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Dima Sidelnikov/Shutterstock.com November 07, 2022 Ana’s interest in finance developed out of her own entrepreneurial journey. As a business owner, she has first-hand experience with the topics she covers for Bankrate. As a finance expert, Ana has ghostwritten for CFOs of fintech companies and authored resources that help small business owners, finance departments, and everyone in between. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Bankrate logo The Bankrate promise
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1 Find a credit card processing provider for your small business
There are many payment processing providers that offer similar services. Consider what portion of credit card transactions you will process in person, online and over the phone. Also, think about what type of credit cards you’ll accept: Visa, Mastercard, Discover, American Express and so on. Processing fees vary between transaction types and card networks. It’s in your best interest to find the provider that offers the for the type of transactions and credit cards that you’ll be processing the most. You should also consider the volume of transactions your business will be processing, as some providers offer better rates for processing more transactions. If you run an online-only business, make sure the payment processor you choose integrates easily with your website. For brick-and-mortar businesses, research what hardware you’ll need to purchase — like payment terminals — to see if they’ll be compatible with your current point of sale (POS) system. Starting the research process can be overwhelming. We’ve recommended some of the best and cheapest ways to accept credit cards for small businesses later in this guide to help you get started. 2 Open a merchant account
After choosing your credit card processor, create a with them. While you may already be using popular providers like , you’ll need to establish a separate business account to enable your company to accept credit card payments. Creating a merchant account typically involves providing some information about your business and setting up a connection with your business’s bank account where money will be deposited. 3 Set up payment terminals
The final thing you have to do to accept credit card payments is set up payment terminals across your business. If you have a brick-and-mortar shop, this step involves ordering and setting up hardware, like a card reader and a POS, if you don’t have one already. There are many card readers on the market: ones that let you accept payments via a swipe, an or a . If you do any sales online, you’ll need to set up online payments. If you’re using an e-commerce platform like Shopify, their payments portal will come with their e-commerce platform. If you’ve built your own website, you may need technical support from your card processing provider or website developer to add credit card processing for small business on your website. Don’t forget to look for training resources from the payments processing provider to understand how to make the most of your hardware and software. Accepting credit cards in person online and over the phone
There are three main paths to “we accept credit cards!” Businesses can choose to accept credit card payments in person, online and over the phone. These methods come with their own technology needs and incur different fees. In-person payments
In-person credit card processing is useful for brick-and-mortar retailers, on-site service providers (like plumbers) and mobile business merchants (like food trucks or farmers’ market vendors). These transactions involve the customer presenting the card to make a purchase. Because the cardholder and card are present for these types of transactions, they pose a lower risk of fraud, so in-person transactions typically have lower fees than the other types of transactions. You’ll need a card reader and a POS system to process credit card payments in person. Online payments
E-commerce shops, restaurants that accept orders online and companies that provide digital services — all are examples of businesses that rely on online credit card processing. Online transactions typically have higher processing fees than in-person transactions. If you want to accept online credit card payments you’ll need a digital storefront, such as an e-commerce store or website, and a . Over-the-phone payments
Card-not-present transactions typically take place over the phone and are commonly used by restaurants to pay for takeout orders. This process involves the customer sharing their credit card number with the merchant, and the merchant manually entering that information into their card reader. These types of transactions typically incur the highest processing fees because they pose the greatest risk for fraud. In order to process credit card payments over the phone, you’ll need a credit card reader and a POS or an online payments gateway. Credit card processing fees for small business
Credit card processing providers charge fees for the services they provide, like conducting fraud checks and verifying with the cardholder’s bank that funds are available. The payment terminal conducts these critical security measures in just a few seconds as soon as a customer swipes, taps or dips their credit card. So, what’s the ? There are usually no monthly fees for credit card processing. Instead, most providers charge fees per transaction. While fees vary based on the type of card (Visa, Mastercard, American Express or others) and processing provider (such as PayPal, Stripe, Square), they typically range from 1.5 percent to 3.5 percent per transaction. American Express tends to charge than its competitors, which is why some businesses don’t accept Amex cards. Average credit card network processing fees
Credit card network Processing fee range American Express 2.5 percent to 3.5 percent Discover 1.56 percent to 2.3 percent Mastercard 1.55 percent to 2.6 percent Visa 1.43 percent to 2.4 percent The best way to accept credit cards for small business
As a savvy merchant, you’re probably looking for the best and cheapest way to accept credit cards. The bad news: there is no one-size-fits-all solution. But here’s the good news: if you weigh your business’s needs — like the volume of transactions and where these transactions take place — you should be able to narrow your search down to several providers that offer convenient solutions at favorable rates. To help you get started, we’ve compared five of the most popular credit card processing providers for small businesses. (Note the fees below are all based on transactions in USD. Rates vary by currency.) PayPal Best for in-person retail
While PayPal began as online, the company now offers for processing credit cards both online and in person. Pros
PayPal is a widely trusted name that can help build confidence with your customers. Transaction fees are competitive with other providers. PayPal offers many different options for processing credit cards, including for online payments, the point of sale system and for billing for services. Cons
PayPal’s extensive offerings can make it difficult to decipher the differences and choose the one that works best for your business. Many account services, including chargeback protection, account monitoring and recurring billing, require . Fees
PayPal charges the following for credit card payments: In-person transactions: 2.7 percent + $0.30 (e.g. $25 transaction = $0.98 fee) Online transactions: 2.9 percent + $0.30 (e.g. $25 transaction = $1.03 fee) Shopify Best for e-commerce
Shopify is an e-commerce platform that helps businesses sell products online. With , they also support in-person and online credit card payments. Pros
Built to be used with Shopify’s signature e-commerce platform Offers competitive fees for processing credit cards Charges the same fee to process card-not-present transactions as it does online payments Cons
You need to have a website through Shopify to access their payment processor. You’ll have to pay a monthly fee for the platform on top of regular credit card transaction fees. Fees
The most costs $9 per month and delivers credit card payment processing, invoicing capabilities and the ability to turn your non-Shopify website into an e-commerce platform. If you want more robust e-commerce capabilities, you’ll need to pay $29+ per month for a different Shopify plan. Shopify charges the following for credit card payments: In-person transactions: 2.7 percent (e.g. $25 transaction = $0.68 fee) Online transactions: 2.9 percent + $0.30 (e.g. $25 transaction = $1.03 fee) Card-not-present transactions: 2.9 percent + $0.30 (e.g. $25 transaction = $1.03 fee) Square Payments Best for mobile businesses
Square is known for its innovative, petite that can be attached to smartphones, turning any device into a payment terminal. Thanks to its compact hardware offerings, Square is great for mobile businesses like food trucks, market vendors or in-home service providers like plumbers. Pros
Square is a leader in smartphone credit card reader hardware. Its mobile card reader is typically offered to its merchants for free. The card reader can work offline, so you can accept credit card payments in places without a reliable Wi-Fi connection. Contactless payment solutions are also available. Cons
High fees for in-person transactions Fees
Square charges the following for credit card payments: In-person transactions: 2.6 percent + $0.10 (e.g. $25 transaction = $0.75 fee) Online transactions: 2.9 percent + $0.30 (e.g. $25 transaction = $1.03 fee) Card-not-present transactions: 3.5 percent + $0.15 (e.g. $25 transaction = $1.03 fee) Stripe Best for online businesses that want to scale
Stripe was built with online businesses in mind and offers sophisticated payment processing solutions that can scale as your company grows. Stripe’s robust API helps you easily with other software solutions in your tech stack, like accounting and customer relationship management software. Pros
Competitive rates for processing online credit card transactions An API with options to customize the software to your needs A variety of financial solutions, including invoice processing, designed for businesses with their sights set on growth Cons
In-person transaction fees are more costly than those of other providers, making it a bad choice for brick-and-mortar retail. The base solution doesn’t support card-not-present transactions, so you’ll need special permission to set up that capability. Fees
Stripe charges the following for credit card payments: In-person transactions: 2.7 percent + $0.05 (e.g. $25 transaction = $0.73 fee) Online transactions: 2.9 percent + $0.30 (e.g. $25 transaction = $1.03 fee) Venmo Best for online-only businesses
Venmo is known for its . While by transferring money between bank accounts, it’s unrolling credit card processing solutions. In order to accept credit card payments via Venmo, you’ll have to link your account to Braintree or PayPal. Then, customers will be able to use the Venmo app to make payments through the credit cards linked to their accounts. Pros
A familiar and convenient payment method for customers No additional setup fees Free standard transfers from your Venmo account to your bank account (usually takes one to three business days) Cons
Not yet available for in-person payments (but customers can pay through the app while in-store) Fee for instantly transferring money from your Venmo account Fees
Venmo charges the following for credit card payments via Braintree: Online transactions: 3.49 percent + $0.49 (e.g. $25 transaction = $1.36 fee) SHARE: Ana’s interest in finance developed out of her own entrepreneurial journey. As a business owner, she has first-hand experience with the topics she covers for Bankrate. As a finance expert, Ana has ghostwritten for CFOs of fintech companies and authored resources that help small business owners, finance departments, and everyone in between. Related Articles