A Complete Guide to Accepting Credit Card Payments

The small business benefits of accepting credit card payments often outweigh the costs. Modern payment systems support multiple sales channels and popular electronic payment options, including digital wallets.

This guide breaks down the cheapest and easiest ways to accept credit cards online, in person, or over the phone. See what software and equipment you need, then learn how to accept credit cards as a small business or freelancer.

What every small business needs to accept credit cards 

To accept credit card payments, a small business needs a payment processor, merchant account access, and the hardware or software to securely capture transaction data. You’ll also need a business bank account to receive settled funds and a reliable internet connection for real-time authorization.

Regardless of your setup, you must comply with the Payment Card Industry Data Security Standard (PCI DSS). These rules govern how cardholder data is stored, processed, and transmitted.

How to accept credit card payments, step by step

Set up credit card payments for your business in six steps. Decide how and where you want to accept payments, then compare processing providers and apply for an account. Once approved, you can take credit cards using tap-to-pay on mobile devices or connect hardware to process cards at the table, counter, or curbside. Explore each step in depth below.

1. Assess your credit card processing requirements.

Evaluate how your business accepts payments and the typical transaction volumes. Your answers will influence pricing and hardware requirements, helping you choose between merchant account providers, payment aggregators, and payment service providers (PSPs).

Consider the following:

• Where do you process most transactions (in person, online, or over the phone)?
• Do you want to accept all major credit cards (Visa, Mastercard, American Express, Discover) and digital wallets, like Google Pay?
• What is your average transaction size?
• Is your business considered high risk?
• Will you need Automated Clearing House (ACH) payments for high-value invoices?
• Do you anticipate a monthly card volume exceeding $10,000?
• What hardware, if any, will you need for in-person payments?
• Do you expect international payments or require multicurrency support?
• Do you need your payment processor or gateway to integrate with an existing website or point-of-sale (POS) system?

2. Choose your payment acceptance setup.

Look at various software and hardware configurations to determine which credit card processing components and services you need. Common payment stacks include all-in-one payment platforms; a traditional processor and merchant account; or as-needed tools such as a payment gateway, a point-of-sale system with processing, or subscription management and invoicing software.

See how these payment acceptance tools and systems compare:

• All-in-one payment service providers: A single platform with a gateway, processor, and merchant account access. PSPs like Square or Stripe typically use a payment facilitator or aggregator model, so you can accept credit cards under a shared merchant account.
• Payment gateway: A front-end payment acceptance interface like Authorize.net that routes transaction data from your POS system, e-commerce platform, or website to a third-party processor like Chase Payment Solutions.
• Merchant services provider: A payment processor that may provide a direct merchant account and other services such as a gateway, POS, and invoicing.
• Merchant account provider: A financial institution (acquiring bank) that sets up a dedicated account on your behalf to receive customer payments and transfer funds to your business bank. You may also need a processor if using a local credit union or bank.
• E-commerce or invoicing tools with processing: Software with built-in payment processing and merchant account access via shared master accounts. Examples include QuickBooks, Shopify, and Wave.
• Point-of-sale system with processing: Service, retail, or restaurant POS software and hardware with integrated payment processing or a third-party processor. POS providers (Lightspeed and Clover) and some processors (Helcim and Square) offer these services.

All-in-one PSP platforms work well for startups, service providers, and businesses with low to moderate monthly income. Companies with higher monthly sales, larger average tickets, or higher-risk classifications may prefer traditional processors and separate stacks (like a gateway through your bank paired with an MSP processor).

3. Compare payment processors, merchant services, and pricing models. 

Once you’ve determined your ideal setup, look at payment processors and merchant services to compare software, hardware, and pricing models.

While many small business payment processors have similar rates, even small differences in percentage rates or per-transaction fees can significantly impact your total costs. Pricing structures include flat-rate, interchange-plus, and subscription-based models.

Create a mock sales scenario using your estimated monthly volume and average ticket size. Then calculate projected fees for each provider.

Beyond cost, compare:

• Funding speed.
• Contract terms.
• Integration capabilities.
• Chargeback support.
• Customer service.
• Hardware pricing.
• Invoicing, POS, and recurring revenue tools.

4. Choose a credit card processor and open an account.

Once you've compared vendors to find the best credit card processing provider for your small business, it's time to apply. Many services offer online applications. Payment facilitators and aggregators like PayPal approve applications almost instantly, while traditional merchant account providers may require underwriting review.

Complete the application process by providing your contact details, employer identification number number, and bank account information. You may need to estimate your monthly transaction volume, list what industry you’re in or what products or services you sell, and what your average transaction amount is. After the processor approves your application, you can sign in to your account.

5. Configure your hardware, software, and integrations.

To begin accepting credit card payments online, over the phone, or in person, you must configure your account and any hardware. Set up payment tools based on how and where you sell, then test your system before accepting credit cards from customers.

You can configure the following:

• In-person payments: Install EMV (Europay, Mastercard, Visa) terminals, mobile card readers, or POS hardware and software.
• Online payments: Connect your payment gateway to your e-commerce platform or enable hosted check-out pages.
• Mobile payments: Download your provider’s mobile POS app and pair any card readers.
• Phone payments: Set up the virtual terminal for manually keyed transactions.

The process is straightforward for small businesses using a smartphone to take payments. It involves downloading the payment app and completing the sign-up process. Tap-to-pay works on Apple devices, and you can add mobile card readers to accept credit cards via contactless tap, swipe, or inserted chip.

E-commerce configurations can be more complex, depending on your website, processor, and online payment gateway. Your provider should offer technical support, and your e-commerce software may also have tutorials.

6. Activate fraud prevention and compliance tools.

Before going live with your system, confirm that your security and compliance settings are configured correctly. Most providers assist with PCI DSS compliance, so review vendor resources to see if you need to complete a questionnaire or address other security issues.

Depending on your business model, you may also set up or look over the following:

• Address verification service (AVS): Enable AVS in your merchant portal to verify the cardholder’s billing address when accepting credit cards over the phone or online.
• Card verification value (CVV) checks: Turn CVV on to request the three- or four-digit code during in person or online check-out.
• 3D secure authentication: Consider enabling extra authentication via 3DS. Using this fraud tool may reduce your chargeback liability.
• Chargeback monitoring tools: Look under the risk and fraud section in your payment dashboard to activate alerts, or use third-party services such as Ethoca Alerts or Verifi.
• Clear refund and return policies: Review in-store and e-commerce refund policies to ensure the information is easy to find and understand.

Fraud prevention tools are especially important for card-not-present (CNP) transactions, which carry higher risk and processing costs.

How long does it take to start accepting credit cards?

Most small businesses can start accepting credit card payments within one to five business days, depending on the provider, underwriting requirements, and whether hardware is required. Payment aggregators like Stripe or Square offer instant or same-day application approvals.

Traditional merchant account providers take longer due to more stringent underwriting. Incomplete applications can delay approvals, as can complex business structures or high-risk merchants.

Once approved, you can almost immediately accept payments through the provider’s POS software, mobile app, or virtual terminal. Equipment, like physical card readers and POS terminals, typically arrives a few days after your application is approved.

Compare ways to accept card payments for small businesses

The best way to accept card payments depends on where and how you sell. Today, many small businesses accept payments online and in person, using a combination of methods to meet customer preferences and improve cash flow.

In addition to accepting credit cards, many e-commerce retailers take digital wallet payments and offer buy now, pay later (BNPL) services. Explore the best ways to accept payments in person, online, and on the go.

Process in-person payments

To accept card payments in person at restaurants, retail stores, or other physical locations, you can use a stand-alone credit card machine (EMV-compliant) or a POS system with an integrated payment terminal. Many setups also support wireless or handheld devices for curbside pickup or tableside service.

This method is ideal for businesses that:

• Operate from a storefront or fixed location.
• Need inventory tracking and sales reporting tools.
• Want integrated tipping and receipt management features.

The payment acceptance process varies slightly, depending on the hardware and POS features. In most cases, you can process in-person payments by calculating the sales total, selecting the payment method, and asking the customer to insert, swipe, or tap their credit card. Retail and restaurant POS systems often include receipt printers, so have your customer sign the paper receipt or the on-screen display, if required.

Use your mobile device to take payments 

For many startups and freelancers, mobile payment processing is the easiest way to accept credit cards. With tap-to-pay functionality, your tablet or smartphone turns into a contactless terminal, allowing any staff member with a phone to process transactions on the go.

Providers also offer Bluetooth card readers, QR codes, or mobile POS applications for extra flexibility. These options help small businesses accept digital payments anywhere, not just at a storefront.

This payment method is popular among:

• Contractors and field service providers.
• Delivery drivers.
• Food trucks and pop-up vendors.
• Event-based businesses.
• Startups without a permanent location.

To use your mobile device to take payments, download your provider’s mobile POS app, and connect a card reader or enable tap-to-pay functionality. 

Accept a credit card payment online (with or without a website)

Businesses can accept a credit card payment online through an e-commerce check-out page, a hosted payment link, or an invoicing platform. Online payments rely on payment gateways to securely transmit card data.

This method works well for:

• E-commerce stores.
• Consultants and freelancers.
• Service providers who send invoices.
• Businesses that collect deposits or prepayments.

To accept a credit card payment online, integrate a payment gateway with your website, e-commerce platform, or invoicing software. If you’re looking to expand your business to new channels but lack an e-commerce presence, select a payment processor that provides website tools for building online stores and check-out pages.

Take payments over the phone 

When customers want to pay over the phone, you can process transactions through a virtual terminal or POS system. Mail order and telephone order  payments require you to manually enter card data, which classifies transactions as CNP and generally costs more than in-person payments.

This payment acceptance method is useful for:

• Collecting past-due invoices.
• Taking reservations or deposits.
• Processing delivery or custom orders.

To take payments over the phone, generate a sale through a virtual terminal or POS system. Follow the on-screen instructions to key in customer and payment information. Confirm the billing details before submitting the payment. Consider using AVS and CVV checks when available. 

Collect recurring payments 

Many businesses use recurring payment tools to automate subscription charges and membership fees. These systems store card details securely and process scheduled payments without manual invoicing. Automated retries and billing reminders help reduce failed payments and stabilize cash flow.

This method is common for:

• Subscription services.
• Membership organizations.
• Software as a service providers.
• Fitness studios.

Set up recurring payments through your processor, then follow the steps to create a subscription plan and define billing intervals (monthly or yearly). Depending on the system and your business model, customers may sign up online, or you can obtain authorization in person. 

How credit card processing works

Credit card processing occurs over three stages (authorization, clearing, and settlement). The process routes payment information among the merchant, processor, and card network, and banks then approve a transaction and complete the payment.

Here’s how credit card transaction processing works after a customer swipes, dips, or enters card information:

• Authorization: The payment system sends transaction details electronically for authentication and fraud screening. If approved, the sale goes through. If denied, merchants receive a denial code while buyers get an error message.
• Clearing: The merchant submits a batch of approved transactions to their processor. Card networks (Visa, Mastercard, American Express, and Discover), issuing (cardholder’s) and acquiring (merchant’s) banks, and processing companies verify data, calculate fees, and reconcile transactions.
• Settlement and merchant funding: After card networks and banks settle balances, they subtract fees and move funds to the acquiring bank. The processor deposits the net amount into your bank account. This phase takes one to five days.

The exact steps and timing vary based on the card type and payment method. Understanding how credit card processing works can help you evaluate funding times and fees for each payment provider.

Card-present vs. card-not-present transactions 

A card-present transaction occurs when the customer physically taps, dips, or swipes their card (or contactless device) at check-out. CNP transactions happen remotely on a website, through an invoice, or over the phone.

Because the card and cardholder are verified in person, card-present transactions usually have a lower fraud risk and cheaper interchange rates. By comparison, CNP payments generally carry greater fraud and chargeback risk, making them more expensive to process.

Fraud, chargebacks, and financial liabilities of accepting credit card payments

CNP fraud is roughly five to 15 times higher than card-present fraud. It accounts for most payment card fraud losses in the United States, according to the Nilson Report. Risks are higher because merchants can’t visually inspect the card and cardholder or use a physical EMV chip terminal to verify details.

When CNP fraud occurs, the merchant usually foots the bill, except in certain cases where 3DS technology authenticated the fraudulent payment. But businesses may not be financially responsible for in-person transactions involving counterfeit or stolen cards. When merchants properly use EMV hardware to process chip and contactless payments, liability shifts to the card-issuing bank.

CNP transactions incur more chargebacks than card-present payments. Fraud plays a role in some but not all disputes. According to Mastercard, “Each chargeback costs merchants an average of $128 in third-party fees and internal costs.” 

Credit card processing fees for small businesses

Payment processing fees usually include a percentage of each sale and a fixed per-transaction charge. The total cost depends on the card type, the processor’s pricing model, and whether your transactions are mostly card present or CNP.

To understand the costs of accepting credit cards, familiarize yourself with these payment processing terms:

• Interchange fees: All merchants who accept credit cards pay these nonnegotiable fees on every transaction. Vendors with interchange-plus, tiered, and subscription models generally itemize each fee, whereas flat-fee processors include them in upfront rates.
• Card network assessment fees: Like interchange fees, assessment costs are nonnegotiable, show up individually on itemized statements or bundled into a fixed rate, and apply to all card payments small business owners process.
• Processor markups: This fee is negotiable; however, providers that charge a flat-rate transaction fee are less likely to budge on payment terms unless your sales volume warrants it.
• Additional account fees: Vendors may charge for PCI compliance, administrative services, or chargebacks. Some also pass third-party fees for verification or authentication services to you.
• Hardware or software expenses: Some processors offer free tools for accepting credit card payments online, while others charge monthly fees for POS subscriptions, virtual terminals, or payment gateways. If you buy or lease equipment, you may see monthly lease fees or one-time charges on your merchant statement.

The cheapest way to accept credit card payments is typically through an EMV terminal. Card processors and networks consider this type of transaction less of a risk than online or manually keyed-in payments. It generally costs more for businesses in high-risk industries, like gaming or travel, to accept credit card payments. Conversely, credit card processors for nonprofits may offer reduced rates for charitable organizations.

How to reduce credit card processing fees as a small business

Small business owners can reduce credit card processing fees by reviewing monthly statements for unusual charges, maintaining a low chargeback rate, and knowing how to fix authorization errors. As your sales volume grows, you may be able to negotiate lower rates with providers. Until then, follow best practices to prevent fraud and avoid unnecessary payment processing fees.

Consider these tips to reduce the cost of accepting credit card payments:

• Set aside time to review statements and reports monthly. Calculate your effective rate by dividing all processing fees by monthly card sales. Compare it with previous months and investigate unexpected fees.
• Learn how to handle declined payments and error codes. Look at card processor and gateway terms to see if they charge a fee per authorization attempt. Create a list of common response codes (like 03 for invalid merchant ID) so you can address how to fix them with the provider.
• Train employees how to take credit card payments. Teach staff to correctly process chip or contactless payments instead of manually keying in-person transactions. They should know how to follow terminal prompts and handle refunds.
• Go over your processing agreement at least annually. Review rate changes, cancellation fees, and equipment terms. If your average transaction size or sales volume has increased, ask your processor to lower its markup, and get quotes from competitors.
• Get ahead of disputes before chargebacks occur. Check out processor-provided tools or resources for managing disputes. Then pull up payment settings to confirm your billing descriptor matches what’s on receipts.
• Pass credit card processing fees to customers when permitted. Before adding a surcharge, check local laws and card network requirements. This option impacts your customers, so it’s important to weigh the pros and cons first.

Comparing payment processors and merchant account providers 

Evaluate merchant account and payment service providers by comparing hardware and software features, integrations, transaction rates, and monthly fees. Because modern payment systems support multiple sales channels, you can use a single processor to accept cards online and in person.

However, some vendors offer additional tools for preventing fraud or managing subscriptions. Explore top credit card processors for online, in-person, and recurring payments.

Best for e-commerce

The best credit card processing services for e-commerce offer fast, secure check-out options and robust chargeback protection tools. Assess online transaction rates, gateway and platform fees, integrations, and fraud screening features. To accept credit cards without a website, look for payment links and hosted check-out pages.

• Shopify Payments: Consider Shopify if you need an all-in-one e-commerce store with built-in payment processing. Monthly plans start at $39 per month, and transaction rates vary by tier, with Shopify Basic charging 2.9% plus 30 cents for standard cards.
• Stripe: Choose Stripe if you plan to accept cryptocurrency payments, or customize your check-out using no-code or API options. It provides fraud prevention tools and processes international payments. The standard online transaction rate is 2.9% plus 30 cents.
• PayPal: Select PayPal to offer customers recognizable payment options (PayPal, Venmo, Pay Later). The standard plan charges 2.99% plus 49 cents per credit or debit transaction and 3.49% plus 49 cents for PayPal payments.
• Stax: Sign up with Stax if your potential savings on processor markups are higher than the monthly subscription fee. It costs $99 monthly for merchants processing up to $150,000. You pay the interchange rate plus 15 cents per online transaction.

Best for in-person retail

Choose an in-person processor based on card-present rates, integrations with existing tools, and payment setup options (counter vs. mobile). Review contract terms for hardware financing or free processing terminals, and see if you qualify for the lowest advertised rates. Some vendors support multiple locations and offer inventory management software but may charge payment gateway fees for e-commerce functionality.

• Helcim: Best for growing retailers and service businesses that want transparent interchange-plus pricing and no monthly fees. For merchants with monthly card volumes up to $50,000, Helcim adds 0.40% plus 8 cents to the in-person interchange rate.
• Clover: Best for brick-and-mortar shops and restaurants seeking a single-vendor solution for hardware, software, and payment processing. Card-present rates vary by plan, from 2.3% plus 10 cents to 2.6% plus 10 cents.
• Square: Best for startups, mobile sellers, and small business owners looking for fast setup and a free entry-level POS plan. Square Free charges 2.6% plus 15 cents per in-person transaction.
• Payment Depot: Best for established retailers who want interchange-plus pricing and flexible hardware options. Accounts include a merchant dashboard with analytics. Payment Depot advertises variable rates from 0.2% to 1.95%.
• ProMerchant: Best for small business owners, including those with lower credit scores, who prefer month-to-month contracts or surcharge-based processing. After applying online, ProMerchant provides a custom quote.
• Merchant One: Best for retail and hospitality companies seeking dedicated account support. Pricing depends on the merchant agreement. According to Merchant One, it has a 98% approval rate and works with those who have less-than-perfect credit.
• Lightspeed Payments: Best for golf facilities, multilocation restaurants, and retailers with large inventories. Add additional registers or locations to monthly plans that range from $109 to $339. The card-present rate is 2.6% plus 10 cents.

Best processors for recurring billing

Evaluate subscription and platform fees, customer portals, and tools for recurring authorizations, card account updates, and automated retries. Payment processors, accounting software vendors, and subscription management services offer recurring billing features.

• QuickBooks Payments: Add recurring card and ACH payments to your current QuickBooks Online account to record transactions automatically. It charges 1% per ACH transaction and 2.99% for card and digital wallet payments.
• HubSpot Payments: Manage B2B customers, sales, and payments in one tool. HubSpot adds a 0.05% platform fee on top of 2.9% per credit or debit transaction and 0.8% per ACH payment.

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