How to Accept Credit Card Payments Online for Free

Running a small business in 2022 isn’t a matter of if you accept credit card payments—it’s a matter of how. While businesses can accept credit card payments online without any monthly or startup fees using services like Square and PayPal, there is no escaping transaction fees (which average about 3%). That’s because card-issuing banks and credit card associations charge a fee whenever a credit or debit card is used as payment.

Square is one of the easiest and more affordable solutions for accepting payments online. It’s free to set up and comes with an online store, invoicing capabilities, a virtual terminal, and a point-of-sale (POS) app. There’s no application process or monthly minimums—anyone can sign up and start accepting payments online for a standard 2.9% + a 30 cent transaction fee. Create your free account today.

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Most Affordable Ways to Accept Payments Online

Just because there’s no way for your business to accept credit cards online for free doesn’t mean you need to pay exorbitant fees. Choosing an affordable payment processing solution can still save you money.

Online ACH & E-check Payments

Although not a credit card transaction, ACH (automated clearing house) transfers are usually the most affordable way to accept payments online. If you have ever received a direct deposit paycheck from your employer or paid bills online using your bank account, those are examples of ACH payments. Popular social payment apps like Venmo also use ACH payments to transfer money for free.

For businesses, ACH payments often have significantly lower transaction fees than credit or debit card payments. It’s a popular option for companies that bill via invoice or have recurring payments such as freelance creatives and law firms.

The downside to using ACH payments is they don’t provide instant approval or denial like a card payment would and can take longer to process. They also require the customer to enter their bank account and routing numbers, so it’s not ideal for retailers or other online businesses that have shopping cart functions.

Some of the best ways to accept ACH payments online include

• QuickBooks: Low-cost ACH processing best for individuals and small businesses charging customers via invoice. ACH fees are 1% with a $10 cap.
• Stripe: Free invoicing solution for online businesses. It includes low-cost ACH processing (fees are 0.8% with a $5 max) and competitive credit card payment processing.
• Square Invoices: Free invoicing software with ACH payments and options for recurring payments. ACH processing fees are 1% with a $1 minimum.
• National Processing: Low-cost ACH payments that work for businesses of all sizes. ACH fees start at 48 cents per transaction and $15 per month.
• PaymentCloud: ACH processing best for high-risk businesses. Like most high-risk solutions, pricing is customized to your business.

Online Credit & Debit Card Payments

Retailers and most other online businesses need to be able to accept traditional credit card payments, as shoppers aren’t likely to go through the hassle of providing their banking information for a one-time transaction.

Although there’s no way to accept credit card payments for free, choosing a processor with low, competitive fees can still save your business a lot of money. The cheapest credit card processor for your business depends on what and how much you are selling.

• Ecommerce Platforms
• Traditional Merchant Accounts

If you’re a retail business needing to accept credit cards online to sell products, the most straightforward and economical option may be to use an ecommerce platform or website builder with built-in payment processing. Opting for an ecommerce store with integrated payments simplifies the process of setting up and managing your store. It also allows you to collect and act on more detailed information about your customers.

The most affordable online store solutions with built-in payment processing include:

• Square: Free online store with low-cost transaction fees, best for brick-and-mortar businesses wanting to accept payments online. Online transaction fees are 2.9% plus 30 cents.
• Shopify: Affordable small-business solution with ecommerce plans starting at $29 per month, best for new ecommerce businesses. Online transaction fees range from 2.4% plus 30 cents to 2.9% plus 30 cents depending on your plan. Monthly fees are anywhere from $29 to $299.

Both Square and Shopify also have native tools to set up recurring billing or subscriptions. Learn more in our comparison of Shopify vs Square.

Square’s free online store comes with built-in features to accept all credit and debit card payments and options to accept PayPal.

If you have an established or high-volume business (consistently processing over $20,000 per month), accepting credit cards through a traditional merchant account could be the least expensive option for your business. A merchant account is a type of bank account, so it’s a more formal setup than something like Square or PayPal because it usually requires an application and approval process.

However, higher-volume businesses could receive more competitive rates from a merchant account provider than an all-in-one ecommerce platform that has set flat fees. Existing brick-and-mortar businesses could negotiate competitive online processing fees with their current payment processor.

If you’re using a merchant account provider to accept credit cards online, you may also need a payment gateway to connect your merchant account with your online store. There’s no one-size-fits-all instruction for this option, as some merchant account providers, such as Stax by Fattmerchant and Payment Depot, come with built-in gateways at no extra cost. Others, like Authorize.net, require you to pay an additional monthly fee or to use a separate gateway.

The most affordable merchant services for online payments include

• Payment Depot: Affordable option for businesses processing over $10,000 in sales per month through any combination of online and offline channels. Processing fees are anywhere from interchange plus 5 cents to 15 cents, depending on your plan. Monthly fees range from $49 to $199.
• Stax by Fattmerchant: Affordable option for online-only companies processing over $20,000 per month. Monthly fees range from $99–$199, and online transaction fees are interchange plus 8 cents for card-present and 15 cents for card-not-present transactions.
• Helcim: Low-cost interchange-plus processing with no monthly fee. Helcim has automated volume discounts that make it competitively priced for established online, in-person, and multichannel payments of all sizes. Online processing fees range from interchange plus 0.2% to 0.5% depending on your sales volume.

Online Mobile or One-Click Payments

In addition to traditional credit card payments, many businesses opt to accept payment online using one-click solutions like PayPal, Apple Pay, and Venmo. Although this method isn’t as affordable as ACH payment processing, it usually has the same fees as regular credit card payments. The main difference is that one-click payments are much easier for customers because they don’t have to enter their information manually.

In 2020, digital and mobile wallet payments made up nearly 45% of all ecommerce transactions worldwide. Customers need to have a fast and easy checkout option.

PayPal One-Touch checkout (Source: PayPal)

When choosing the most affordable online payment method, consider how that method will impact your sales. ACH payments might be the least expensive, but if the complex purchase forms are turning away customers, it may be more profitable to accept credit cards through a solution like PayPal, even if the transaction fees are higher.

With PayPal, you can install a simple online checkout for free on most websites and ecommerce platforms; it accepts debit cards, credit cards, PayPal, and even Venmo payments. PayPal’s One-Touch checkout is available with PayPal’s free standard online checkout.

In addition to using PayPal, businesses can offer one-click payments by:

• Allowing customers to create user accounts: If you have an online store, enable checkout settings so shoppers can save their card, contact, and shipping information to use for future purchases.
• Enabling Apple Pay and Google Pay: Most ecommerce platforms and online store builders that come with built-in payments have features to accept Apple Pay and Google Pay. Shopify stores also have Shop Pay. Make sure to enable these payment methods in your store.

Additionally, many online store platforms have unique options for single-click checkouts. Shopify, for example, has Shop Pay, which allows customers to save payment and shipping information across all online stores powered by Shopify.

Square has rolled out similar features with its Square Pay solution. Online checkouts powered by Square can save customer details for one-click purchases on future visits to websites powered by Square.

Low-cost Online Invoicing

There are affordable ways to accept credit card payments online through a shopping cart or ecommerce setup rather than by billing customers for products or services. While we mentioned that ACH and direct bank payments might not make sense for online stores, it’s a much better fit for invoicing.

If you regularly send out invoices and collect payments, using an established invoicing tool that includes ACH processing is probably your best option.

If you only need to request payment occasionally, you may be able to use a free service like Zelle, which powers free bank transfers. However, Zelle is only available through certain banks, such as Chase.

In addition to the online ACH processors covered above, the following methods could be a good fit for sending and receiving funds through online invoicing:

• Wave: Free invoicing and accounting software with a credit card processing fee of 2.9% plus 30 cents (3.4% plus 30 cents for American Express) and a 1% ACH payment fee, with a $1 minimum. Can also set up automated recurring billing.
• Zelle: Send and request funds through the app. Payments are free and quick. However, it requires both parties to create an account. Business accounts are only available through select banks. This is best for occasional payments.
• FreshBooks: Cloud-based small business accounting software that includes features for invoicing and online payments. Online transaction fees are 2.9% plus 30 cents each and ACH transfers have a 1% fee.
• QuickBooks Online: If you already use QuickBooks for accounting, every QuickBooks Online account comes with invoicing software that includes a bank transfer payment option. This is best for businesses already using QuickBooks, as the subscription requires a monthly fee. ACH fees are 1% with a $10 cap. Card transaction fees are 2.4% plus 25 cents for swiped cards, 2.9% plus 25 cents for online invoices, and 3.4% plus 25 cents for keyed-in payments.
• Zoho Invoice: Free online invoicing software and a suite of accounting tools that has online invoicing fees for just 50 cents per transaction.

Wave Apps is an incredibly affordable way to accept payments online through bank payments and invoices.

Costs of Accepting Payments Online

While there’s no way to accept credit card payments online for free as a business, the exact prices will vary depending on the type of payments you are receiving and the provider you choose. Typically, if you select a provider with no monthly fees, you can expect to pay around 3% in transaction fees.

For example, Square charges the following fees:

• Ecommerce payments: 2.9% plus 30 cents per transaction
• Invoice payments: 2.9% plus 30 cents per transaction
• ACH deposits: 1% per transaction

If you’re a brick-and-mortar business, it’s important to note that online processing fees are usually higher than fees to accept credit cards in-store. For example, Square’s transaction fees for swiped or contactless payments start at only 2.6% plus 10 cents per transaction.

There’s no way to accept credit cards online for free because credit card issuers like Visa and Mastercard charge a nonnegotiable processing fee for every transaction. This fee is called an interchange fee. Your merchant account provider or payment processor pays this fee, then passes it along to you with their markup, which can take the form of a transaction fee or a monthly fee.

Because of these unavoidable interchange fees set by credit card associations, direct bank payments and ACH or e-check payments are the most affordable way to accept payments online.

How to Choose a Payment Processing Solution

Now that you know the different kinds of payment options available to you, when choosing a payment processing solution, consider the following:

• Transaction fees: For new and small businesses, solutions like Square and PayPal with flat fees and no monthly minimums are usually the most affordable. As your business grows, solutions with interchange-plus or membership pricing such as Payment Depot and Stax by Fattmerchant, can offer the lowest rates.
• Tiered pricing: Tiered pricing models (where the processor charges different rates and fees depending on the card type) are typically the priciest and least transparent option. Avoid these pricing models.
• Monthly fees: Some solutions offer low transaction rates but have high monthly fees.
• Startup fees and applications: Traditional merchant services accounts typically have longer setup processes than third-party credit card processing solutions because there is an approval process.
• Contracts and requirements: Some solutions require you to sign up for a year or more; others require your business to meet monthly transaction minimums.
• Compatibility with your website: Make sure the service you choose integrates well with your website hosting service.

How to Lower Your Credit Card Processing Fees

While free credit card processing may not exist for businesses in 2022, there are many ways you can reduce the fees you pay. Here are just a few:

• Offer cash discounts: In many places, it’s illegal to pass payment processing fees onto the customer, but you can offer incentives for cash payment. Learn more about cash discounting (or “zero cost” payment processing).
• Set a minimum: You can require a minimum purchase amount for credit card payments. This can also help increase average order value (AOV).
• Negotiate new rates: It doesn’t hurt to ask your processor if it can accommodate more affordable rates. Remind the provider if you have a longstanding history with its platform. The bigger and more established your business, the more leverage you have with negotiating. You can also choose a processor that automatically discounts your rates as your business grows, such as Helcim.
• Eliminate extra services: If your payment processor includes additional services, features, or tools, make sure you’re not paying for them—especially if you don’t use them.
• Fight fraud: Businesses around the world lost $28.58 billion to card fraud in 2020, equal to 6.8 cents per $100 in purchase volume. Merchants facing credit card fraud lose a lot of time and money to fraudsters and in managing these instances. Use chargeback prevention tools and take other steps to reduce chargebacks and fraud in your business.

Bottom Line

Although there’s no way to accept credit card payments online for free, it’s possible to find an affordable solution. Minimize costs and streamline the entire process by choosing an all-in-one solution that will host your website and offer competitive payment processing.

Square is one of the most affordable and easiest-to-use solutions that offers everything you need to accept payments online, including a free payment processing account and a free website. Plus, you can add extra features as you grow and use its marketing solutions to help scale your business. Visit Square to create your free account.

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