match up the large aggregate companies that do not offer high risk merchant accounts – Stripe, PayPal, and Square.
High Risk Merchant Services
Many business owners pursue their dreams of owning a successful company not being aware that there are many business types classified as high risk. And as a company that is classified as high risk, you must be aware of the hurdles, processes, and stipulations related to payment processing. If you don't, you can get shut down by the acquiring bank. So how do you ensure that you keep payments processing and increase revenue?
Before covering the details of high risk credit card processing, it is important to understand what factors contribute to determining if a business is classified as high risk. The activities below are indicators that your company may be high risk:
- The individual registering the business has a bad credit score
- Products and services sold are large ticket transactions
- There is a high amount of returns and chargebacks
- The bank considers your company having a reputational risk
- You use a recurring billing model for monthly and subscription-based sales
- Processing is for card-not-present transactions
- The merchant is in a highly-regulated industry
If one or more of the above indicators describes your company and offerings, it is likely your business falls into the high risk category. In this case, it is essential to find a payment processor, like PayKings, who specialize in providing sustainable high risk merchant accounts.
Stripe Vs PayPal
Stripe was founded in 2010. They are a financial services and software as a service (SaaS) business headquartered in San Francisco, California. Stripe's main services include payment processing, point of sale solutions using Terminal, issuing, and lending. The company has had steady growth since its inception, securing several rounds of funding and strategic partnerships with Walmart, Facebook, Intuit, and Twitter.
PayPal was not originally called PayPal. The first name they went by was Confinity. In March of 2000, they merged with X.com founded by Elon Musk. He was soon replaced by the CEO Peter Thiel. The name PayPal was adopted after surveys showed X.com was less appealing because consumers believed it may have pornographic associations. One year later, Ebay acquired PayPal which went on to be one of the largest online payment systems in the world.
Although they are a global company, PayPal's corporate headquarters are in San Jose, California. They operate as a payment processor for many ecommerce websites and online vendors, offering simple, one-click transactions seamlessly on countless internet based store fronts. PayPal services provide the ability for customers to easily make financial transactions online between businesses and individuals.
Stripe Vs Square
Square specializes in mobile payments, financial services, merchant services aggregation, and point of sale. In 2009 by Jack Dorsey, Jim McKelvey, and Tristan O'Tierney founded the company. Its headquarters is currently in San Fransisco, California and their main products include point of sale terminals, the Square reader, Square stand, and the Cash App.
It is clear that Stripe has consistently shown a strong presence of their product in the global market. In comparison, Square does not have quite the geographical reach. Stripe serves the United States, European Union, Australia, Canada, Hong Kong, India, Japan, Malaysia, Malta, Mexico, New Zealand, Norway, Singapore, Switzerland, and the United Kingdom. While Square only covers the United States, Canada, Australia, United Kingdom, and Japan.
Location coverage is vital for customer decision making and the ability for business owners to expand their potential sales, but there are other important considerations regarding technological advancement that can affect future revenue. For instance, Square developed the Cash App, which allowed individuals to transfer money to one another via the app or website. In 2015, they introduced Square Cash for businesses. It enables any person, organization, and business owner to send and receive money using a $cashtag. Possibly one of the most significant advances of this application is the expansion and support for Bitcoin trading.
Square Vs PayPal
PayPal has several features that distinguish their company from other credit card processors. One commonly known use of PayPal is the ability to accept donations. In fact, the company even set up its own charity, PayPay Giving Fund. It allows non-profit organizations to use their platform in order to receive donations easier.
Another unique feature of their business is that they offer free analytics to customers. These free analytic tools provide insight on the ways that consumers use online payments. Over the years, PayPal has also acquired several significant companies including Venmo, Braintree, Hyperwallet, GoPay, and Honey.
There are no setup fees or monthly fees with Square. They even give magnetic stripe card readers to their users for free. The company also offers subscription based products such as Square Payroll, Square Register, and Customer Engagement, which is their proprietary CRM software.
Did Square, Stripe, or PayPal Drop Your Account?
It is extremely common for merchants to be approved for a merchant account by Square, Stripe or PayPal only to be dropped a few months later. But why does this happen so often?
It happens when the merchant unknowingly breaks the Terms of their contract. After approving the account, the payment processor researches more about the business, and they deem them high risk. As a result, the processor cannot provide their services to the high risk merchant.
In the event that this happens to your high risk company, do not fear. There are alternatives to Stripe, Square, PayPal, and other processors that can't support high risk merchants. PayKings is a proven sustainable solution for any business needing a high risk merchant account.