Accepting credit card payments can increase in-store sales by up to 40% compared to cash payments alone. It’s also necessary for businesses selling online. This guide shows you how to accept credit cards in a brick-and-mortar store, on a website, and with a mobile device.
Complicated processing fees often scare businesses away from taking credit cards. Payment Depot is a payment processor that offers transparent pricing with no hidden fees, surprises, or cancellation fees. Convenient monthly pricing also makes it easy to choose the right plan based on how much you process in credit card payments each month.
How to Accept Credit Cards
The way you accept credit cards will depend on where you’re taking the payments. To accept credit cards in-store, you need a card reader and a merchant account. To accept credit cards online, you need an ecommerce site and a payment gateway.
All businesses can choose between two options for accepting credit cards:
- An all-one-one provider that has a solution for each step of the process like Square
- Select individual providers for separate point-of-sale (POS) systems and merchant accounts like Payment Depot
Here is a step-by-step guide for how to accept credit card payments.
1. Select a POS System
A POS system is a software system that serves as the central hub of your business. POS systems manage transactions, track inventory, and provide business analytics. It is important to choose a POS system first because some systems have built-in payment processing to accept credit card payments. For help choosing a POS system, check out our choices for the top POS systems.
If you are selling in-person, you will need a POS to help manage customer interactions. If you’re selling online, you need a digital or ecommerce POS platform that will let shoppers purchase from your site. In either case, you can choose from an all-in-one solution that has built-in payment processing or a POS that will require third-party payment processing.
If you are a small business and for the sake of simplicity, we recommend choosing an all-in-one solution that has POS, payment processing, and merchant services built-in. However, if you are a larger business or have a higher sales volume―$20,000 or more per month―you may want to consider using a separate merchant account, such as Payment Depot, one of our recommended merchant account providers.
We recommend that most small businesses use an all-in-one system. However, here are the pros and cons of using an all-in-one system so that you can decide if it’s right for your business.
Pros of All-in-One System
- Customer relationship management (CRM) functions: Solutions like Square track customers automatically by their payment method, so it’s easy to associate transactions with customers and vice versa
- Easier to create and accept gift cards: Square has free digital gift cards that businesses can create and sell; when using a merchant account, businesses have to make sure that the gift cards are compatible with their system
- All-inclusive customer support: If something goes wrong, businesses contact one customer support team, instead of trying to figure out where the problem originated and which company to call
- Flat rates: Flat, predictable payment processing fees
Cons of All-in-One System
- More expensive: Solutions like Square can be more expensive, especially for larger businesses because they charge flat fees per transaction; merchant accounts typically offer lower fees
- Less flexibility: All-in-one systems usually have fixed rates, whereas merchant accounts provide more flexibility with volume discounts; plus, if you are using a POS that works with multiple payment processors, you can always switch providers if needed
All credit card processing companies make it possible for you to accept credit cards for your business. An all-in-one, like Square, provides hardware that makes processing credit cards a seamless process, plus every card you charge is managed in one central account.
Most all-in-ones use their own branded readers and POS hardware so that you tend to have fewer technical or connectivity issues. They also tend to work with many online shopping carts or, like Square, include a free online store. You can sign up in minutes to get a free account from Square today.
Pros and Cons of Using Traditional Merchant Accounts
Traditional merchant services often contract with third-party providers for readers and POS equipment. This can lead to a more difficult setup and getting tech support when needed can take longer. Also, for online sales, you likely will need to connect your merchant account to your online store using a payment gateway, which can add yet another fee.
To sum it up, if you sell in-store, mobile, and online, an all-in-one like Square can be the better choice. But if you sell in high volume in a retail location, the savings from an interchange plus or membership model merchant services provider can be worth a little-added work to set up. Visit our Square review page to read feedback from other business owners.
If you opt for an all-in-one solution, you can skip down to Purchase Needed Equipment. If you are a high-volume brick-and-mortar retailer interested in learning more about traditional merchant services, move on to Select a Merchant Account.
2. Select a Merchant Account (if Not Using All-in-One System)
Traditional merchant services providers are a good option for higher-volume sellers since their credit card processing fees tend to be lower than all-in-ones. Generally, you’ll see worthwhile savings when your sales reach about $20,000 per month for in-store sales.
If you want to go this route, it’s important to understand the different fees they charge because they’re not as straightforward as the all-in-one providers. Along with the credit card processing and transaction fees, you might have an account fee, a gateway fee, fraud prevention fees, and more. Therefore, always make sure you’re clear on both the processing fees and any added fees when considering a traditional merchant services provider.
Traditional merchant services providers fall under three different types of fee structures.
Interchange Plus Merchant Services Providers
The credit card issuers―Visa, MasterCard, American Express, and Discover―charge a base processing rate to use their service called the interchange rate. These rates vary based on card types like rewards, corporate cards, and debit card and sale types like retail sales, business equipment sales, and so on.
What you need to understand is that interchange rates are what card issuers charge payment processors to run each charge. The payment processors, in turn, mark that up and call this plan interchange plus. This fee structure can be much cheaper for higher-volume sellers compared to all-in-one services.
Membership or Subscription Merchant Services Providers
Many of the interchange-plus merchant services that are popular with small businesses operate with a membership model. With membership models, businesses pay a flat monthly fee in exchange for much lower fees for each transaction. For example, Payment Depot, one of our recommended merchant service providers, charges a $49 monthly fee for small businesses, who then just pay interchange fees + 15 cents on each transaction.
Tiered Pricing Merchant Services Providers
Tiered pricing providers charge a different markup for every single type of card you process. Credit and debit cards each have different fees, but that’s not all. Rewards cards, corporate cards, and even airline miles cards have different fees as well, and you never know how much you’re being charged until you receive your bill.
This makes it very hard to understand how much you are paying to process credit cards. Plus, it makes it very easy for the merchant account provider to overcharge your business since tiered billing is very confusing to sort out. We don’t recommend tiered pricing providers for small businesses since there are many better options with all-in-one and interchange plus providers.
3. Select a Payment Gateway
When an online customer enters their credit card information in your online store’s checkout page, the payment gateway encrypts, or secures the information and sends it over the internet for approval via your processor. The purchase is approved or declined instantly. If approved, your online store completes the sale automatically, and your merchant account provider deposits the funds into your account, generally within one to two days.
Many payment processors like Square, PayPal, and Payment Depot include a payment gateway with their service. Others require a separate payment gateway account. For sheer simplicity, we recommend using all-in-one solutions like Square that include a built-in gateway with their service.
4. Purchase Needed Equipment
The type of equipment you need will vary based on where you are selling. If you plan to sell in-person, whether it’s over mobile or in-store, you will need a card reader. If you are selling online, you won’t need any physical hardware.
Here are the details on what equipment and hardware you need to accept credit cards:
- In-person (in-store and mobile): Credit card payments require card reading equipment that allows you to swipe a card physically. Square comes with a free magstripe credit card reader that can be used for accepting credit card payments on smartphones and iPads. Businesses can also purchase additional credit card readers to accept tap and chip payments.
- Online (ecommerce and virtual terminal): Credit card payments use a payment gateway that lets customers or sales staff enter credit card information into a secure online form. So, no physical hardware purchases are necessary.
Merchant Account Service Providers
There are two main types of merchant accounts to choose from: an all-in-one service like Square and traditional providers like Payment Depot. All-in-one providers offer simplicity for small businesses by acting as the POS, merchant, and payment gateway. Whereas traditional merchant services perform one function but can offer lower rates for larger businesses. Both offer security by following the Payment Card Industry Data Security Standard (PCI DSS), so that your transactions are protected, but you may need to do more to achieve PCI compliance.
Top Merchant Account Service Providers
Merchant Services Provider
All-in-one solution for small and startup businesses
All-in-one solution for multichannel sellers
All-in-one solutions for online businesses
Traditional merchant services for most small businesses
Traditional merchant services for established high-volume businesses
Traditional merchant services for businesses that want to work directly with a bank
Traditional merchant services best for medium to large businesses
Square Payments is a free account that lets businesses process payments in-store, mobile payments, online, through a virtual terminal, and even invoice payments with flat rates. The standard in-person card processing fee is 2.75%, online is 2.9% plus 30 cents, and keyed-in payments are 3.5% plus 15 cents. After signing up for a free Square Payments account, Square provides you with a free magstripe card reader for in-person payments. On our Square review page, users like that Square is easy to use, and it’s one of the best choices for mobile payments.
Square is a great choice for small businesses, startups, and people who sell only occasionally. There are no startup or monthly fees and no monthly transaction requirements. Businesses pay the flat rate whenever they make a sale. Funds are deposited in roughly one to two business days. Visit Square to create a free account.
Shopify is a POS and ecommerce solution that allows retailers to sell in-store, online, over mobile, and through social media. Shopify also has a built-in payment processing solution. Shopify is an all-in-one solution like Square but, unlike Square, businesses pay a monthly fee for Shopify software, so it is a good choice for serious retailers that a robust ecommerce platform. On our Shopify review page, users like that Shopify is super-efficient and helps streamline the process of running an ecommerce business.
Shopify Pricing Tiers
In-person Processing Fees
2.7% + 0 cents
2.5% + 0 cents
2.4% + 0 cents
Online Processing Fees
2.9% + 30 cents
2.6% + 30 cents
2.4% + 30 cents
Overall, Shopify is a great option for retailers that focus on ecommerce or multichannel selling and want an all-in-one POS and merchant services provider. Visit Shopify for a free 14-day trial.
PayPal offers an all-in-one credit card processing solution for online and in-person card payments. Like Square, PayPal offers flat-rate processing. PayPal’s fees for in-person payments are 2.7%, online sales are 2.9% plus 30 cents, and keyed-in payments are 3.5% plus 15 cents. However, unlike Square, PayPal does charge a fee for basic card readers, starting at $25 for a basic magstripe reader to plug into your smartphone. On our PayPal review page, businesses like having the option of accepting PayPal payments.
Like Square, PayPal does not have any monthly fees or minimum processing requirements, so it is a good fit for small businesses that want a simple solution. The big advantage of using PayPal as your merchant services provider is you can accept PayPal payments in addition to credit and debit cards, which is a preferred payment method for some shoppers. Visit PayPal to create a free account.
Payment Depot is a membership or subscription model merchant services provider. That means businesses pay a flat monthly fee and a very low fee for each transaction. Payment Depot has some of the most competitive payment processing rates available for small to medium-sized businesses. The one flat monthly fee allows businesses to accept credit cards in-person through an in-store terminal, mobile payments, ecommerce, and virtual terminal payments. Payment Depot has four plans for different-sized businesses.
Payment Depot Pricing Plans
Monthly Processing Limit
Interchange + 15 cents
Interchange + 10 cents
Interchange + 7 cents
Interchange + 5 cents
Free Mobile Reader
Free Standard Terminal
Free Pin Pad
Payment Depot’s membership pricing model is ideal for businesses processing more than $20,000 per month. Payment Depot offers some of the lowest interchange-plus rates available to small businesses. All Payment Depot plans include free equipment reprogramming and a gateway for online payments. Unlike most merchant account providers, Payment Depot makes no distinction between online and in-person payments. The pricing is the same, and both kinds of payments are included with every membership. Visit Payment Depot for a free quote.
First Data offers traditional merchant services with a variety of rate options, including some interchange-plus options. First Data does not disclose specific pricing on their website. However, according to First Data user reviews, businesses can expect to pay 2% to 3% + 25 cents to 40 cents per transaction. Like all traditional merchant service accounts, businesses need to apply for an account with First Data.
As one of the largest credit card processors, First Data is better suited for growing and high-volume businesses that can use their size to negotiate a low rate. First Data also requires a contract, whereas many all-in-one providers like Square and some traditional merchant providers like Payment Depot are month-to-month. This means that First Data is best for established, high-volume businesses. Visit First Data for a free quote.
Chase Merchant Services (formerly Chase Paymentech) is part of JPMorgan Chase, one of the largest banks in the country. Chase offers traditional merchant services, including flat-rate payment processing and interchange-plus pricing. Unlike Square and the all-in-one services, businesses need to apply for a merchant account with Chase. All of the payment processing rates are quote-based, so there’s room to negotiate.
Chase is a great option for businesses that prefer to work directly with banks, especially if you have business checking or credit accounts with Chase. Many people like the simplicity of having all their financials run through the same institution. Chase Merchant Services offers quick online transactions with no hidden fees or long-term contracts. You also get 24/7 customer support and next-business-day funding with a Chase business checking account.
Fattmerchant is a traditional merchant services provider that has some of the lowest per-sale credit card processing rates. This is because Fattmerchant passes the actual card issuers’ interchange and assessment fees on to you with no percentage markup at all, a flat 6 cents or 8 cents transaction fee. However, Fattmerchant has hefty monthly fees: $99 per month for less than $500,000 in annual sales, and $199 per month for more than $500,000 in annual sales.
Fattmerchant’s direct-interchange model can be a money-saving option for sellers processing around $20,000 per month or more in credit cards. Fattmerchant is one of few merchant services providers that offer a direct-interchange fee structure to smaller businesses. This model gives you the lowest possible interchange rate since there is no markup on card issuer fees at all. Visit Fattmerchant to apply.
Comparing All-in-One Fees to Merchant Account Fees
Generally speaking, if your average credit card revenue is less than $30,000 per month, a flat-rate provider like Square is the best choice. As you can see in the chart below, Payment Depot’s membership model pricing offers very competitive rates for most small businesses. The only other thing to keep in mind is that Square comes with built-in point-of-sale software. With Payment Depot, you will need to purchase that separately.
Here’s a comparison of Square and Payment Depot at two different revenue points: $10,000 and $30,000 in monthly in-store credit card sales.
Comparing Fees per Monthly Revenue
Credit Card Revenue
Merchant Account Provider
Processing Fees per Month
Service Fees per Month
Total Annual Cost
Total Annual Cost With POS Software
120 sales (average $83/sale)
2.75% per swipe
Interchange (1.8% + 10 cents) + 15 cents
361 sales (average $83/sale)
2.75% per swipe
Interchange (1.8% + 10 cents) + 15 cents
As shown above, Square is more economical if you’re charging $10,000 per month in credit card payments. However, Payment Depot is more economical at $30,000 per month. This is because Square charges slightly higher processing fees of 2.75% but doesn’t have any monthly charges. Payment Depot has lower rates, but you need to pay for a POS system separately.
The takeaway here is that at a certain revenue point, Payment Depot’s lower rate beats Square’s flat-rate. But, for very small and new businesses, Square is the more affordable option.
Overall monthly charges are part of the equation. Your average sale amount also plays a role in your credit card fees, as you can see in this comparison/
Comparing Fees per Average Sale
Merchant Account Provider
Processing Fee per Purchase
Monthly Processing Fees for $10,000
$10 average sale
Interchange (1.8% + 10 cents) + 15 cents
$100 average sale
Interchange (1.8% + 10 cents) + 15 cents
As shown above, Square charges the same rate regardless of the sale value. This is because they charge a fixed fee of 2.75% for in-person sales. Since Payment Depot charges a percentage rate plus a per-transaction fee such as 15 cents, this makes Payment Depot costlier for selling high volumes of low-cost items. However, Payment Depot can be significantly cheaper for high-value purchases.
Tips for Accepting Credit Cards
Accepting credit cards can create uncertainty and take up a lot of time and energy if you don’t know what you need. Hopefully, you now have a good idea of whether you need an all-in-one solution like Square, or if you need to process transactions with a more traditional merchant services provider. Below are some additional tips that can help you get set up quickly without all the hassle that can come with this process.
Make Sure You Have Dedicated Customer Support
When selecting a credit card processor, or any software or service provider for your business, it’s important to know what kind of customer support they offer. Ideally, the provider you choose will have free 24/7 phone support. However, some companies only offer email support, phone support during certain hours, or businesses have to pay extra for dedicated support.
Make Sure You Have Dedicated Customer Support
When selecting a credit card processor or any software or service provider for your business, it’s important to know what kind of customer support they offer. Ideally, the provider you choose will have free 24/7 phone support. However, some companies only offer email support, phone support during certain hours, or businesses have to pay extra for dedicated support.
“When it comes to selecting a credit card processor security, cost and customer support should be front of mind. As with most things in life, the devil is in the details. Invariably, you will require customer service and you should look for a processor that offers 24/7 customer support. Ideally, you want direct help from an actual representative.”
―Steven Millstein, certified financial planner & editor, CreditRepairExpert
Customer support is especially crucial when money is involved. Small businesses rely on having funds quickly. A large percentage of your cash flow comes from credit card payments, so it’s important to be able to get help right away if something ever goes wrong.
“When it comes to account service, remember that your payment processing company is managing anywhere from 60% to 100% of your money, so make sure you have a go-to person or a good support desk. Otherwise, when you are looking for your money or something has gone wrong, this issue rises to the top of your list very quickly.”
―Eric Brown, founder & CEO, Aliant Payment Systems
Avoid Higher Fees for Different Credit Cards
Some merchant accounts charge higher fees for different types of cards, such as American Express. This is important to consider when comparing providers, and why many businesses opt for a flat-rate provider.
“One important thing business owners need to think about when selecting a credit card processor is how much they charge for different types of credit cards. For example, if you run a small business in a tourist area, you need to check how much your processor will charge you to process international credit cards as these may make up a significant portion of your sales. Similarly, if your business is in a business district, you should probably look at the cost of processing American Express cards as this will be a popular option.”
―Ian Wright, founder, Merchant Machine
Protect Against Fraud
Credit card fraud is another reality you face when you accept credit cards, but there are ways you can protect yourself. Most top merchant account providers offer powerful fraud detection tools, and you should put these in place per their direction.
“Focus on finding a secured provider. Make sure you find a provider that prioritizes data security. Only go with processors that flag or deny risky transactions and securely store and encrypt their data.”
―David Ambrogio, consultant, Tower Books
Always Negotiate for the Best Rate
Many providers are willing to negotiate volume discounts for credit card processing. If you are a larger business, definitely ask about any discounts or tiered pricing structures available.
“Like anything else in business, shop around for the best rates. Always ask for a discount rate plus―typically 0.2%, depending on your volume. Never accept a flat rate.”
―Yungi Chu, owner, Headset Plus
Frequently Asked Questions (FAQs) for Accepting Credit Cards
For new business owners, navigating the ins and outs of credit card processing can be daunting. Below, we address some of the most commonly asked questions. But, if you don’t see the information you’re looking for, head to our Fit Small Business forum to ask us a question.
How do you accept credit card payments online?
To accept credit cards online, you need an ecommerce platform and a secure checkout solution. If you choose Square as your payment processor, it comes with the option to build a free ecommerce site.
How do you accept mobile credit card payments?
To accept credit cards in a mobile sales setting, you need a mobile credit card reader that connects to your smartphone or tablet, like the Square reader shown above. With it, you can accept every type of credit or debit card and swipe, insert (for chip cards), or tap (for e-wallets like Apple Pay), to complete the payment.
The payment information is sent through your cellular or Wi-Fi connection to your merchant account processor for approval. You receive confirmation instantly that the transaction was approved or declined. If approved, you complete the sale and your merchant account provider deposits the funds into your account, generally within two days.
How do you accept credit card payments over the phone?
To accept credit cards for phone sales, you need a virtual terminal. Most payment gateways include a virtual terminal in their service. It allows you to log into a secure screen, enter or key-in your customer’s payment information, and process the charge over the internet. The charge is approved or declined instantly. If approved, your merchant account provider deposits the funds into your account, generally within two days.
Here’s a look at Square’s virtual terminal in action:
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 he or she used for the purchase. Mobile payment, online sales, and virtual terminal refunds all can be processed on screen too.
Most payment processors have a time limit on refunds, often between 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, like PayPal refund part of all of the original transaction fee. This is another question you should ask when deciding between providers.
What are chargebacks and how do they work?
When a customer disputes a charge, your merchant account provider will notify you with all of the details and provide you with 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, which we detail below.
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.
A chargeback happens when the customer’s credit card company sides with the customer in a 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. So, it’s important to understand why chargebacks happen and how to minimize them.
Credit Card Processing Terms to Know
No matter where and how you want to accept credit cards, you first need to be familiar with certain industry terms. These include:
- Merchant account: This is the account that you use to process credit card payments; you can get a merchant account from your bank, from an all-in-one provider like Square, or through traditional processors like Payment Depot
- Processing fees: These are what merchant account services charge and are figured as a percentage of each sale plus a per-transaction fee; some merchant account providers also tack on monthly fees
- Retail POS system: These handle credit cards, cash, and check payments for in-store sales; most also include business management features
- Payment gateway: This connects your website’s checkout page your payment processing solution; many payment processors like Square, PayPal, and Payment Depot include a payment gateway with their service; others require a separate payment gateway account
How Credit Card Payments Work
In-store sales generally have the lowest processing fees since the risk of fraud is relatively low as you can see your buyer, confirm their identity, and physically process their card. With online payments, because the risk of fraud is higher, online sales have higher processing fees than in-person sales as you can’t see your buyer, confirm their identity in person, or physically process their card. Here is an overview of how each process works.
How to Accept Credit Card Payments in Person
To accept credit cards in an in-store retail setting, a credit card reader lets customers swipe, insert (for chip cards), or tap (for e-wallets like Apple Pay) credit cards physically to complete their payment. Your card reader is connected to the internet directly, or through your POS system like the one pictured below.
After swiping, inserting, or tapping the card, the payment information is sent for approval via your merchant account processor. Within a moment, you receive confirmation that the transaction was approved or declined. If approved, you complete the sale and your merchant account provider deposits the funds into your account, generally within one to two days.
How to Accept Credit Card Payments Online
To accept credit cards online, you need an ecommerce platform that, ideally, supports a secure checkout, as shown below. If you choose Square for your credit card processing, you get a free Square online store with your account. Square and other payment solutions also work with most top-rated, low-cost ecommerce platforms, including BigCommerce and Shopify.
Depending on your merchant account solution, you might need a payment gateway to accept and process payments in your online store. However, all-in-one solutions like Square, PayPal, and Stripe include a built-in gateway with their service, so they’re often the simplest choice.
When an online customer enters their credit card information in your online store’s checkout page, the gateway encrypts (secures) the information and sends it over the internet for approval via your processor. The purchase is instantly approved or declined. If approved, your online store completes the sale automatically, and your merchant account provider deposits the funds into your account, generally within one to two days.
Most people find the subject of credit card processing complicated and difficult to understand. However, you must understand the basics to avoid putting the wrong solution in place and paying more than you should when you accept credit cards.
If you are starting up, your monthly card sales are less than $30,000 per month, or most of your purchases are low value, such as less than $25, then we recommend using Square. It’s quick to set up, comes with many free features like POS software, an online store, and business management tools, and works anywhere you want to sell. Plus, each free Square account comes with a free magstripe credit card reader to accept credit cards anywhere. Visit Square to get a free account.