How to take a credit card payment depends on what you're selling and who you're selling to

If you're a business owner, freelancer, or anyone else who needs to collect money by credit card, you have several routes. The simplest is a payment processor — a service that handles the card details, charges a fee (usually 2 to 3 percent), and deposits the money into your bank account. The most common processors are Stripe, Square, PayPal, and Shopify Payments. If you already have a business bank account, your bank may offer its own payment processing service.

The route you choose depends on whether you're taking payments in person, online, or both, and how many transactions you expect to handle each month. In-person sales need a card reader (a small device that connects to your phone). Online sales need a payment link or form embedded on your website. Many businesses use both methods at the same time.

Key Takeaways

  • Payment processors like Stripe and Square charge a percentage fee per transaction and handle the security and fraud protection for you.
  • In-person payments require a card reader (a small device that plugs into your phone or computer), while online payments use a payment form or link.
  • You will need a business bank account to receive the money, though some processors can deposit to a personal account if you're just starting out.
  • The customer's card details are encrypted and never stored on your device or computer — the processor handles that part.
  • Fees vary by processor and payment method, so comparing a few options before you start can save you money over time.

Taking payments in person with a card reader

If you meet customers face-to-face — at a market, a salon, a service call, or a pop-up — you'll need a card reader. This is a small device that connects to your phone or tablet via Bluetooth or a headphone jack. The customer inserts, taps, or swipes their card, and the reader sends the information securely to your payment processor. Square Reader, Stripe Terminal, and PayPal Here are the most common options. Each one costs between $20 and $100 to buy, though some processors include one free when you sign up.

The process is straightforward: open the payment app on your phone, enter the amount, hand the reader to the customer, and they complete the payment. The money typically appears in your bank account within one to three business days. Some processors offer same-day deposits for an extra fee. You'll receive a receipt that you can email or print, and the processor keeps a record of every transaction for your records and taxes.

Taking payments online with a payment link or form

If customers pay you remotely — through email, text, or your website — you can send them a payment link or embed a payment form on your site. A payment link is a unique URL that takes the customer to a checkout page where they enter their card details. You can create one in seconds in most payment processors and send it via email or text. A payment form is code you embed directly on your website so customers never leave your site to pay.

Payment links are faster to set up if you don't have a website or don't want to hire a developer. Payment forms look more professional and keep customers on your site, which can reduce the number of people who abandon their purchase. Both are equally secure — the processor encrypts the card details and you never see the full card number. The fee structure is the same: a percentage of the transaction plus sometimes a small fixed fee per payment.

What happens to the card information

When a customer pays by credit card, their card number, expiration date, and security code are encrypted immediately. You never see or store the full card number — the payment processor handles that part. This protects both you and the customer. You're not responsible for storing sensitive data, which means you don't have to meet strict security standards (called PCI compliance) that banks require. The processor is responsible for that, and they carry insurance in case of a breach.

The customer receives a receipt with the last four digits of their card and the transaction amount. You receive a receipt with the same information plus the fee you were charged. Both of you can dispute the transaction later if something goes wrong — the processor has a dispute process that protects both sides. Your payment processor keeps detailed records of every transaction, which you can download for your own records and tax filing.

Understanding payment processor fees

Every payment processor charges a fee, and the amount varies. Most charge between 2.2 and 3 percent of the transaction amount, plus a fixed fee of 30 cents per payment. So a $100 payment might cost you $2.50 to $3.30. Some processors charge a flat monthly fee instead of per-transaction fees, which can save you money if you process a lot of payments. Others charge different rates depending on how the customer pays — in-person card swipes are usually cheaper than online payments or keyed-in card numbers.

Before you choose a processor, add up what you expect to earn in a month and calculate the fees for each option. A processor that charges 2.2 percent might save you $50 a month compared to one that charges 3 percent if you're processing $5,000 in payments. Over a year, that's $600. Most processors let you switch later, but it's easier to start with the right one. The fee is deducted from each payment before the money reaches your bank account, so if a customer pays $100 and your fee is $2.50, you receive $97.50.

Setting up a business bank account to receive payments

Payment processors deposit the money into a bank account, so you'll need one before you start. A business bank account is separate from your personal account and makes taxes and record-keeping simpler. You can open one at any bank or credit union. You'll need your Social Security number or EIN (Employer Identification Number), a government-issued ID, and proof of address. Some banks require a minimum deposit to open the account; others don't.

If you're just starting out and don't have a business account yet, some processors like PayPal and Square will deposit to a personal account temporarily. But as soon as you're established, opening a business account is worth it. It keeps your personal and business money separate, which protects you legally if something goes wrong, and it makes filing taxes much easier. The process takes about 15 minutes online at most banks.

Choosing between different payment processors

The main processors — Stripe, Square, PayPal, and Shopify Payments — all do the same job, but they have different strengths. Square is known for in-person payments and has the most card readers available. Stripe is popular with online businesses and developers because it's flexible and has good documentation. PayPal is the oldest and most recognizable, which some customers prefer. Shopify Payments is built into Shopify's platform, so it's the easiest choice if you already use Shopify to run your store.

Each processor also offers different add-ons: invoicing, recurring billing, inventory management, or accounting software integration. If you need those features, they might be included with one processor but cost extra with another. Spend an hour comparing the three or four that seem like the best fit for your business, then pick one and start. You can always switch later if you find a better option.

Frequently Asked Questions

What if a customer disputes a charge?

The payment processor has a dispute process. The customer contacts their bank or credit card company and explains why they're disputing the charge. The processor then asks you for evidence that the transaction was legitimate — a receipt, an email confirmation, a delivery confirmation, or a photo of the service you provided. You have a set number of days (usually 7 to 10) to respond. The bank decides who was right based on the evidence.

Can I take payments without a business bank account?

Some processors will deposit to a personal account when you're starting out, but most require a business account once you reach a certain volume of transactions. It's easier to open a business account from the start. The process takes about 15 minutes online, and many banks don't charge a monthly fee for a basic business account.

What's the difference between a card reader and a payment link?

A card reader is a physical device for in-person payments. A payment link is a URL you send to a customer so they can pay online. You need a card reader if you meet customers face-to-face. You need a payment link if they pay you remotely. Many businesses use both.

Do I have to pay the fee on every transaction?

Yes. The fee is how payment processors make money, and it's built into every transaction. You can't avoid it, but you can choose a processor with lower fees. The fee is deducted from the payment before it reaches your bank account, so if a customer pays $100 and the fee is $2.50, you receive $97.50.

Is it safe to take credit card payments online?

Yes, as long as you use a legitimate payment processor. The processor encrypts the card details, so you and the customer are both protected. Never ask a customer to email you their card number or type it into an unsecured form. Always use a payment processor's official payment form or link.