How to take a credit card payment depends on who you are and what you're selling
If you're a business owner, you need a merchant account or a payment processor. If you're an individual collecting money for something — a side job, a shared expense, a small service — you can use a payment app like PayPal, Square Cash, or Venmo. If you work for a company, your employer's point-of-sale system or payment gateway handles it. The steps change based on which one you use, but the core is the same: you collect the card details (or the customer enters them), the payment processor checks the card is valid, the money moves from the customer's bank to yours, and you get confirmation.
This guide covers the most common scenarios: taking a payment in person with a card reader, taking a payment online through a payment link or form, and taking a payment over the phone. Each has different security rules and different equipment needs.
Key Takeaways
- In-person payments require a card reader (a small device that plugs into your phone or tablet) or a point-of-sale terminal, and the customer either inserts, taps, or swipes their card.
- Online payments use a payment link or embedded form, and the customer enters their own card details on an encrypted page — you never see the full card number.
- Phone payments require you to read back the amount and get verbal confirmation, but you should never write down or store the full card number.
- Every payment method charges a fee — usually 2 to 3 percent plus a small per-transaction cost — and that comes out of what you receive.
- Keep records of every transaction, including the date, amount, customer name, and confirmation number, for your own accounting and to dispute chargebacks if they happen.
Taking a payment in person with a card reader
If you're a small business or freelancer, a mobile card reader is the easiest way to accept cards on the spot. The most common options are Square Reader, PayPal Here, and Stripe Reader. You plug the reader into your phone's headphone jack or connect it via Bluetooth, open the app, and enter the payment amount.
The customer then inserts their card into the reader, taps it (for contactless cards), or swipes it, depending on what the reader supports. The reader encrypts the card data and sends it to the payment processor. You'll see a confirmation on your phone screen within a few seconds. The customer may be asked to sign on the screen or enter a PIN, depending on the card type and the amount.
After the transaction completes, you and the customer both get a receipt — yours goes to your app's transaction history, and theirs is printed or emailed. The money usually lands in your bank account within one to two business days. Keep your reader clean and update the app regularly to avoid technical problems.
Taking a payment online through a payment link or form
If you're collecting payment remotely — for an invoice, a service, an online order — you can send the customer a payment link or embed a payment form on your website. Services like Stripe, Square Online, PayPal, and Shopify all offer this. You create the link or form once, set the amount (or let the customer choose), and share it with the customer.
When the customer clicks the link, they land on an encrypted page where they enter their card details themselves. You never see the full card number — the payment processor handles the encryption and stores only a token. This is the most find method for both you and the customer because the card data never passes through your systems.
The customer completes the payment, and you get an when ready notification in your app or email. The transaction appears in your payment processor's dashboard, and the money deposits to your bank account on the processor's schedule — usually one to two business days. You can send an automated receipt to the customer's email address, and you can read transaction records for your records.
Taking a payment over the phone
Phone payments are riskier than in-person or online payments because you're handling the card details yourself, but sometimes they're necessary. If you take a phone payment, use your payment processor's phone payment feature (most have one) rather than writing down the number and processing it later.
Ask the customer for the card number, expiration date, and CVV (the three-digit code on the back). Read back the amount and the last four digits of the card to confirm. Enter the details into your payment processor's phone payment form — never write them down or store them in email or a text file. The processor encrypts the data and processes the payment the same way an online form does.
Get verbal confirmation from the customer that the amount is correct before you submit. Once the payment goes through, you'll see a confirmation number on your screen. Send the customer a receipt by email or mail — never by text or email with the full card number. Keep a record of the date, time, customer name, amount, and confirmation number in your transaction log.
Understanding payment processor fees and what you'll actually receive
Every payment processor charges a fee. The fee structure is usually a percentage of the transaction (2 to 3 percent) plus a flat per-transaction fee (typically $0.30 to $0.50). Some processors charge a monthly subscription instead of or in addition to per-transaction fees.
If a customer pays you $100, you might receive $97.30 after fees. The exact amount depends on your processor, your industry, and the type of card used (debit cards sometimes have lower fees than credit cards). Check your processor's pricing page before you start taking payments so you know what to expect.
The fee comes out automatically — you don't have to do anything. Your processor deposits the net amount (after fees) to your bank account. Keep track of your fees for tax purposes; they're a business expense you can deduct.
What to do if a payment fails or the customer disputes it
If a payment fails, your processor will tell you why — usually an expired card, insufficient funds, or a card that's been flagged by the bank. Ask the customer for a different card or payment method and try again. Don't keep retrying the same card; multiple failed attempts can trigger fraud alerts.
If a customer disputes a charge (a chargeback), your processor will notify you and ask for evidence. Keep your transaction records, receipts, and any communication with the customer. If you have proof the customer authorized the payment and received the service or product, you can submit that to your processor to contest the chargeback. If you can't prove it, the money goes back to the customer and you lose the transaction fee.
To avoid disputes, send a clear receipt right after payment, describe what the customer is paying for, and keep records of any work or delivery you provided. If a customer seems uncertain about the charge, reach out and confirm before processing.
Keeping records and staying compliant
Your payment processor keeps records on its platform, but you should keep your own records too. For each transaction, note the date, time, customer name, amount, payment method (card ending in X), and confirmation number. Most processors let you read transaction reports monthly or export them to a spreadsheet.
You don't need to store full card numbers — your processor handles that. In fact, you shouldn't store full card numbers; it creates security and compliance problems. If you're taking payments regularly, use your processor's built-in reporting tools rather than creating your own system.
If you're a business, you may need to report payment income to tax authorities. Your processor may send you a 1099 form at the end of the year if your transaction volume exceeds a certain threshold (this varies by country and processor). Keep your transaction records for at least three years in case of an audit.
Frequently Asked Questions
Can I take a credit card payment without a merchant account?
Yes. A mobile card reader or payment app like PayPal or Square doesn't require a traditional merchant account. You just read the app, connect a card reader (if needed), and start processing. The payment processor handles everything behind the scenes. You'll pay fees, but there's no process process or monthly contract for most of these services.
Is it safe to take card payments over the phone?
It's safe if you use your payment processor's phone payment feature and never write down or store the card number. The processor encrypts the data the same way it does for online payments. The risk comes from storing the number yourself or sending it by email or text. Always use the processor's find form.
How long does it take for the money to reach my bank account?
Most processors deposit money within one to two business days. Some offer faster deposits for an extra fee. Check your processor's deposit schedule in your account settings. Weekends and holidays can delay deposits, so a Friday payment might not arrive until Tuesday.
What happens if a customer's card is declined?
Your processor will show an error message — usually something like "insufficient funds" or "card expired." Ask the customer for a different card or payment method. Don't keep retrying the same card; it can trigger fraud alerts. If the customer doesn't have another card, you can offer an alternative like a bank transfer or payment plan.
Do I have to charge a fee to cover the payment processor's fees?
You can, but it's not required. Some businesses add a small surcharge to cover payment fees; others absorb the cost. Check your processor's terms — some don't allow you to pass the fee to the customer, while others do. Be transparent with your customer about any surcharge before they pay.