If you are running a small business in 2023, it isn’t a matter of whether you should 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.
- There is no absolutely free way to accept credit card payments. However, there are means to significantly minimize costs with zero-cost payment processing programs.
- Or, you can shop around for the cheapest credit card processing fees to cut costs.
Square is one of the easiest and most 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% + 30-cent transaction fee. Create your free account today.
How to Avoid Credit Card Processing Fees
There are ways to avoid credit card processing fees when accepting online payments. You can pass on the fees to your customers or choose a different payment method altogether.
Credit card surcharging (or passing transaction fees on to customers) is an increasingly popular option in some US states. You could also offer other payment methods, like ACH payments, that have lower transaction fees than credit card processing fees.
“Zero-cost” Credit Card Processing
In some US states, it’s legal for merchants to pass on their credit card processing fees to customers. Depending on where a business is located, the following methods are available for those who accept credit cards online:
- Convenience Fee: Fixed amount added as a fee at checkout
- Credit Surcharging: Credit card processing fees are added to the product price
- Cash Discounting: Cash discounting for online purchases is possible with merchant processors that offer ACH payment processing services.
However, these methods don’t let businesses avoid other merchant processing fees, such as merchant account costs and transaction fees for ACH and debit card payments. Additionally, merchants should make sure that their website has a system in place to verify that customers are located in states that allow all methods.
There are a number of payment processing providers that offer this service, but merchants should be aware of key factors that make a reliable zero-cost credit card payment processor.
- CardX by Stax: For out-of-the-box, fully compliant online credit surcharging
- PaymentCloud: For high-risk merchants that want both traditional and credit surcharging payments
- AND Processing: For midsize brick-and-mortar businesses
- Helcim: For merchants that accept ACH payments
Zero-cost Payment Processors Compared
Monthly Fee | Transaction Fees | Chargeback Fee | |
|---|---|---|---|
 | From $0 | From 2.91% (debit card transactions) | $0 |
 | $0–$30 | 2.69%–4.25% | $25 |
 | $50 | Not disclosed | Not disclosed |
 | $0 | 0.5% + 25 cents (ACH) | $15 (reversible) |
Learn more about “Zero-cost” payment processing.
Online ACH & E-check Payments
One of the most affordable ways to accept payments online is through an ACH (automated clearing house) transfer. 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. 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.
Popular social payment apps like Venmo and Zelle also use ACH payments to transfer money for free.
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:
- Chase Payment Solutions: Low-cost, no minimum, no cap ACH payments processing
- Stripe: Free invoicing for online businesses with low-cost ACH processing and competitive credit card payment processing
- Helcim: Free merchant account with low-cost ACH processing for large-volume businesses
- Square Invoices: Free invoicing software with built-in estimates and contracts builder, plus no cap ACH payment processing
- Wave: Low-cost ACH payment processing with free accounting software
ACH & E-check Processors Compared
Monthly Fees | ACH Fee | ACH Minimum | ACH Cap | |
|---|---|---|---|---|
 | $0-$15 | 1% ($25 cap) for real-time and same-day | None | None |
 | $0 | 0.8% ($5 cap) | None | None |
 | $0 | 0.5% + 25 cents | None | None |
 | $0 | 1% | $1 | None |
 | $0 | 1% | $1 | None |
Learn how to accept ACH payments and the best ACH payment processors.
Most Affordable Ways to Accept Credit Card Payments Online
Retailers and most other online businesses need to be able to accept both traditional credit card as well as debit card payments, as shoppers aren’t likely to go through the hassle of providing their banking information for a one-time ACH transaction.
Additionally, passing on the credit card processing fees to customers may not be an available option because it is illegal in some states, or merchants risk losing customers—almost half of US credit card users would switch merchants to avoid paying a credit card surcharge. 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.
Did You Know? Debit and credit cards are two of the most popular payment methods for online shopping, and Worldpay Global forecasts that credit, debit, and digital wallets will account for some 80% of online payments by 2026.
Here are the cheapest ways to accept payments online:
Ecommerce Platforms
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 $9 per month, best for new ecommerce businesses. Online transaction fees range from 2.4% + 30 cents to 2.7% + 30 cents, depending on your plan.
Ecommerce Platforms Compared
 |  | |
|---|---|---|
Ecommerce Monthly Fees | $0–$72 (annual billing) | $9–$299 (monthly billing) |
Ecommerce transaction fees | 2.9% + 30 cents | 2.4% + 30 cents to 2.7% + 30 cents |
Payment processing options | Square Payments | Shopify Payments or connect a third-party processor for an additional fee |
Multichannel Sales and Ordering | Included | Included |
Best for | Small brick-and-mortar Businesses | Ecommerce businesses |
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. (Source: Square & PayPal)
Traditional Merchant Accounts
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.
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. Some merchant account providers, like Stax and Payment Depot, come with built-in gateways at no extra cost, while 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:
- Helcim: Best option for low-cost interchange-plus processing with no monthly fee. It also has automated volume discounts that make it competitively priced for established online, in-person, and multichannel payments of all sizes.
- Payment Depot: Affordable option for businesses processing over $10,000 in sales per month through any combination of online and offline channels.
- Stax: Affordable option for online-only companies processing over $20,000 per month.
Traditional Merchant Accounts Compared
Monthly Fees | Online Transaction Fee | Card-present Transaction Fee | Chargeback Fee | |
|---|---|---|---|---|
 | $0 | Interchange plus 0.2% to 0.5% + 10 to 25 cents | Interchange plus 0.1% to 0.3% + 5 to 8 cents | $0–$15 |
 | $79 | Interchange plus 18 cents | Interchange plus 8 cents | $25 |
 | $99–$199 | Interchange plus 18 cents | Interchange plus 8 cents | $25 |
Recurring Payments
Businesses that offer memberships, subscriptions, and professional services require the ability to collect the same fees from customers on a regular basis. Recurring payment processors typically have tools for quotes, billing, and invoicing to help you bill, track, and accept payments from customers.
Instead of repeatedly asking customers to key in their card information every time you send them an invoice, they will only need to do this once with a recurring payments option. Some payment processors also charge a smaller card-on-file transaction fee compared to keyed-in rates.
There are a number of reliable all-in-one payment processors that support recurring payments:
- Helcim: For high-volume merchants that will benefit from automatic volume discounts
- Square: Free online and in-person POS system ideal for small businesses and startups.
- PayPal: For seasonal businesses that accept PayPal payments
- Stripe: Best for B2B businesses accepting international sales
- Wave: Best free recurring invoicing and accounting service for solopreneurs
Recurring Payment Processors Compared
Monthly Fee | Invoice Fees | Card-on-File Rate | Keyed-in Rate | |
|---|---|---|---|---|
| $0 | $0 | 0.2% + 10 cents to 0.5% + 25 cents | 0.2% + 10 cents to 0.5% + 25 cents |
| $0 | $0–$20 | 3.5% + 15 cents | 3.5% + 15 cents |
 | $0 | $10–$40 | 3.49% + 49 cents | 3.49% + 49 cents |
 | $0 | 0.5%–0.8% | 2.9% + 30 cents | 3.4% + 30 cents |
 | $0 | $0 | 2.9% + 30 cents | 2.9% + 30 cents |
Learn more about accepting recurring payments and find more payment processing providers.
Costs of Accepting Payment Online
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.
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:
- Monthly payment processing fee: $0
- Ecommerce payments: 2.9% plus 30 cents per transaction
- Invoice payments: 2.9% plus 30 cents per transaction
- ACH deposits: 0.5% to 1% per transaction
If you accept payments in-store or use a mobile device to accept payments, 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.
For merchants that use a free credit card processing program, the credit card transaction fees are passed on to customers. However, if customers pay with ACH or debit cards, then the merchant will have to shoulder the transaction cost.
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.
- Set up and ease of use: Small businesses should look for free and remote setups. The ideal payment processor should also have an easy-to-navigate interface, accessible knowledgebase, and fast deposit times.
- Security: The best payment processors are PCI-compliant and come with fraud protection tools, such as tokenization, address, and IP verification.
How to Lower Your Credit Card Processing Fees
While free credit card processing may not exist for businesses in 2023 (and in the foreseeable future), there are many ways you can reduce the fees you pay. Here are just a few:
- 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. If you have a longstanding history with its platform, then remind your provider of that—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.
- Minimize chargebacks: 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.
Looking to increase online sales? Consider adding a buy now, pay later (BNPL) option at checkout. BNPL transaction fees are typically higher than regular credit card processing fees. The trade-off is that average order values are also typically higher for BNPL purchases.
Accept Payments Online for Free Frequently Asked Questions (FAQs)
The easiest way to accept payments online is through credit card transactions. Not only is the settlement of funds instant and same-day deposit of funds available, there are also payment services providers that do not require an approval process, so you can set up your online business in minutes.
All credit card payments come with an interchange fee charged by card networks (Visa, Mastercard, etc.), so there is no way to process credit card payments for free. However, there are a number of ways to limit the cost of your transactions with the right payment services provider.
If you have a small or startup business, you will likely have a hard time applying for a traditional merchant account. However, there are payment processing companies (or aggregators) that can provide you with the same services without the hassle of a long application process. Most popular examples are Square and PayPal, which can let you set up and start accepting payments in minutes with very minimal cost.
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.
