The ability to accept credit card payments is crucial for any business, whether you have a brick and mortar storefront or sell goods at the local farmers market. Some 46% of Americans don’t worry about carrying cash and assume they can pay for goods using non-cash methods.
If you’re selling online, accepting card payments is a non-starter. Luckily, whether you want to accept credit cards in-store, on-the-go, or online, there are plenty of affordable and user-friendly ways to do so.
In order to accept credit card payments, you’ll need to:
- Determine how you want to accept payments (via mobile, invoices, in-store, over the phone, etc.).
- Open a merchant services account.
- For in-person sales: Purchase a card reader.
- For online sales: Install a checkout on your website, or make sure you have the relevant software to collect payments from your customers. For example: If you’re a service provider, do you need invoicing software? Or if you’re selling physical goods, do you need an online store?
No matter how you want to accept credit cards, those are the basic steps you’ll need to follow. The most important step is choosing a recommended merchant service provider that offers affordable and transparent pricing.
Take this four-question quiz to see which merchant service provider we recommend for your business. Then, continue below for details on accepting credit cards in-store, via mobile, and online.
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1. How to Accept Credit Card Payments In-Store
Accepting credit card payments comes with a fee. At first glance, it’s easy for small businesses to see credit card processing as an unnecessary expense. However, only accepting cash significantly shrinks your pool of potential customers. Credit and debit cards are the preferred in-store payment method of more than 73% of North Americans.
If you have a brick and mortar store, whether you’re a retail business, restaurant, cafe, or service provider, the first thing you’ll need is a merchant account that is equipped to grow with your business and handle high volumes.
In general, there are two types of merchant services: traditional merchant accounts and aggregate payment service providers. Traditional merchant accounts are a type of bank account. They require a more in-depth application and approval process but offer lots of stability and security. Payment aggregators are easy to get up and running quickly, sometimes not requiring any type of approval process.
However, while traditional merchant accounts process your transactions individually, aggregates bundle your transactions with those of other businesses in order to offer affordable rates. The drawback is that aggregates are quick to freeze your account if there is any hint of an irregular transaction.
Payment Service Providers
Type of business bank account - very secure
Payments are aggregated with other businesses
Require application and contract negotiation
Minimal or no application process
Offer competitive rates for established businesses
Accessible and affordable for new and small businesses
Takeaway: If you are a brand-new business, aggregate payment service providers are usually best. Once you are an established business processing over $5,000 monthly, choose a merchant account for the best value and stability.
What Payment Processors Should You Use?
- Square: Best payment processor for new and small businesses
- Payment Depot: Best payment processor for established or growing businesses
Tip: Many popular POS systems come with built-in payment processing. While this method is not always recommended for high-risk businesses, for many shops, having one system for POS and payments can streamline operations and offer a good value.
Connecting a Card Reader
The card reader you use will depend on your merchant services. Your provider will either offer you options for purchase or, if you sign a contract with a traditional merchant account, sometimes offer a free terminal.
If a merchant account requires you to sign a long-term contract (more than a year or two) and leases hardware—run. That is a big red flag. The best processors do not require long-term contracts and offer affordable purchase options for hardware.
Learn more about the fees behind payment processing.
2. How to Accept Mobile Credit Card Payments
If you’re accepting card payments on-the-go, you need a merchant service provider that offers a mobile app for processing payments and offers reliable service. Ideally, the processor will have an offline mode, so you can still accept payments if you don’t have an internet connection or cellphone service.
You’ll also need a portable card reader. There are some portable terminals on the market, which may work well for high-volume, mobile service providers. But, for most small mobile businesses, choosing a processor with a mobile app and card reader that works with your mobile phone is the easiest and lowest-cost option.
What Mobile Payment Processor Should You Use?
- Square: Square offers a free mobile POS app for iOS and Android and a free magstripe card reader. It also has affordable chip and tap readers, plus terminal hardware options. It’s our top pick for the best mobile card readers.
- PayPal: If you’re processing under $500 per week, PayPal is incredibly user-friendly, and you’ll also be able to accept PayPal and Venmo payments, which is a plus.
- Shopify: If you sell online but also need a solution to sell in-person, Shopify is our top choice for multichannel POS and offers a free mobile payments app for all ecommerce users.
Adding a Mobile Card Reader
Unlike in-store payments, which typically use a countertop terminal, mobile payments often need a more flexible and portable option. Luckily, mobile card readers are often less expensive than countertop terminals.
Some providers offer a free basic magstripe reader to new account holders. However, we recommend purchasing a chip and contactless reader because EMV chip and NFC contactless payments are more secure than swiped payments. Mobile chip and contactless card readers typically cost around $50 and can be paired with the payments app on your smartphone.
Do You Need a Receipt Printer?
Well, that’s up to you. Most mobile processing apps also have tools to send digital receipts. So, if you’re just processing a handful of transactions or occasional sales, digital receipts might be enough for you. If you’re doing higher volumes, having a printer can speed up the time it takes to process transactions. Our top choices for receipt printers work with a variety of devices. You can also likely purchase one directly from your payment processor.
3. How to Accept Credit Card Payments Online
Accepting credit cards in-store and through a mobile app and card reader are pretty straightforward. However, when it comes to accepting credit cards online, there are about a million different ways to do so: through an online store, invoices, and payment forms are probably the most popular.
The processor best for your business will depend on how you want to accept online payments, what tools or systems you already have in place (such as a website or online store), and the size of your business.
What Online Payment Processor Should You Use?
- Stripe: Best for new online businesses wanting to add a checkout to any website.
- Square: Best for creating a free online store, checkout page, or invoicing.
- PayPal: Best for adding one-click checkout to any website, plus discounted processing for nonprofits.
- Stax by Fattmerchant: Best for established businesses needing invoicing, recurring billing, or a virtual terminal.
Read our full guide on accepting payments online to find and sign up with a processor that best suits your needs.
Do You Need a Virtual Terminal?
A virtual terminal will allow you to accept payments from customers over the phone. This is helpful for professional services businesses, like a medical or legal office, or B2B businesses that deal with large orders. Even if you’re sending customers digital invoices, having a virtual terminal option makes it easier to call to collect payments or take orders while talking to clients over the phone.
Do You Need a Payment Gateway?
Probably not. Most merchant services providers that work with small businesses have built-in payment gateways or offer their own payment gateway solutions. It is unlikely that you will need to purchase a subscription to a payment gateway from a third-party service provider.
4. How to Accept Credit Cards in-Store, Online, and on-the-Go?
Choosing one omnichannel processor that can do it all is your best option. Luckily, there are many processors that fit the bill, offering flexible merchant accounts, often with free POS and/or payment gateway tools.
What Omnichannel Payment Processor Should You Use?
- Square: Best for individuals and businesses just starting out. Square is instant to sign up for and free to use. It comes with a free POS app, online store, virtual terminal, and invoicing software.
- Payment Depot: Best for established and growing businesses. One account comes with in-store, mobile, and online processing. Plus, Payment Depot’s online processing fees are the same as in-person—most processors charge higher rates for online payments.
Accepting Credit Card Payment Frequently Asked Questions (FAQs)
What is PCI compliance?
PCI stands for Payment Card Industry. PCI compliance means you adhere to the Payment Card Industry Data Security Standard (PCI DSS) guidelines for protecting consumer data. If, as a merchant, you do not adhere to the guidelines, you could be fined by the PCI DSS. Payment processors also have PCI guidelines they need to follow. Measure your security with a Self-Assessment Questionnaire.
How do refunds work?
Refunds are processed using the same system that you originally used to process the sale. Basic in-store credit card processing equipment may require you to swipe the card for a refund, but most modern POS systems let you reverse the charge in the on-screen dashboard, so it’s fine if your customer didn’t bring the card they used for the purchase. Mobile payments, online sales, and virtual terminal refunds all can be processed on-screen too.
Most payment processors have a time limit on refunds, often anywhere from 60 days to 120 days. This is important to note for your return policies. If you have an unlimited time frame for returns, you won’t be able to credit the payment back after a certain date, but you can always offer store credit instead.
Once you process a refund, your merchant provider removes those funds from your daily deposit, or if the refund exceeds that day’s deposit, your processor deducts the difference from your bank account the following business day. After that, it takes about two to four business days for the refund to appear in your customer’s credit card account.
Some payment processors charge a transaction fee for processing refunds. However, some refund part of all of the original transaction fee.
What are charge disputes?
When a customer disputes a charge, your merchant account provider will notify you and provide a form to document and submit key transaction information. How a dispute is resolved depends on several factors, but you never want to ignore a notification. If you do, you’re guaranteed to lose money through a chargeback.
If a customer disputes a charge because they don’t recognize the transaction, a quick call to your customer usually clears up any confusion. In this case, the customer contacts their card provider and clears the charge. However, it’s always best to respond on your end as well by completing and submitting the dispute form and noting your conversation with your customer.
In cases where a customer claims an item did not arrive for online sales, that it was defective, or that the charge was fraudulent, you need to submit information to defend the charge. However, you should know that these cases are decided in the buyer’s favor more often. Sometimes, it’s best to refund the charge in question so that you don’t have a chargeback.
What are chargebacks?
A chargeback happens when the customer’s credit card company sides with the customer in a charge dispute and deducts money from your merchant account to refund the charge. If you have a high rate of chargebacks, you risk paying higher processing fees or having your account suspended altogether. Though every business will experience some chargebacks, there are steps you can take to prevent them.
The ability to accept credit cards is a must for every business, whether you need to accept payments in-person, online, or over a virtual terminal. Getting set up to accept credit cards can be easy. The hard part is knowing you are getting a good rate and signing up with a company that offers the support you can rely on.
If you’re a new business, Square offers an affordable and immediate way to accept credit card payments in-person through Square’s POS app, online through Square’s free Online Store, or through invoices. Square’s flat-rate fees are transparent and offer good value for new businesses or occasional sellers. Visit Square to create a free account.