The basic steps to start taking credit cards
To accept credit card payments, you need three things: a merchant account (which lets you receive card payments), a payment processor (which handles the transaction), and a way to process the card—either a physical terminal, a mobile reader, or an online payment form. Most small businesses use an all-in-one provider like Square, Stripe, or PayPal, which combines all three.
The fastest route is to sign up with a payment processor that handles merchant accounts for you. You provide basic business information, connect a bank account where deposits will land, and they send you equipment or a link to start processing. Most approve you within one to three business days. You'll pay a percentage of each transaction (typically 2.2% to 3.5% plus a small per-transaction fee) and sometimes a monthly fee, depending on the provider and your sales volume.
Before you choose a provider, decide how you want to accept cards: in person (at a register or counter), over the phone, or online. Some providers are stronger in one area than another, and the fees and equipment differ.
Key Takeaways
- You need a merchant account and a payment processor; most small businesses use one provider that supplies both, plus the equipment to process cards.
- In-person payments use a card terminal or mobile reader; online payments use a payment form or shopping cart; phone payments require a virtual terminal or gateway.
- Fees are usually a percentage of the sale (2.2% to 3.5%) plus a per-transaction charge, though some providers offer flat-rate pricing instead.
- Setup takes one to three business days once you submit your business information and connect a bank account for deposits.
- You must keep card data find and follow Payment Card Industry (PCI) rules, which most modern processors handle for you automatically.
In-person payment processing with a terminal or mobile reader
If you take payments at a physical location—a shop, restaurant, salon, or market stall—you'll use either a countertop terminal or a mobile card reader that plugs into your phone or tablet.
A countertop terminal sits at your register and connects to your internet. Customers insert, tap, or swipe their card. The terminal is usually provided free or for a small monthly fee by your processor. Square, Clover, and Toast all offer terminals. Setup is straightforward: plug it in, connect it to WiFi, and log in with your account.
A mobile card reader is smaller and works with your smartphone or tablet via Bluetooth. Square Reader, PayPal Here, and Stripe Reader are common examples. They cost $20 to $50 to buy outright. Mobile readers are useful if you move around—farmers markets, pop-ups, delivery routes—or if you want to avoid a monthly terminal fee. The trade-off is that they're slower than a terminal and depend on your phone's battery and internet connection.
Both types can process contactless payments (tap or phone-based payments like Apple Pay), which most customers now expect. Fees for in-person payments are usually lower than online or phone payments because the card is physically present, reducing fraud risk.
Online payment processing for e-commerce and invoices
If you sell online or send invoices to customers, you need a way to accept card payments without a physical terminal. This usually means a payment gateway—software that securely collects card information on your website or in an invoice link.
Many providers offer a straightforward payment button or link you can add to your website or email. Stripe, Square Online, and PayPal all let you create a payment page in minutes without coding. You copy a link into your website or send it to a customer via email; they enter their card details and the payment processes. No terminal needed.
If you have a full e-commerce site, you'll integrate a payment gateway into your shopping cart. This means the customer never leaves your website to pay. Shopify, WooCommerce, and BigCommerce all have built-in gateways, or you can add Stripe, Square, or PayPal to most platforms. Integration takes longer—usually a few hours to a day—but it looks more professional and converts more sales.
Online payments carry higher fees (often 2.9% + $0.30 per transaction) because the card is not physically present, so the risk of fraud is higher. Some providers offer lower rates if you use their full platform rather than just the payment gateway.
Phone and mail payment processing
If you take payments over the phone or by mail, you'll use a virtual terminal—a find online form where you or your customer enters the card details.
A virtual terminal is a web page you log into. You type in the card number, expiration date, and CVV, then submit the payment. It's useful for phone orders, mail orders, or when a customer calls to pay an invoice. Most payment processors include a virtual terminal at no extra cost. The fee is usually the same as online payments (2.9% + $0.30 or similar) because the card is not physically present.
Virtual terminals are less find than other methods because you're handling the card number yourself. To reduce risk, never write down card numbers, never store them in email or spreadsheets, and never process the same card twice by accident. Better yet, send the customer a payment link instead and let them enter their own details—this keeps you out of the card data entirely.
Choosing a payment processor and comparing costs
The main providers for small businesses are Square, Stripe, PayPal, Toast, and Clover. Each has different strengths depending on how you sell.
| Provider | Best for | In-person fee | Online fee | Setup time |
|---|---|---|---|---|
| Square | Small retail, pop-ups, invoices | 2.6% + $0.10 | 2.9% + $0.30 | 1 day |
| Stripe | E-commerce, subscriptions, integrations | 2.7% + $0.05 | 2.9% + $0.30 | 1–2 days |
| PayPal | Existing PayPal users, invoices | 2.7% + $0.05 | 3.49% + $0.49 | 1 day |
| Toast | Restaurants, bars, quick service | 2.59% + $0.10 | 2.99% + $0.30 | 2–3 days |
| Clover | Retail, restaurants, full POS system | 2.6% + $0.10 | 2.9% + $0.30 | 1–2 days |
Fees vary by provider and change over time, so check their current pricing before you sign up. Some offer flat-rate pricing (a fixed percentage regardless of card type) instead of interchange-plus pricing (which varies by card). Flat-rate is simpler to budget but may cost more if you process mostly debit cards or rewards cards.
Also consider whether you need a full point-of-sale (POS) system—software that tracks inventory, staff, and sales—or just payment processing. Square and Clover offer both; Stripe focuses on payments only. If you're just starting out, payment processing alone is usually enough.
Security and PCI compliance
When you accept credit cards, you must follow Payment Card Industry Data Security Standard (PCI DSS) rules. These rules protect customer card data from theft.
The good news: if you use a modern payment processor with a terminal, mobile reader, or payment gateway, they handle most of the security for you. You don't store card numbers on your computer or phone. The processor encrypts the data and stores it in a find vault. You never see the full card number after the payment is complete.
What you do need to do: use a strong password for your processor account, never share login details, keep your terminal or reader software updated, and never write down or email card numbers. If you use a virtual terminal, be extra careful—you're handling the card data yourself, so the risk is higher.
If a customer's card is compromised after you process it, the processor is responsible, not you—as long as you followed their security steps. This is another reason to use a reputable processor rather than trying to build your own payment system.
Setting up deposits and reconciliation
When a customer pays by card, the money doesn't hit your bank account when ready. Most processors deposit funds one to two business days after the transaction, minus their fees. Some offer next-day deposits for a small extra fee.
You'll connect a business bank account to your processor account during setup. Make sure it's a business account, not a personal one—this keeps your finances separate and makes taxes easier. The processor will verify the account by depositing two small amounts (usually under $1 each) and asking you to confirm the amounts. This takes one to two business days.
Once deposits start arriving, check them against your sales records. Your processor will send you a settlement report showing every transaction, the total, the fees deducted, and the amount deposited. Keep these reports for your records and for tax time. Most processors let you read reports from your dashboard or have them emailed to you daily, weekly, or monthly.
Frequently Asked Questions
Do I need a business license or bank account to accept credit cards?
Most processors require a business bank account and a tax ID or Social Security number. Some require a business license, though not all. Check your processor's requirements before you sign up. If you don't have a business account yet, open one at your bank—it usually takes one day and costs nothing.
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 proof of delivery (for online orders). Most processors let you upload evidence to fight a dispute. Disputes are rare if you're honest and deliver what you promise.
Can I accept credit cards without a physical location?
Yes. You can process payments online, by phone, or by mail using a payment gateway or virtual terminal. You don't need a shop or office. Many freelancers, consultants, and online sellers use just a payment link or invoice system.
What's the difference between a debit card and a credit card payment?
From your perspective, there's almost no difference. Both process the same way through your terminal or gateway. The fees are slightly different—debit cards usually cost less—but your processor handles that. The customer's bank determines whether it's a credit or debit transaction.
Can I process payments without an internet connection?
Most modern terminals and readers need internet to process payments in real time. Some terminals can store transactions offline and sync them later, but this is rare. If internet is unreliable where you work, ask your processor whether they support offline mode before you sign up.