The Best Mobile Payment Systems: Small Businesses Weigh In

Anisha Sekar for Forbes writes: Many small merchants, from food truck vendors to hair stylists, use mobile payments to process their transactions. They’re convenient, simple and often come with handy features like receipt delivery and reports. But should small businesses always turn to the first processor they see? Even though companies like Square and PayPal Here dominate the conversation, they’re not always the best choice.

The tangled web

A NerdWallet study found that the best payment processor varied greatly by type of transaction, amount, total sales volume and type of card. In the end, though, certain processors carried the day.

Breadcrumb by Groupon GRPN -2.45% wins out for merchants who:

• Key in a significant number of transactions OR
• Have many transactions over $400 OR
• Do less than five or more than six figures in monthly sales volume, AND
• Have an average transaction over $26 OR

• Have an average transaction over $17 and under $26, but do not take American Express AXP -2.35%

PayPal Here is ideal for merchants who:

• Do less than five figures in sales a month AND

• Have an average transaction under $17 OR
• Have an average transaction under $26 and take American Express cards

Square’s monthly subscription plan is best for merchants who:

• Do 5-6 digits in sales every month AND
• Have very few transactions over $400 AND
• Key in very few transactions
• There are a few other tips available to businesses:
• Dwolla is one of the best processors out there, but it requires both customer and merchant to have signed up for an account, adding friction to the transaction process.
• Online donations from companies like Frendo or through portals like American Express Members Give can offer transaction discounts for registered nonprofits.
• American Express can be costly: Bank of America BAC -0.46%’s Mobile Pay on Demand, Breadcrumb by Groupon and Intuit INTU +0.09% GoPayment all charge extra to take the high-end cards.

Watch for the fine print

There can be some crazy things hidden in terms and conditions. For example, Intuit GoPayment’s subscription service comes with hidden surcharges that significantly jack up the price. As CardFellow reports, only non-rewards credit card transactions (“qualified transactions”) get the lowest rate; others cost significantly more. According to NerdWallet analysis, such transactions make up only about 60% transactions – a hidden detail that can take a significant chunk from already-thin margins.

In the end, though, a merchant is best served by doing the math and finding the best payment processor for her own needs.