Buying Payments

On this page

• What Matters
• Buying Payments Topics
• Popular in This Section
• Quick Reference: Volume Recommendations
• Quick Reference: Legitimate vs Junk Fees
• The $50k/mo Exit Test
• Test to Run
• Next Steps
• See Also

Prerequisites

Before selecting a processor, understand:

• Payments metrics you need to track
• Reading statements to understand costs

Most SMBs overpay for payments because they don't know what questions to ask. The difference between a good processor deal and a bad one is 30-50 basis points. On $500k/year, that's $1,500-$2,500 walking out the door.

What Matters

1. All-in cost, not quoted rate. The rate they advertise is not the rate you pay.
2. Contract terms, not just pricing. Early termination fees, reserves, and auto-renewals hurt more than basis points.
3. Volume-appropriate stack. What works at $20k/mo is wrong at $200k/mo.
4. Exit strategy. Can you leave with your tokens? If not, you're locked in.
5. Support quality. When money stops moving, response time matters.

Buying Payments Topics

🏢

Processor Profiles

Stripe vs Square vs PayPal vs Adyen - when to use which one

🎯

Processor Selection

The 3-bid method, volume-based recommendations, PayFac vs direct

📝

Contracts

Fee breakdown, contract gotchas, negotiation tactics

🔍

Underwriting

Approval process, documents needed, limits, and ongoing monitoring

🔧

Integration & Exit

API vs hosted, token portability, card-present, Level 2/3

Popular in This Section

• Processor Selection - The 3-bid method and volume-based recommendations
• Contracts - Fee breakdowns, contract gotchas, negotiation tactics
• Underwriting - Approval process and documentation needed

Quick Reference: Volume Recommendations

Volume	Recommendation	Focus
Under $100k/mo	Use aggregators (Stripe, Square)	Simplicity over optimization
$100k-$1M/mo	Shop for rates, consider direct	Negotiate reserves and terms
Over $1M/mo	Custom pricing, redundancy	Token portability required

Quick Reference: Legitimate vs Junk Fees

Legitimate	Junk (Negotiate Away)
Interchange (1.5-3.5%)	PCI compliance fee
Network assessments (0.13-0.15%)	Batch fee
Processor markup (0.1-0.5%)	Statement fee
	Annual fee
	Minimum monthly fee

Reality check: A processor with a clean 2.5% all-in is often cheaper than one quoting 2.2% plus seven line-item fees.

The $50k/mo Exit Test

Every 6 months, ask yourself:

1. What's my all-in effective rate?
2. Is my current processor still the best fit for my volume?
3. Have I outgrown my current contract terms?
4. Could I leave if I wanted to? (Token portability)

If you're paying more than 2.9% all-in above $50k/mo, you're likely overpaying.

Test to Run

2-week exercise:

1. Pull your last 3 months of statements
2. Calculate your true all-in rate: (Total fees / Total volume)
3. Get one competitive bid
4. Compare

Success criteria: You either confirm you're well-priced, or you find savings worth pursuing.

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Next Steps

Shopping for a processor?

1. Use the 3-bid method → Get three competitive quotes
2. Calculate your all-in effective rate → Compare apples to apples
3. Review contract terms before pricing → Termination fees matter more than basis points

Already have a processor?

1. Audit your current effective rate → Are you paying what you expected?
2. Review your contract terms → When does it renew? ETF clause?
3. Check processor management → Ongoing optimization

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See Also

• Payment Provider Types - Gateway vs processor vs ISO vs PayFac
• Processor Management - Ongoing relationship management
• Processor Comparison - Side-by-side comparison
• Reading Statements - Understanding fees
• Holds and Reserves - Cash flow impact