The fastest way to take credit card payments online is through a payment processor that connects to your bank account
You need three things: a payment processor (the service that handles the transaction), a way to collect the card details (a form, link, or device), and a business bank account to receive the money. The processor charges a fee per transaction — usually 2.2% to 3.5% of the amount plus 30 cents — and deposits the funds into your account within one to three business days.
The most common route for small businesses and freelancers is a service like Stripe, Square, PayPal, or Shopify Payments. Each one lets you create a payment link you can send to a customer, embed a form on your website, or use a card reader if you take payments in person. You do not need a separate merchant account or a physical storefront.
The setup takes 15 to 30 minutes. You provide your business name, your personal identification, your bank account details, and a few details about what you sell. The processor runs a background check and usually approves you the same day or within 24 hours.
Key Takeaways
- Payment processors like Stripe, Square, and PayPal charge a percentage fee per transaction and deposit money to your bank account within one to three business days.
- You can collect payments through a link you send to customers, a form embedded on your website, or a physical card reader — you do not need a separate merchant account.
- Setup requires your business name, personal ID, and bank account details, and most processors approve you within 24 hours.
- Each processor has different fee structures and features, so comparing them before you sign up saves money over time.
- You are responsible for keeping records of all transactions for tax purposes, and the processor will send you a 1099-K form at the end of the year.
Comparing the main payment processors and their costs
The four largest processors for small businesses are Stripe, Square, PayPal, and Shopify Payments. Each charges a transaction fee and has different strengths depending on how you take payments.
| Processor | Online payment link or form | In-person card reader | Transaction fee |
|---|---|---|---|
| Stripe | Yes (Stripe Payment Links) | Yes (Stripe Terminal) | 2.9% + 30¢ online; 2.7% + 8¢ in-person |
| Square | Yes (Square Payment Links) | Yes (Square Reader) | 2.9% + 30¢ online; 2.6% + 10¢ in-person |
| PayPal | Yes (PayPal.me or invoices) | Yes (PayPal Here) | 3.49% + 49¢ online; 2.7% + 5¢ in-person |
| Shopify Payments | Yes (if you use Shopify) | Yes (Shopify POS) | 2.9% + 30¢ online; 2.7% + 0¢ in-person |
Stripe and Square are the most popular for online-only businesses because their payment links are straightforward to set up and share. PayPal is useful if your customers already have PayPal accounts and want to pay that way. Shopify Payments only works if you use Shopify as your website platform.
If you take payments in person as well as online, Square and Shopify Payments have lower in-person fees. If you only take payments online, the differences are small enough that ease of use matters more than the fee structure.
Setting up a payment link you can send to customers
A payment link is the simplest method if you do not have a website or do not want to embed a form. You create the link in your processor's dashboard, set the amount, and send it to the customer by email, text, or social media. The customer clicks the link, enters their card details, and the payment goes through.
With Stripe, go to the dashboard, click "Payment Links," and create a new link. Enter the amount, a description of what you are selling, and your preferred currency. Stripe generates a URL you can copy and paste anywhere. You can set the link to accept any amount (useful for invoices) or a fixed amount (useful for a service or product).
With Square, go to the dashboard, click "Payment Links," and follow the same process. You can also create an invoice and Square will generate a link automatically. With PayPal, you can use PayPal.me (a simpler option) or create an invoice through your PayPal account. Both methods send a link the customer can click to pay.
Payment links are useful for freelancers, consultants, and small service businesses. They work on mobile phones and do not require the customer to have an account with the processor.
Embedding a payment form on your website
If you have a website and want customers to pay without leaving your site, you can embed a payment form directly into a page. The customer enters their card details on your site, and the processor handles the transaction securely in the background.
Stripe offers Stripe Embedded Form, which you can add to any website. You paste a small piece of code into your website's HTML, and the form appears on the page. Square offers a similar tool called Square Web Payments SDK. Both require some technical knowledge or help from a web developer, but they give you full control over how the form looks.
If you use a website builder like Wix, Squarespace, or WordPress, these platforms have built-in integrations with Stripe, Square, and PayPal. You do not need to write code — you just connect your processor account and add a payment button or form from the builder's menu.
Embedded forms are best for e-commerce sites, membership sites, or any business where customers are already on your website and expect to pay there. They reduce friction because the customer does not have to click a link and leave your site.
Taking card payments in person with a card reader
If you need to take payments face-to-face, you can use a small card reader that plugs into your phone or tablet. The customer inserts or taps their card, and the payment goes through when ready. The reader costs between $29 and $99 depending on the processor, and you pay the same per-transaction fee as online payments.
Square Reader is the most common option for small businesses. It costs $29, works with any phone or tablet, and takes about five minutes to set up. Stripe Terminal is more expensive (around $99) and is better for businesses that take many payments per day. PayPal Here is similar to Square Reader in price and ease of use.
You do not need a separate merchant account or a physical point-of-sale system. The reader connects to your phone via Bluetooth, and the processor's app handles the rest. Payments appear in your account the next business day.
Understanding fees, deposits, and tax reporting
Every transaction costs you a fee. For online payments, expect to pay between 2.2% and 3.5% of the amount plus a flat fee of 30 to 49 cents. On a $100 payment, that is $2.20 to $3.50 plus 30 to 49 cents, so roughly $2.50 to $4.00 total. The fee is deducted automatically before the money reaches your bank account.
Deposits usually arrive within one to three business days. Some processors offer next-day deposits for an extra fee, or when ready deposits for a small percentage of the transaction. Most small businesses use the standard deposit schedule.
At the end of the calendar year, the processor sends you a 1099-K form if you processed more than $20,000 in payments. This form reports your total transaction volume to the IRS. You are responsible for reporting this income on your tax return, even if you have not received the 1099-K yet. Keep your own records of all transactions in case of an audit.
Some processors offer accounting integrations with QuickBooks or Wave, which automatically import your transactions into your accounting software. This makes tax time easier.
Security and protecting customer card data
When you use a major processor like Stripe, Square, or PayPal, you do not handle the customer's card details directly. The processor collects the card information on their find servers, which means you are not responsible for storing or protecting it. This is called PCI compliance — the processor handles it for you.
If you use a payment link or embedded form, the customer's card details never touch your computer or your website. The processor's find form collects the information, processes the payment, and only sends you a confirmation that the payment succeeded. This is the safest method for both you and the customer.
Never ask a customer to email you their card details or type them into a text message. Never store card details in a spreadsheet or email. If you use a card reader in person, the reader encrypts the data automatically — you do not need to do anything extra.
Frequently Asked Questions
Do I need a business bank account to take credit card payments?
Yes. The processor deposits the money into a bank account in your name. You can use a personal account, but most processors recommend a business account so your business income is separate from your personal finances. A business account also makes tax reporting easier.
What happens if a customer disputes a charge?
The processor handles the dispute process, called a chargeback. The customer contacts their bank and claims they did not authorize the charge or did not receive what they paid for. The processor investigates and either returns the money to the customer or sides with you. You can provide evidence like a receipt or email confirmation to defend yourself.
Can I take payments without a website?
Yes. Payment links work on any device and do not require a website. You create the link in your processor's dashboard and send it by email, text, or social media. The customer clicks the link and pays. This is the easiest method if you do not have a website.
Which processor is best for a small business just starting out?
Square or Stripe are both good choices. Square is slightly easier to set up and has a lower learning curve. Stripe is more flexible if you want to customize how payments work on your website. Both have no monthly fees — you only pay per transaction. Try the free trial with each one and see which dashboard you prefer.
How long does it take to get approved?
Most processors approve you within 24 hours. Some approve when ready. The processor runs a background check and verifies your bank account, which takes a few minutes to a few hours. Once approved, you can start taking payments when ready.