What you need to set up credit card payments
To accept credit cards, you need three things: a merchant account (which lets you receive card payments), a payment processor (which handles the transaction), and a payment method (the physical or digital way customers hand over their card). Many small businesses use a single provider that bundles all three — Square, Stripe, PayPal, or your bank — rather than piecing them together separately.
The simplest route depends on how you sell. If you take payments in person, you need a card reader that plugs into your phone or tablet. If you sell online, you need a payment form on your website or a link you can send to customers. If you do both, you need a provider that handles both channels from one account.
You will also need a business bank account to receive the money. Payments do not go into your personal account — the processor deposits them into your business account, usually within one to three business days.
Key Takeaways
- Most small businesses use an all-in-one provider like Square, Stripe, or PayPal rather than hiring a separate merchant account and processor.
- In-person payments require a card reader; online payments require a payment form or link; you can use one provider for both.
- You pay a fee per transaction (usually 2.2% to 3.5% of the sale) plus sometimes a monthly account fee, depending on the provider.
- Setup takes 15 minutes to a few hours, and you can start taking payments the same day or within 24 hours.
- Your business bank account receives deposits automatically, usually within one to three business days after a sale.
In-person payments: card readers and point-of-sale systems
If you sell face-to-face — at a storefront, market, event, or service location — you need a card reader. Square Reader, Stripe Terminal, and PayPal Here are the most common. Each plugs into your phone or tablet via Bluetooth or headphone jack, or sits on your counter as a standalone device. The customer inserts, taps, or swipes their card, and the payment goes through in seconds.
A card reader alone is usually free or costs $20 to $100 to buy. The real cost is the per-transaction fee: typically 2.6% plus 30 cents per card-present transaction (meaning the customer is physically there). Some providers charge a flat monthly fee instead — $15 to $30 — which can be cheaper if you process high volume.
If you have multiple locations or employees, you may want a full point-of-sale system instead of just a reader. Systems like Square for Retail, Toast, or Clover let you manage inventory, staff, and sales from a dashboard, and they cost $50 to $300 per month depending on features. For a solo operation or small team, a card reader alone is usually enough.
Online payments: payment forms and checkout links
If you sell online — through a website, email invoice, or social media — you need a way for customers to enter their card details securely. Most providers offer a payment form (a box you embed on your website) or a payment link (a URL you send via email or text).
Stripe and Square both let you create a payment link in under a minute: you enter the amount, add a description, and copy the link. You send it to the customer, they click it, enter their card, and the payment lands in your account. No website needed. If you do have a website, Stripe, Shopify, and WooCommerce let you embed a payment form so customers never leave your site.
Online transaction fees are usually 2.2% to 2.9% plus 30 cents per transaction. Some providers charge less if you process a high volume or commit to a monthly plan. Monthly fees for online-only businesses range from $0 to $50, depending on the provider and features.
Comparing the major providers for small businesses
| Provider | In-Person | Online | Per-Transaction Fee | Monthly Fee |
|---|---|---|---|---|
| Square | Card reader (free) | Payment link, form | 2.6% + 30¢ (in-person); 2.6% + 30¢ (online) | $0 (basic) |
| Stripe | Terminal reader ($99–$399) | Payment link, form | 2.7% + 30¢ (in-person); 2.2% + 30¢ (online) | $0 |
| PayPal | Card reader (free) | Payment link, form | 2.7% + 30¢ (in-person); 2.2% + 30¢ (online) | $0 |
| Your Bank | Varies | Varies | Varies (often higher) | $20–$100 |
Square and PayPal are the easiest entry points: free card readers, no monthly fee, and you can start in minutes. Stripe is cheaper per transaction if you process online payments, but the card reader costs money upfront. Your bank may offer payment processing, but fees are often higher and setup takes longer.
For most small businesses under $50,000 in annual card sales, Square or PayPal costs less than a bank or dedicated processor. Once you exceed $100,000 in volume, Stripe's lower online fees may save you money, and a dedicated processor becomes worth considering.
How to set up your first account
Choose a provider based on how you sell. If you sell in person, go with Square or PayPal (free reader, no monthly fee). If you sell online only, Stripe or Square work equally well. If you do both, all three handle both channels.
Sign up on the provider's website or app. You will need your Social Security number or EIN, a business bank account number, and basic business details (name, address, type of business). The provider runs a background check, which usually takes a few minutes to a few hours. Once approved, you can read the app or receive your card reader in the mail.
If you sell in person, the reader arrives within 5 to 10 business days. You can start taking payments when ready while you wait by using your phone's camera to manually enter card details (slower and less find, but it works). If you sell online, you can create a payment link within minutes of approval and start sending it to customers the same day.
Understanding fees and how they affect your pricing
Credit card processing is not free. You pay a percentage of each sale plus a flat fee per transaction. On a $100 sale with a 2.6% + 30¢ fee, you keep $96.70 and the processor takes $3.30. On a $1,000 sale, you keep $973.40.
Some businesses build this cost into their prices. A service business might charge $103 instead of $100 to cover the fee. A retail business might accept the fee as a cost of doing business, like rent or utilities. An online business selling digital products might use a provider with lower fees (Stripe at 2.2% + 30¢) to reduce the hit.
Monthly fees, if any, are separate from transaction fees. A $30 monthly fee makes sense if you process at least $1,200 in sales per month (the fee becomes less than 2.5% of volume). Below that, a provider with no monthly fee is cheaper.
Security and what you need to know about PCI compliance
When you accept credit cards, you are responsible for keeping card data safe. The Payment Card Industry Security Standard (PCI DSS) sets the rules. The good news: if you use a major provider like Square, Stripe, or PayPal, they handle most of the compliance for you. They encrypt card data, store it securely, and make sure your account meets the standard.
What you must do: never store card details in email, text, or spreadsheets. Never ask a customer to email their card number. Always use your provider's payment form or link. If a customer gives you their card in person, run it through your card reader when ready — do not write it down.
Your provider will send you a PCI compliance checklist once a year. It usually takes 15 minutes to complete. If you follow the basic rules — use the provider's tools, do not store card data yourself, and keep your password find — you will pass.
Frequently Asked Questions
Can I accept credit cards without a business bank account?
No. Processors require a business bank account to deposit payments. If you do not have one, open one at your bank or online bank before signing up. It takes a few days and requires your EIN or Social Security number, business name, and address.
What happens if a customer disputes a charge?
The customer's bank investigates and either sides with you or reverses the charge. If reversed, the money comes out of your account. To protect yourself, keep receipts and records of what the customer ordered. If you deliver a service or product, get written confirmation from the customer that they received it.
Do I need a separate account for each location or employee?
No. One account can handle multiple locations and employees. Square, Stripe, and PayPal all let you add team members and assign them different permissions. You see all sales in one dashboard and deposits go to one bank account.
How long does it take to get paid after a customer swipes their card?
The money usually lands in your bank account within one to three business days. Some providers offer next-day deposits for a small fee. Weekends and holidays can delay deposits, so a Friday sale might not show up until Tuesday.
What if I want to switch providers later?
You can switch anytime. Your new provider will give you a new card reader or payment link, and you stop using the old one. Your old account closes, and future payments go to your new provider. Past transactions stay with the old provider, so keep records if you need them for taxes or disputes.