Credit card payment systems require a merchant account, a payment processor, and integration with your existing setup

To accept credit cards, you need three things working together: a merchant account (which lets you receive card payments), a payment processor (which handles the transaction), and a way to collect the payment—either in person, online, or by phone. You do not need all three from the same company, but they must be compatible. The processor talks to the card networks (Visa, Mastercard, American Express) and your bank to move money into your account.

The process starts with choosing a payment method that fits how you collect rent or fees. If you collect in person, you might use a card reader that plugs into a phone or tablet. If you collect online, you need a payment gateway—software that securely takes card details through a website or form. If you collect by phone, you need a processor that allows phone-based entry. Each method has different costs and security requirements.

Key Takeaways

  • You need a merchant account from a bank or payment company before you can accept any credit cards, and approval usually takes three to five business days.
  • Payment processors charge a percentage of each transaction (typically 2.2 to 3.5 percent) plus a per-transaction fee, and these costs are separate from any merchant account fees.
  • Online payment gateways, in-person card readers, and phone-based systems each have different security rules and cost structures, so choose based on how you actually collect payments.
  • You must display your processing fees clearly to renters or customers before they pay, and some jurisdictions restrict how much you can charge as a fee.

Getting a merchant account and choosing a processor

A merchant account is a bank account specifically for card payments. Your personal or business bank account cannot receive credit card transactions directly. You open a merchant account through a bank, a payment processor (like Square, Stripe, or PayPal), or a specialized merchant services provider. The application asks for your business license, tax ID, bank statements, and sometimes personal credit information. Approval typically takes three to five business days, though some providers approve faster.

Once approved, you choose a payment processor—the company that actually handles each transaction. Large processors include Square, Stripe, PayPal, Toast, and traditional merchant services companies. Each charges differently: some charge a percentage of the transaction (2.2 to 3.5 percent is typical), some charge a flat per-transaction fee (25 to 50 cents), and some charge both. Many also charge monthly fees, gateway fees, or setup fees. Compare the total cost across a typical month of your payments before signing up.

In-person payment collection with card readers

If you collect rent or fees in person, a card reader lets tenants or customers swipe, insert, or tap their card on your phone or tablet. Popular options include Square Reader, PayPal Here, and Stripe Reader. These devices cost between $20 and $100 to buy, and you pay the processor's per-transaction fee each time someone pays. The reader connects to your phone via Bluetooth or headphone jack and sends the transaction to the processor's servers.

In-person readers are PCI compliant by default—meaning they meet security standards set by the card networks—because the card never touches your phone directly. You keep no card data on your device. The processor stores the encrypted card information on their secure servers. This is the safest way to accept cards in person because you have minimal liability if data is breached.

Online payment collection through a gateway

If you collect rent online through a website, tenant portal, or email link, you need a payment gateway—software that securely collects card details. Stripe, Square Online, PayPal, and Authorize.net are common gateways. A gateway encrypts the card information before it leaves the tenant's browser, so you never see the full card number. The encrypted data goes directly to the processor's servers.

Setting up an online gateway usually means embedding a payment form on your website or sending tenants a payment link via email. Most gateways provide templates you can customize with your logo and payment instructions. You can set up recurring payments (for monthly rent) or one-time payments. Costs are typically 2.2 to 3.5 percent of the transaction plus 30 cents per payment. Some gateways charge monthly fees ($15 to $50) in addition to per-transaction fees.

Phone-based payment collection

If you collect payments by phone, you enter the card details into a secure phone system or payment terminal. This method is less common for housing but may be used for late fees or other charges. The processor provides a phone line or software interface where you type or speak the card number, expiration date, and security code. The system encrypts the data before sending it to the processor.

Phone-based collection has higher fraud risk than in-person or online methods because you are manually entering card data. Processors charge higher fees for phone transactions—often 3.5 to 4 percent plus per-transaction fees. You must be PCI compliant, which means you cannot store card details after the transaction completes. Many processors require you to use their specific phone system or software to reduce liability.

Fees, costs, and what you can charge tenants

Credit card processing costs money, and you have the right to pass some or all of that cost to the person paying. However, the rules vary by state and by card network. Most states allow you to charge a convenience fee or processing fee as long as you disclose it before the payment is made. The fee must be reasonable—typically between 2 and 4 percent of the transaction—and you cannot charge more than the processor actually charges you.

Some states cap the fee you can charge. California, for example, limits convenience fees to the actual cost of processing. New York requires disclosure but does not cap the amount. A few states prohibit convenience fees on certain types of payments. Check your state and local housing laws before setting a fee. Always display the fee amount clearly on your payment page or in your payment instructions so tenants know the total cost before they submit payment.

Beyond per-transaction fees, some processors charge monthly account fees ($10 to $50), gateway fees, or setup fees. Factor these into your total cost. If you process fewer than 10 payments per month, a processor with no monthly fee but higher per-transaction fees may cost less than one with a monthly fee.

Security and compliance requirements

PCI DSS (Payment Card Industry Data Security Standard) is a set of rules that protect card data. If you use a processor that handles encryption and never stores card data on your systems, you have minimal PCI compliance burden. If you build your own payment system or store card data, you must meet strict security requirements, which is expensive and complicated.

The safest approach is to use a processor that handles all encryption and data storage—meaning you never see or store full card numbers. Stripe, Square, and PayPal all do this. If a processor asks you to store card data or handle encryption yourself, consult a security professional before proceeding. A data breach can expose you to liability, fines, and lawsuits.

You must also keep records of all card transactions for your accounting and tax records. Most processors provide transaction reports and can integrate with accounting software like QuickBooks. Set up automatic exports or regular downloads so you have a backup of your payment history.

Frequently Asked Questions

Can I charge a fee when someone pays by credit card?

Yes, in most states you can charge a convenience or processing fee as long as you disclose it before payment. The fee must be reasonable and cannot exceed what the processor actually charges you. Some states cap the fee or restrict it on certain payment types, so check your state housing laws. Always show the fee amount clearly before the tenant submits payment.

What happens if a tenant disputes a charge?

The card network (Visa, Mastercard, etc.) investigates disputes called chargebacks. You have the right to respond with proof of the transaction—a signed lease, payment records, or communication showing the tenant authorized the payment. If you cannot prove the payment was authorized, the processor refunds the tenant and charges you a dispute fee (usually $15 to $100). Keep detailed records of all payments and communications.

Do I need a separate business account to accept credit cards?

Most processors require a business bank account to deposit card payments, though some allow sole proprietors to use a personal account. You will need a business license or tax ID number to open a merchant account. If you operate as a sole proprietor without a separate business entity, ask the processor whether a personal account is acceptable in your state.

Which processor is cheapest for a small landlord?

It depends on your payment volume and method. Square and PayPal charge 2.6 to 3.5 percent plus 30 cents per transaction with no monthly fee, making them good for low-volume landlords. Stripe charges similar rates. If you process many payments monthly, a processor with a monthly fee but lower per-transaction rates may be cheaper. Calculate your typical monthly cost with each processor before choosing.

Can I accept credit cards without a website?

Yes. You can send payment links via email using Square, PayPal, or Stripe—tenants click the link and pay without visiting a website. You can also use an in-person card reader if you collect payments in person. Phone-based collection is also an option, though it has higher fees and fraud risk. Choose based on how you actually collect payments.