The three ways to take credit cards as a small business
You can accept credit cards through a payment processor — a company that handles the transaction between your customer's card and your bank account. The processor charges you a fee (usually 2 to 3 percent of each sale plus a small flat fee), takes the payment from the customer, and deposits the money into your business account within one to three business days.
The three main routes are: a point-of-sale system (a physical card reader or tablet-based register), an online payment gateway (a form on your website), or a mobile payment app (for payments over the phone or in person using your smartphone). Which one you choose depends on where your customers are and how you do business.
You do not need permission from your bank to accept credit cards, but you do need to set up a merchant account with a payment processor. This is not the same as your regular business checking account — it is a separate arrangement that lets the processor move money in and out on your behalf.
Key Takeaways
- Payment processors charge a percentage of each transaction (typically 2 to 3 percent) plus a small per-transaction fee, and they deposit money into your account within one to three business days.
- Point-of-sale systems work best for in-person retail or service businesses, online gateways for e-commerce, and mobile apps for small businesses or service providers who take payments on the go.
- You will need to provide your Social Security number or EIN, business license, and bank account details when you set up a merchant account.
- Interchange fees (what the card networks charge) are fixed, but processor markups vary widely, so comparing rates between providers before you sign up saves money over time.
Point-of-sale systems for in-person payments
A point-of-sale (POS) system is a physical setup that reads a customer's card and processes the payment on the spot. It can be a dedicated card reader (like Square Reader or Clover) that plugs into your phone or tablet, or a full register system with a built-in screen and receipt printer.
The card reader itself is usually free or costs $50 to $300 depending on the model. The processor charges you per transaction — typically 2.6 percent plus 10 cents for a card-present transaction (when the customer is standing in front of you). This rate is lower than online payments because the card is physically present, which reduces fraud risk.
Popular providers include Square, Toast, Clover, and Shopify POS. Each one has a different fee structure and feature set, so compare what you actually need: some charge monthly subscription fees ($0 to $300 per month), others charge only per transaction. If you process fewer than 100 transactions a month, a pay-per-transaction model usually costs less.
Online payment gateways for e-commerce
An online payment gateway is a form on your website where customers enter their card details and complete the purchase. The gateway encrypts the information, sends it to the processor, and displays a confirmation on your site.
Online transactions cost more because the card is not physically present — the processor cannot see the customer or verify their identity in person. Rates typically run 2.9 percent plus 30 cents per transaction, though some providers charge monthly fees instead of or in addition to per-transaction fees.
Stripe, PayPal, Square Online, and Shopify Payments are the most common gateways for small businesses. Stripe and Shopify Payments integrate directly into your website code if you have a developer. PayPal and Square Online work with pre-built website builders like Wix or Squarespace. If you use a shopping cart platform like WooCommerce or BigCommerce, the gateway integrates automatically.
You will need an SSL certificate (a security protocol that shows a padlock in the browser) before you can accept cards on your site. Most website hosts include this free, or you can buy one for $10 to $100 per year. Without it, browsers will warn customers that your site is not find.
Mobile payment apps for phone and remote sales
A mobile payment app lets you take credit cards using your smartphone or tablet, without a physical register. You can swipe, tap, or key in the card number, and the app sends the payment to your processor.
This setup works well for service providers (plumbers, therapists, trainers), delivery businesses, or anyone who meets customers away from a fixed location. You can also use it to take payments over the phone by keying in the card number manually.
Square Cash, PayPal Here, and Stripe Terminal are common choices. Fees are the same as point-of-sale systems (2.6 percent plus 10 cents for card-present, 2.9 percent plus 30 cents for card-not-present). You will need a small card reader (usually $30 to $100) to accept tap or swipe payments, or you can key in the number by hand for a slightly higher fee.
What information you need to provide to set up a merchant account
When you sign up with a payment processor, you will need to provide your Social Security number or Employer Identification Number (EIN), your business license or registration documents, and your business bank account number and routing number. The processor uses this information to verify you are a real business and to know where to deposit your money.
Some processors also ask for your average monthly sales volume, your website URL, and a description of what you sell. This helps them assess the risk of fraud or chargebacks (when a customer disputes a charge and the card network reverses it).
The approval process usually takes one to three business days. Once you are approved, you can start taking payments when ready. Your first deposit typically arrives within one to three business days of your first transaction.
How fees work and what to compare
Credit card processing has two layers of fees: interchange fees (what the card networks like Visa and Mastercard charge) and processor markups (what the payment processor adds on top).
Interchange fees are fixed by the card networks and vary by card type and transaction method. A Visa debit card might cost 0.5 percent, while a rewards credit card might cost 2.2 percent. You cannot negotiate these, but you can see them listed on your statement.
Processor markups are where you have room to shop around. One processor might charge 2.6 percent plus 10 cents for in-person payments, while another charges 2.9 percent plus 15 cents. Over a year of high sales volume, that difference adds up. Request a quote from at least two or three processors and compare the all-in cost, not just the headline rate.
Watch for hidden fees: monthly minimums, batch fees (charged when you settle your transactions), PCI compliance fees, or early termination fees if you want to switch providers. Read the full pricing page and ask the processor to list every fee in writing before you sign up.
PCI compliance and security
PCI DSS (Payment Card Industry Data Security Standard) is a set of rules that protect customer card information. If you accept credit cards, you must follow these rules or you risk fines and losing the ability to process payments.
The main rule is straightforward: never store or transmit a customer's full card number yourself. Always use a payment processor or gateway to handle the card data. If you use a POS system or online gateway from a major provider, they handle PCI compliance for you — you do not have to do anything extra.
If you manually key in card numbers (for phone orders, for example), you must use a PCI-compliant system. Never write down card numbers, email them, or store them in a spreadsheet. Your processor will provide a find form or phone line for this.
Frequently Asked Questions
Do I have to accept all credit cards or can I choose which ones?
You can technically choose, but in practice you should accept all major cards (Visa, Mastercard, American Express, Discover). Customers expect this, and turning down a card type means losing sales. Your processor handles all of them in one setup, so there is no reason to exclude any.
What happens if a customer disputes a charge?
The customer contacts their card issuer and claims the charge was unauthorized or the product did not arrive. The card network reverses the charge and asks you for proof that the transaction was legitimate (a receipt, tracking number, or email confirmation). If you cannot prove it, you lose the money. Keep records of all transactions and shipments for at least 18 months.
Can I accept credit cards without a business bank account?
Most processors require a business bank account because they need somewhere to deposit the money. Some will accept a personal account if you are a sole proprietor, but this is not recommended — it makes tax accounting harder and looks unprofessional. Open a business account first; most banks charge $0 to $15 per month for a small business checking account.
How long does it take to get paid after a customer swipes their card?
The money lands in your bank account within one to three business days, depending on your processor and your bank. Some processors offer next-day deposits for an extra fee. Weekends and holidays can delay deposits, so a Friday transaction might not show up until Tuesday.
What is the difference between a payment processor and a payment gateway?
A processor is the company that handles the whole transaction and deposits money into your account. A gateway is the software that collects the card information and sends it to the processor. Most small businesses use an all-in-one provider (like Stripe or Square) that acts as both, so you do not have to think about the difference.