The main ways to accept credit card payments
You can accept credit card payments through a payment processor — a company that handles the transaction between your customer's bank and yours. The three most common routes are a point-of-sale (POS) system for in-person payments, a payment gateway for online transactions, and a mobile card reader for payments on the go. Each has different costs, setup time, and equipment needs.
You do not need a separate merchant account anymore — most modern processors bundle that into their service. What you do need is a business bank account, a way to process the card (a terminal, a website integration, or a phone app), and an agreement with the processor about their fees and terms.
The processor keeps a small percentage of each transaction, typically between 1.5% and 3.5% depending on the card type and your business size. Some also charge a monthly fee, a per-transaction fee, or both. Comparing these costs upfront saves money over time.
Key Takeaways
- Payment processors handle the technical work of accepting cards; you choose one based on whether you need in-person, online, or mobile payments.
- Costs vary by processor and card type, so compare the percentage fee, monthly fees, and per-transaction charges before signing up.
- In-person payments usually cost less per transaction than online payments because the card is physically present and fraud risk is lower.
- You will need a business bank account and a way to receive the funds — most processors deposit money daily or weekly.
- Fraud protection and chargeback policies differ between processors, so read the terms before you start taking payments.
In-person payments with a point-of-sale system
A point-of-sale (POS) system is a terminal or device that reads the card in front of you. It can be a countertop machine, a tablet with a card reader attachment, or a phone app with a small square reader. The customer inserts, taps, or swipes their card, and the transaction goes through in seconds.
Common POS providers include Square, Toast, Clover, and Shopify POS. Setup usually takes a few hours — you download the app or plug in the hardware, connect your business bank account, and you are ready to process. Most do not charge a monthly fee for the basic service; you pay only when you process a card.
In-person transactions typically cost 2.6% plus $0.10 per transaction for standard debit and credit cards, though some providers charge differently for premium cards or rewards cards. Because the card is physically present, the fraud risk is lower and your costs are usually lower than online payments.
Online payments with a payment gateway
A payment gateway lets customers enter their card details on your website or in an email invoice. The gateway encrypts the information, sends it to the processor, and tells your website whether the transaction was approved. Examples include Stripe, PayPal, Square Online, and Authorize.net.
Setup requires you to integrate the gateway into your website or use a hosted payment page — a page the gateway provides that you link to from your site. Integration can take anywhere from an hour (if you use a simple hosted page) to several days (if you have a custom website that needs coding). Many gateways offer plugins for common website builders like Shopify, WordPress, and Wix that speed this up.
Online transactions usually cost 2.9% plus $0.30 per transaction for standard cards. Some gateways charge a monthly fee on top of this; others do not. Because the customer is not physically present, fraud risk is higher, so processors charge more and may hold funds for a few days before depositing them to your account.
Mobile payments with a card reader
A mobile card reader is a small device that plugs into your phone or tablet and lets you take payments anywhere — at a customer's home, at a market, or outside your office. Square Reader, PayPal Here, and Clover Go are common options. The customer taps or swaps their card, and the payment processes over your phone's data connection.
These readers cost between $20 and $100 to buy, and setup takes minutes. You download the app, plug in the reader, and enter your business details. The transaction fees are usually the same as in-person POS payments — around 2.6% plus $0.10 — because the card is physically present.
Mobile readers are useful if you move between locations or do not have a fixed storefront. The main drawback is that you depend on a reliable phone signal or data connection; if your connection drops, the payment may not go through until you reconnect.
Understanding fees and how money reaches your account
Every processor charges a percentage of the transaction amount, called the interchange rate. This is set by the card networks (Visa, Mastercard, American Express) and varies by card type — a rewards credit card costs more to process than a basic debit card. The processor adds its own markup on top, so your total cost is the interchange rate plus the processor's margin.
Some processors also charge a monthly fee (usually $10 to $50), a per-transaction fee (usually $0.10 to $0.30), or a combination. A few charge nothing monthly but take a higher percentage. Compare the total cost for your expected monthly volume before you choose.
Money from card transactions is usually deposited to your business bank account daily or weekly, depending on the processor. Some hold the first deposit for 7 to 14 days as a security measure. Chargebacks — when a customer disputes a charge and the card network reverses it — can pull money back out of your account weeks later, so keep enough cash on hand to cover potential chargebacks.
Fraud protection and security requirements
All payment processors use encryption to protect card data. If you take in-person payments, the card never leaves the customer's hands and the terminal reads it, so your fraud risk is very low. If you take online payments, you never see or store the full card number — the gateway handles that — but you still need to watch for suspicious orders.
Most processors offer fraud detection tools that flag unusual transactions, like a large order from a new customer or multiple failed attempts. Some charge extra for advanced fraud protection; others include it free. Read the processor's fraud policy before you sign up so you know what happens if a transaction turns out to be fraudulent.
If you store customer card data (which most small businesses should not do), you must comply with the Payment Card Industry Data Security Standard (PCI DSS). Most modern processors handle this for you by not letting you store the data in the first place. Ask your processor whether you need to do anything to stay compliant.
Choosing between processors
Start by deciding what type of payments you need: in-person only, online only, or both. Then list the processors that offer that service and compare their fees on your expected monthly volume. A processor that charges 2.6% plus $0.10 per transaction costs less than one charging 3% plus $0.30 if you process many small transactions, but more if you process a few large ones.
Check whether the processor charges a monthly fee and whether that fee is waived if you process a minimum amount. Look at the contract terms — some lock you in for a year, others let you cancel anytime. Read reviews from other businesses in your industry to see which processors have good customer support and reliable uptime.
Most processors let you test their system free for a short period. Use that time to process a few test transactions and make sure the integration works with your website or equipment. Once you are confident, you can switch your real payments over.
Frequently Asked Questions
Do I need a separate merchant account?
No. Modern payment processors include a merchant account as part of their service. You just need a business bank account where the processor can deposit the money. The processor handles the relationship with the card networks on your behalf.
What happens if a customer disputes a charge?
The customer contacts their bank or card company and reports the transaction as fraudulent or unauthorized. The card network investigates and either sides with you or reverses the charge. If reversed, the money is pulled back from your account and returned to the customer. You can dispute the chargeback if you have proof the transaction was legitimate.
Can I accept American Express and Discover, or just Visa and Mastercard?
Most processors accept all four major card networks. American Express and Discover usually cost more to process — sometimes 1% to 2% higher — because they set their own interchange rates. You can choose to accept them or decline them, but most businesses accept all four to avoid turning away customers.
How long does it take to get paid after a customer swipes their card?
For in-person payments, most processors deposit money daily or within 24 hours. For online payments, deposits usually happen within 1 to 3 business days. Some processors hold the first deposit for 7 to 14 days as a security measure. Check the processor's deposit schedule before you sign up if timing matters to your cash flow.
What if my internet goes down during an online transaction?
If your connection drops, the payment gateway will not process the transaction and the customer will see an error. They can try again once your connection is back. For in-person payments with a mobile reader, the same applies — the transaction will not go through until you have a data connection again. Some terminals can queue transactions offline and send them when the connection returns, but not all.