How Do You Find the Right Payment Processor?
Finding the right payment processor requires matching your industry MCC, monthly processing volume, average transaction value, geographic markets, chargeback history, and compliance posture against processor capabilities across 50+ providers. The wrong match leads to account freezes, excessive fees, or termination. Automated matching tools analyze these six factors to recommend optimal processor fits.
Processor Selection Checklist
- Know your MCC code and verify the processor explicitly supports your industry
- Calculate your monthly volume and average transaction value before comparing quotes
- Check the processor's prohibited business list — not just accepted industries
- Request interchange-plus pricing for transparency (avoid flat-rate for volume over $25K/mo)
- Ask about reserve requirements, hold periods, and release schedules upfront
- Confirm chargeback management tools: alerts, RDR, representment support
- Have a backup processor approved before you need one
The Six Matching Factors
Payment processor matching is not just about finding who will accept your business. It's about finding the optimal fit that balances approval likelihood, processing costs, feature set, and long-term stability. These six factors determine compatibility between a merchant and a processor.
| Factor | Weight | Why It Matters |
|---|---|---|
| Industry MCC | Critical | Your four-digit merchant category code determines which processors accept your business type |
| Monthly Volume | High | Total monthly processing amount affects pricing tiers and account limits |
| Average Transaction Value | High | Per-transaction amount signals risk profile and affects interchange costs |
| Geographic Markets | Medium | Domestic-only vs international and specific country coverage |
| Chargeback History | High | Historical dispute ratio determines risk appetite and reserve requirements |
| GuardScore | Medium | Composite compliance score from MerchantGuard (0-100) |
Types of Payment Processors
Payment processors fall into four broad categories, each suited to different merchant profiles. Understanding these categories helps narrow your search before comparing individual providers. The right category depends on your risk classification, volume, geographic needs, and how quickly you need to start processing.
Payment Facilitators (PayFacs)
Approval: 1-3 daysExamples
Stripe, Square, PayPal
Best For
Low-risk businesses, startups, quick setup
Limitations
Strict prohibited business lists, sudden account freezes, limited customization
Traditional Acquirers
Approval: 5-14 daysExamples
Worldpay, First Data (Fiserv), Chase Paymentech
Best For
Established businesses with 6+ months processing history
Limitations
Longer onboarding, require dedicated merchant account, higher monthly minimums
High-Risk Specialists
Approval: 5-21 daysExamples
Durango Merchant Services, PayKickstart, DirectPayNet
Best For
CBD, crypto, nutra, adult, gaming, subscription businesses
Limitations
Higher fees (3-8%), rolling reserves required, stricter monitoring
International / Multi-Currency
Approval: 7-30 daysExamples
Adyen, Checkout.com, dLocal
Best For
Global businesses needing local acquiring in multiple markets
Limitations
Complex integration, enterprise pricing, volume requirements
Common Processor Matching Mistakes
The most expensive mistake merchants make is choosing a processor based solely on the lowest advertised rate. Flat-rate pricing that looks attractive at low volume becomes costly as you scale. Choosing a PayFac when your business is borderline on their prohibited list risks a sudden account freeze that stops all revenue. Not having a backup processor means a single termination can shut down your business for weeks while you scramble for a new account.
Choosing on price alone
Compare total cost of ownership including reserves, fees, and chargeback costs
Using a PayFac for high-risk
PayFacs will freeze your account at the first sign of trouble; use specialized processors
No backup processor
Always maintain a pre-approved secondary account for business continuity
Ignoring contract terms
Read early termination fees, rate increase clauses, and reserve release schedules
Understanding Pricing Models
Payment processing pricing comes in three main models. Flat-rate pricing (e.g., Stripe's 2.9% + $0.30) is simple but expensive at volume. Interchange-plus pricing passes through the actual interchange cost and adds a fixed markup, offering the most transparency and typically the lowest total cost for merchants processing over $25,000 per month. Tiered pricing bundles transactions into qualified, mid-qualified, and non-qualified categories with different rates, and is generally the least transparent model. Always request interchange-plus pricing and ask for a rate review after 6 months of clean processing history.
How MerchantGuard Matches You With the Right Processor
MerchantGuard's PSP Match analyzes your industry, volume, risk profile, and geography against our database of 50+ payment processors to recommend the optimal matches. Your GuardScore compliance rating helps processors evaluate your application more favorably, leading to better terms and faster approvals.
Frequently Asked Questions
What factors determine which payment processor is right for my business?
The six primary matching factors are: industry MCC code (determines which processors accept your vertical), monthly processing volume (affects pricing tiers and account limits), average transaction value (some processors specialize in micro or high-ticket transactions), geographic markets (domestic vs international and specific countries), chargeback history (processors have different risk appetites), and your GuardScore compliance rating.
How many payment processors should I apply to?
For low-risk merchants, applying to 2-3 processors is typically sufficient. For high-risk merchants, apply to 3-5 specialized processors simultaneously to maximize approval odds and compare terms. Having a backup processor is also recommended as risk management. If your primary processor freezes your account, a pre-approved backup prevents revenue disruption. Never put all your volume through a single processor.
What is the difference between a payment processor and a payment gateway?
A payment gateway is the technology that securely transmits transaction data between your website and the payment processor. A payment processor (or acquirer) is the financial institution that actually moves money between the cardholder's issuing bank and your merchant account. Many companies offer both services bundled together. Stripe, for example, serves as both gateway and processor, while Authorize.net is primarily a gateway.
What fees should I expect from a payment processor?
Standard payment processing fees include interchange fees (set by card networks, typically 1.5-3.5%), processor markup (0.1-0.5% for low-risk, 1-4% for high-risk), monthly account fees ($10-$50), PCI compliance fees ($10-$30/month), chargeback fees ($20-$100 per dispute), and potentially setup fees and early termination fees. Always request interchange-plus pricing for transparency.
What is a GuardScore and how does it affect processor matching?
GuardScore is MerchantGuard's proprietary compliance score from 0 to 100 that evaluates a merchant's risk profile. It factors in chargeback rate (40%), fraud prevention stack (25%), authentication methods (15%), processing volume stability (10%), and PSP relationship health (10%). A higher GuardScore improves your chances of approval with premium processors and can result in better terms and lower reserves.
