How to accept credit card payments as a business


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If you run a small business, you need to accept credit card payments. While some businesses manage to survive on cash-only services, today’s consumers expect to be able to use debit or credit wherever they go — and if they’re shopping online, debit and credit are really the only options.

So that means you need to learn how to accept credit card payments as a small business. There are many different ways of accepting credit card payments as a business, from signing up with a merchant account to using one of the popular third-party services, like Square or PayPal. You can even accept Venmo payments as a small business, which might be a good option if you’re marketing towards young people.

Which method of credit card payment processing is right for you? It all comes down to how many credit card transactions you regularly process and whether you need in-person payment processing, online transaction support or both. You should also ask yourself whether you’re looking for a provider that can offer a high level of customer service, or whether you’re fine with a plug-and-play solution.

How do small businesses accept credit card payments?

The process of paying via credit card might seem simple from the customer’s end — swipe the card, sign the receipt — but it’s actually a very complex process that involves everything from monitoring credit card balances to checking for potential fraud.

Since small business owners don’t tend to have the kind of infrastructure required to check the validity of hundreds of different credit card transactions, they outsource this job to credit card payment processing companies. When a credit card is swiped, chipped or tapped, the processing company contacts the cardholder’s bank or lender to confirm the account has funds available. The processing company also runs a few basic fraud checks. All of this happens in just a few seconds, and if everything checks out, the payment goes through.

That’s just the first step in accepting credit card payments, though. The credit card processing company also has to ensure that the right amount of money is deducted from the right credit or debit accounts and transferred to your accounts. These transactions tend to happen at the close of every business day, which is one of the reasons why it can often take a day or two for a credit card purchase to show up as a posted transaction.

In exchange for providing all of these services, credit card payment processing companies charge a small amount of money per credit card transaction. Banks and credit card companies also charge a small amount interchange fee for each transaction — and the payment processing company will deduct that money from your credit card payments before transferring the funds to your business account.

Many small business owners find that losing a little bit of money to processing and interchange fees is more than worth the benefits of being able to accept credit card payments. That said, there are ways to minimize the impact of these fees, from choosing the right payment processing service to charging the right prices for merchandise.

Do you need a merchant account?

Businesses that conduct a large volume of credit card transactions (over $10K per month, according to Merchant Maverick) can benefit from a merchant account. Although a merchant account is more expensive to set up and includes monthly fees, it can save you money in credit card processing costs over time.

Smaller businesses, however, may be better served with a payment service provider (PSP). These third-party credit card processing services charge slightly more to process credit card transactions, but they are generally free to set up, with no monthly fees — which means they could be a more economical choice for a business that doesn’t quite have the credit card transaction volume to justify a merchant account.

In-store vs. online payments

If your business is entirely brick-and-mortar, credit card transactions may only make up a percentage of the payments you receive from customers. Depending on the type of merchandise you sell and the price points at which you sell it, customers may prefer to pay in cash — or, though it’s rarer these days, by check.

That said, giving customers the option to pay by credit is a smart move. The Federal Reserve Bank of San Francisco reports that consumers only use cash for 35 percent of their in-person transactions, which means that retailers who don’t offer the option to pay via credit or debit are potentially leaving money on the table.

If your business includes an online storefront (or is solely online), you’re going to be working nearly exclusively with credit and debit transactions. Your customers will expect a seamless checkout experience, and anything that makes your payment process appear atypical or unusual might cause them to abandon their shopping carts and take their online shopping dollars elsewhere.

What you need for in-store payments

  • Card reader/terminal: Whether you’re using a smartphone attachment or a mounted swipe/chip/tap terminal, you’re going to need a tool that can read a customer’s credit card.
  • Virtual terminal: If you don’t want to get a card reader or physical card terminal, you have the option of accepting credit card payments by typing the credit card number into your smartphone or computer. This is also an effective way of taking credit card payments over the phone.
  • Point-of-sale software: This software charges the right amount of money to the customer’s card, gives the customer the option to add a tip, manages receipts, collects emails, tracks purchases, and more.

What you need for online payments

  • Storefront: Your website needs to clearly display all available products or services, in a way that allows potential customers to browse and learn more about what you’re offering.
  • Shopping cart: As customers select items to purchase, these items are collected in a virtual shopping cart. A good shopping cart displays both the number of items in the cart and the total cost of the cart (not counting tax or shipping, both of which come into play during the checkout process).
  • Payment gateway: As the name implies, a payment gateway provides a secure way of allowing customers to pay for the products or services in their shopping cart. (Point-of-sale software programs also include payment gateways.)

What is the easiest and cheapest way to accept payments?

There’s no single “easy and cheap” method of accepting credit card payments. What’s easiest and least expensive for your business will depend on your business’s needs, the number of credit card transactions you process on a monthly basis and whether you expect your business to grow significantly in the future.

If your business is just getting started, you’ll probably be best served working with a PSP or third-party credit card processing service. While this option comes with slightly higher credit card processing fees, you won’t have to pay set-up costs and won’t be locked into a monthly contract. In fact, you can stop using the PSP whenever you want, at no charge — which you might want to do when your business has scaled to the point where you are more likely to benefit from the lower fees associated with a merchant account.

If you’re interested in exploring payment processing options, Merchant Maverick offers trustworthy merchant account reviews and mobile payment app reviews. Here’s a quick rundown of some of the most popular options:


Square offers a variety of payment processing solutions, from point-of-sale terminals to ecommerce platforms — and yes, you can even use Square to process credit card payments on your smartphone. Larger businesses can benefit from Square’s customized built-from-scratch payment processing. Prices vary depending on the solution you choose, but the basic point-of-sale system is free to use and charges 2.6 percent + $0.10 per transaction.


Shopify offers a single platform with all the ecommerce and point-of-sale features you need to run a small business. The basic Shopify plan is designed for people who are just starting a new business; it costs $29/month plus 2.9 percent + $0.30 per online transaction and a flat 2.7 percent per in-person transaction. Larger businesses might want to consider the more expensive Shopify or Advanced Shopify plans.


PayPal helps small businesses by providing a fast, easy online checkout process that consumers already know and trust. Plus, you can use PayPal Here to take in-person payments — whether that’s through a chip-and-tap charging stand connected to a point-of-sale system, or a mobile card reader attached to your smartphone. Both the online and in-person payment processing services are free to use; businesses pay 2.9 percent plus a fixed fee depending on the currency for online transactions, and 2.7 percent for in-person transactions.


Stripe offers an integrated platform that supports both online and in-person transactions. Businesses pay 2.9 percent + $0.30 per transaction with no setup, monthly or hidden fees. If you use Stripe Terminal to take in-person payments, you’ll pay 2.7 percent + $0.05 per transaction; you’ll also need to purchase either a $59 or $299 payment reader, depending on your business’s needs.


Venmo is known for its peer-to-peer transactions, but businesses can also use Venmo to process online credit card payments. You’ll need to link Venmo to either Braintree or PayPal Connect before you can begin accepting Venmo payments from customers, but it’s one more way to provide a trusted, name-brand method of payment. Venmo transactions cost 2.9 percent + $0.30, with no setup or monthly fees.

How can I accept credit card payments without fees?

There’s no way to accept credit card payments without paying fees, so small business owners need to work credit card processing fees into the cost of doing business. Maybe that means raising prices slightly, to ensure your business makes the necessary profit on each item sold. Maybe it means adding a surcharge or convenience fee to payments made via credit, though you’ll want to be aware of both state and federal laws regarding surcharge and convenience fees. Some businesses even refuse to accept credit card payments for transactions below a certain dollar amount — there are rules around that as well, so learn them before you start telling customers when they can and can’t use credit.

How to choose the best way to accept credit cards as a business

If you are trying to decide how your small business should accept credit cards, start by asking yourself how many credit card transactions your business is currently processing. If your business doesn’t currently accept credit card payments, adding a trusted third-party PSP like Square or PayPal can help you begin to process credit card transactions. As your business continues to grow, keep an eye out for the point at which credit card transactions exceed $10K per month. That’s when you’ll benefit from switching from a PSP to a merchant account; yes, you’ll pay a monthly account fee, but you’ll save money on every credit card transaction — and once your business hits a certain level, that’s the smart move.

If you are trying to choose between credit card processing services, do the math. Add up all the costs of each service on your list, from per-transaction charges to monthly fees, and see which service would charge you the least money to process credit card payments. Fee structures are often different depending on whether the transaction takes place in person or online, so make sure you ask yourself where the majority of your credit card charges are likely to originate. Remember that a business with a large number of credit card transactions might benefit from a service that charges monthly fees but offers low payment processing rates.

You should also ask yourself what other benefits you’re getting from each potential service. A payment processing service that also offers a pre-built online storefront, for example, might be a good option for a small-business owner who doesn’t want to build out their own storefront and shopping cart functionality. Lastly, don’t forget about customer service! Are you the type of business owner who can handle a third-party processor with limited customer service, or would you prefer working with the type of company where an agent is always available to help?

Once you know exactly what you want from your credit card payment service, and how to compare what each service is offering, you’ll be able to make the best choice for your business.