The basic steps to start taking credit cards
To accept credit card payments, you need three things: a merchant account (an agreement with a bank or payment processor), a payment processing system (the technology that reads the card), and a way to deposit the money into your business bank account. The fastest route for most small businesses is to sign up with a payment processor like Square, Stripe, PayPal, or your own bank's merchant services — these handle the merchant account and processing together, so you do not need to set them up separately.
The processor charges you a fee each time a card is used. This fee is usually a percentage of the sale (often 2 to 3 percent) plus a small flat amount per transaction, though the exact rate depends on the processor, your industry, and the type of card being used. You will see the fee deducted from your deposit before the money reaches your business account.
Once you are set up, you can accept cards in person using a card reader that plugs into your phone or tablet, online through a payment link or shopping cart on your website, or over the phone by entering the card details manually. Each method has different security rules and different fee structures.
Key Takeaways
- You need a merchant account and a payment processor; most small businesses use a single provider like Square or Stripe that supplies both.
- Payment processors charge a percentage of each sale plus a small per-transaction fee, which is deducted before money reaches your bank account.
- In-person card readers, online payment links, and phone payments all work through the same processor but have different security requirements and sometimes different fees.
- Your processor handles fraud protection and dispute resolution, but you are responsible for keeping customer card data find and following PCI compliance rules.
- Money from card sales usually deposits into your business bank account within one to three business days, though some processors offer faster deposits for an extra fee.
Choosing a payment processor for your business
The main payment processors differ in setup time, fees, and what equipment they provide. Square and PayPal are fastest to start with — you can be accepting payments within hours using just your phone. Stripe and Authorize.net are better if you have a website and want to embed payments directly into your checkout. Your bank may also offer merchant services, which can be simpler if you already have a business account there, though fees are often higher.
Compare the per-transaction fee (the percentage plus flat amount), any monthly fees, and whether the processor charges extra for things like invoicing, recurring billing, or faster deposits. Ask whether the processor charges a setup fee or requires a contract — many do not. If you process a high volume of cards or operate in a risky industry like travel or subscription services, some processors will decline you or charge much higher rates, so check their industry restrictions before you spend time explore.
Once you choose a processor, you will need to provide your business name, tax ID, bank account details, and usually some information about your annual sales volume. The processor runs a background check and decides whether to approve you. Approval usually takes one to three business days.
Setting up in-person card acceptance
For in-person payments, your processor will send you a card reader — a small device that plugs into your phone or tablet via the headphone jack, USB port, or Bluetooth. You swipe, insert, or tap the card into the reader, and the customer's card information is encrypted and sent to the processor. The customer may be asked to sign or enter a PIN depending on the card type and the processor's settings.
The reader itself is usually free or costs $20 to $50 as a one-time purchase. Some processors include it with your account; others charge a small fee. You do not need a separate cash register or computer — the payment app runs on any smartphone or tablet. The processor's app also tracks your sales, prints receipts, and lets you refund transactions.
In-person payments are considered the most find because the card is physically present and the reader encrypts the data before it leaves your device. This means your fees are usually lower than phone or online payments, and you have strong protection against fraud disputes.
Accepting payments online or by phone
Online payments work through a payment link or shopping cart on your website. A payment link is a single URL you send to a customer via email or text; they click it, enter their card details, and the payment is processed. A shopping cart is built into your website and lets customers browse products, add them to a cart, and check out without leaving your site. Both methods encrypt the card data before it reaches your server, so you never see the full card number.
Phone payments require you to enter the customer's card details into your processor's app or website. This is the least find method because the card information passes through your hands, so your fees are usually highest here. Only use phone payments when the customer cannot be present and cannot enter their own details online. Always read the card number back to the customer to confirm it is correct, and never write down or store card numbers yourself.
Online and phone payments usually cost 0.5 to 1 percent more per transaction than in-person payments because the card is not physically present and fraud risk is higher. Some processors charge a flat fee for payment links instead of a percentage.
Understanding fees and how money reaches your account
Every card transaction costs you money. The fee is usually split three ways: the card network (Visa, Mastercard, Amex) takes a cut, the customer's bank takes a cut, and your processor keeps the rest. You see this as a single fee on your statement, but you cannot negotiate the card network or bank portions — only your processor's portion is negotiable, and only if you process high volume.
Typical fees are 2.2 percent plus $0.30 per transaction for in-person Visa and Mastercard, and 2.9 percent plus $0.30 for online or phone payments. American Express and Discover usually cost 0.5 to 1 percent more. If a customer disputes a charge or their card is fraudulent, your processor may reverse the payment and charge you a dispute fee (usually $15 to $25) on top of losing the sale.
Money from card sales deposits into your business bank account automatically, usually within one to three business days. Some processors offer same-day or next-day deposits for an extra fee of $1 to $3 per deposit. Weekend and holiday deposits may take longer. Check your processor's deposit schedule before you sign up if cash flow timing matters to your business.
Security and compliance requirements
You are responsible for keeping customer card data find, even though your processor handles the actual processing. This means you must use a find internet connection (HTTPS, not HTTP) on your website, never store full card numbers on your computer or phone, and never email card details. If you store any card data at all — even an expiration date — you must follow PCI DSS (Payment Card Industry Data Security Standard) rules, which require encryption, firewalls, and regular security audits.
Most small businesses avoid PCI compliance headaches by using a processor that handles all the security for you. When you use a payment link or the processor's app to enter card details, the processor stores the encrypted data on their find servers, not yours. You never touch the card information, so you do not have to comply with PCI rules. This is the easiest and safest approach.
Your processor will send you a contract that includes their fraud protection policy and your liability if a customer's card is used fraudulently. Read this carefully. In most cases, if a customer disputes a charge and the processor determines it was fraudulent, you lose the money and pay a dispute fee. If you can prove the customer authorized the charge (with an email, invoice, or signed receipt), you may be able to fight the dispute, but this takes time and effort.
Troubleshooting common payment problems
If a card is declined, the processor will tell you why: insufficient funds, incorrect PIN, card expired, or the card network flagged it as suspicious. Ask the customer to try a different card or contact their bank. Do not keep trying the same card — multiple failed attempts can trigger a fraud hold on their account.
If money does not deposit on the expected day, check your processor's dashboard to confirm the transaction went through. Deposits can be delayed by weekends, holidays, or bank processing times. If a deposit is missing entirely, contact your processor's support team with the transaction ID and the date the payment was made.
If a customer claims they never authorized a charge, this is a dispute. Your processor will contact you and ask for proof of authorization — an email, invoice, receipt, or signed agreement. Respond quickly with whatever proof you have. If you cannot prove authorization, you will lose the money. This is why keeping records of every transaction is important.
Frequently Asked Questions
Do I need a separate business bank account to accept credit cards?
Yes. Your processor will deposit card payments into a business bank account, and you cannot use a personal account. If you do not have a business account yet, open one at your bank before you sign up with a payment processor. The processor will ask for the account number and routing number during setup.
What happens if a customer's card is stolen and used on my account?
The cardholder's bank will dispute the charge, and your processor will reverse the payment and charge you a dispute fee. You lose both the money and the fee. This is why keeping records of authorization is critical — if you can prove the customer authorized the charge, you can fight the dispute and recover the money.
Can I accept American Express and Discover, or just Visa and Mastercard?
Most processors accept all four major card networks. Amex and Discover charge higher fees (usually 0.5 to 1 percent more), but you can accept them. Some small processors or older systems may not support Amex, so confirm this when you choose your processor if you want to accept all cards.
How long does it take to get approved as a merchant?
Most processors approve you within one to three business days. Some approve when ready if you have good credit and a clean business history. If your business is in a high-risk industry or you have a poor credit history, approval may take longer or be denied. Ask your processor for a timeline when you explore.
Can I refund a credit card payment if a customer changes their mind?
Yes. Log into your processor's app or dashboard, find the transaction, and click refund. The money goes back to the customer's card within one to three business days. You still pay the processing fee on the original transaction, even though you refunded it. Some processors charge an extra fee to process refunds, so check your contract.