NMI is a payment processor that handles card transactions for businesses
NMI (Network Merchants Inc.) is a payment gateway and processor that lets businesses accept credit cards, debit cards, and digital wallets. It sits between your business, the customer's bank, and the card networks (Visa, Mastercard, American Express, Discover). When a customer swipes, taps, or enters their card details, NMI routes that transaction to the right bank, checks whether the card is valid and has funds, and tells your system whether the payment went through or was declined.
NMI does not hold the money itself. It passes the transaction to your merchant bank, which deposits the funds into your business account. NMI charges a fee for this service—usually a percentage of each transaction plus a flat per-transaction fee, though the exact amount depends on your contract and the type of card used.
The company has been in business since 1998 and serves millions of transactions a year for businesses of all sizes, from small online shops to large retailers. It is owned by Paysafe, a larger payments company, but operates as its own brand.
Key Takeaways
- NMI routes card transactions from your customer to their bank and back to you, handling the technical connection between all parties.
- You need a merchant account (a business bank account that accepts card payments) to use NMI; NMI itself does not hold your money.
- NMI charges per-transaction fees and a percentage of each sale; the exact rate depends on your industry, card type, and contract terms.
- NMI supports multiple payment methods including credit cards, debit cards, digital wallets, and ACH bank transfers through its platform.
- If a transaction fails or a customer disputes a charge, NMI provides tools to investigate and respond, but your merchant bank makes the final decision.
How a transaction flows through NMI
When a customer enters their card information on your website or at your point-of-sale terminal, that data goes to NMI's servers. NMI encrypts it and sends it to the card networks and the customer's bank. The bank checks whether the card is real, whether the account is active, and whether there are enough funds. This check usually takes a few seconds.
The bank sends back an approval or decline code. NMI receives that code and passes it to your system, which then shows the customer a success or failure message. If approved, the transaction is marked as "authorized"—the money is held but not yet moved. Your merchant bank then settles the transaction, usually within one to two business days, and deposits the funds into your account.
If the customer's bank declines the transaction (insufficient funds, card expired, fraud flag), NMI relays that decline to your system immediately. The customer can try a different card or payment method, or the transaction simply does not go through.
What NMI charges and how fees work
NMI's pricing model typically includes three components: an interchange fee (set by the card networks, not NMI), an assessment fee (also set by the networks), and NMI's own markup. The interchange and assessment fees vary by card type—a rewards credit card costs more to process than a basic debit card—and by your industry and transaction size.
On top of those, NMI charges its own fee, which is usually a percentage of the transaction (often 1% to 3%) plus a flat per-transaction fee (often $0.10 to $0.30). Some businesses negotiate a flat rate instead. Monthly fees, PCI compliance fees, and gateway fees may also apply depending on your contract.
The total cost of processing a $100 transaction might be $2.50 to $4.00, but the exact amount depends on the card type, your industry code, your sales volume, and your negotiated rate. Asking NMI or your merchant services provider for a detailed rate sheet before signing is the only way to know what you will actually pay.
NMI's security and fraud protection features
NMI encrypts all card data using TLS (Transport Layer Security), the same encryption standard used by banks. It is PCI DSS Level 1 certified, which is the highest security standard for payment processors. This means NMI undergoes annual third-party security audits and meets strict requirements for how card data is stored, transmitted, and handled.
NMI also offers tokenization, which means it can store a customer's card information as a token—a unique code—instead of storing the actual card number. When the customer makes a repeat purchase, you send the token instead of the card number, which reduces the risk of a data breach exposing card details.
For fraud detection, NMI provides tools like velocity checks (flagging multiple transactions from the same card in a short time), address verification (checking that the billing address matches the card issuer's records), and CVV verification (checking the three-digit security code on the back of the card). These tools do not stop fraud entirely, but they catch many common patterns.
Disputes, chargebacks, and what happens when a customer contests a charge
If a customer disputes a charge—saying they did not authorize it, did not receive the goods, or were charged twice—the card issuer opens a dispute. NMI notifies you and gives you a window (usually 7 to 10 days) to respond with evidence. You can upload receipts, shipping confirmations, email correspondence, or other proof that the transaction was legitimate.
NMI passes your evidence to the card issuer, which makes the final decision. If the issuer sides with you, the dispute is closed and the money stays in your account. If the issuer sides with the customer, the money is reversed and returned to their card, and you are charged a chargeback fee (usually $15 to $100 per dispute). Repeated chargebacks can result in higher fees or loss of your merchant account.
NMI provides a dispute management dashboard where you can track all open disputes, upload evidence, and see the status. Responding quickly and with clear documentation is your best defense.
NMI's integration options and who uses it
NMI offers multiple ways to connect to its system. Businesses with their own websites can use NMI's hosted payment page (you redirect customers to NMI's secure form), an embedded form (NMI's form sits on your page), or a direct API integration (your developer connects your system directly to NMI's servers). Point-of-sale systems, shopping carts like WooCommerce and Shopify, and accounting software often have built-in NMI connectors.
NMI also offers a virtual terminal—a web-based tool where you can manually enter card information and process transactions one at a time. This is useful for phone orders, mail orders, or in-person transactions when you do not have a physical card reader.
Businesses that use NMI range from small e-commerce shops to restaurants, gyms, nonprofits, and subscription services. It is particularly common among businesses that need flexible integration options or that process a high volume of transactions.
Alternatives to NMI and when to consider them
Other payment gateways include Stripe, Square, PayPal, Authorize.net, and Worldpay. Stripe and Square are popular with small businesses because they have simple pricing and fast setup. Authorize.net is common among larger businesses with custom integrations. PayPal is useful if you already have a PayPal account and want to accept cards without a separate merchant account.
The choice between NMI and alternatives depends on your business size, technical needs, and budget. If you need a flexible API, high transaction volume, or custom integration, NMI is a solid choice. If you want the simplest setup and do not mind paying slightly higher fees, Stripe or Square may be faster to get running. If you are just starting out and want to avoid a merchant account, PayPal or Square Cash for Business might be enough.
Frequently Asked Questions
Do I need a separate merchant account to use NMI?
Yes. NMI is a gateway and processor, but it does not hold your money or provide the bank account where funds are deposited. You need a merchant account from a bank or merchant services provider. Some providers bundle NMI with a merchant account, so you sign one contract and get both. Others let you bring your own merchant account to NMI.
How long does it take for money to show up in my account after a customer pays?
NMI authorizes the transaction in seconds, but settlement (the actual movement of money) usually takes one to two business days. Your merchant bank controls the settlement timeline. Some banks offer next-day settlement for an extra fee; others settle every business day automatically.
What happens if NMI goes down or my internet connection fails during a transaction?
If NMI's servers are down, transactions cannot be processed until they come back online. If your internet fails mid-transaction, the transaction is usually not completed, and the customer is not charged. NMI publishes its uptime status on its website, and most payment processors aim for 99.9% uptime.
Can I use NMI to accept payments over the phone?
Yes. NMI's virtual terminal lets you manually enter card information and process the payment. You can also use NMI's API to build a custom phone payment system. Phone transactions are treated as "card not present," which means they carry a higher fraud risk and may have higher processing fees.
What should I do if a customer says they were charged twice?
Log into your NMI dashboard and check the transaction history. If two identical charges appear, contact NMI's support team immediately to request a reversal of the duplicate. If only one charge appears on your end but the customer sees two on their bank statement, it may be a pending transaction that will drop off in a few days. Ask the customer to wait 3 to 5 business days before disputing it.