How to Accept Credit Card Payments for Small Businesses

Payment methods: In-person, online, mobile, phone

In-person card acceptance

When you have a brick-and-mortar business location, a hardwired credit card reader or a POS system allows cashiers to take payments from customers at a fixed location. Hardwired systems tend to be more reliable than mobile systems, which require a strong network signal.

“Businesses will want to make sure the credit terminal supports their needs and is capable of supporting all payment types — tap, swipe, insert,” said Todd Weiss, director of product at PayJunction.

Businesses should also consider how their staff will use the system. Hardware should be selected based on the actual needs of staff and customers on-site. 

“Will they need just one terminal or multiple?” Weiss asked. “Consider the volume of transactions and durability required for in-person, high-traffic use. With in-person transactions, reliability is key.”

Online card acceptance

To take credit card payments online, businesses can use a payment gateway to create a payment page or shopping cart on their website. These pages provide customers with an easy way to provide payment digitally, simply filling out a form with their payment information, billing address and shipping address.

“They can also provide customers with a direct payment link for quick and easy payments,” said Branden Korf, marketing associate at EBizCharge, a payment processing company. “Simply check [to make sure] everything is secure and PCI-compliant.”

Mobile card acceptance

Mobile credit card readers are helpful for businesses that travel, sell at trade shows or simply want to accept payments anywhere within their establishment. These readers require a strong network connection, though, so you’ll want to make sure you have a reliable business internet provider as well.

“Mobile credit card processing technology helps businesses to accept payments at the customer’s location, improving ease and professionalism,” Korf said. “For example, a mobile hairstylist may utilize a Bluetooth card reader to receive payments right after a haircut.”

Phone payments

If your business accepts credit cards over the phone — such as a restaurant that offers delivery or takeout — choose a virtual terminal or payment gateway. Virtual terminals and payment gateways allow businesses to take down the payment information from a caller in a secure way, rather than writing it down where it could easily be stolen. Similarly, service-based businesses, such as law firms and marketing agencies, can use virtual terminals to generate invoices and process payments. 

Required tools: Gateways, processors, POS, merchant accounts, terminals

When selecting a payment processor and the types of hardware you’ll use, consider how your customers use their cards. If the vast majority come into your store and swipe or tap their cards, you may just need a standard credit card reader. However, you might also want to accept credit cards online, over the phone or on a mobile device. These methods may require additional hardware or software. 

Payment gateway

Accepting credit card payments online requires a payment gateway, which you can set up through your credit card processor. Typically, a credit card processor charges you an additional monthly fee for this service; we recommend only setting up a payment gateway if you sell online regularly, or if your occasional online sales are large enough to cover the monthly cost.

POS systems and terminals

Most POS systems can do more than just process credit card transactions, including tracking sales, managing inventory and integrating with other systems like accounting software. You can also use a POS system to build a customer loyalty program.

However, feature-rich POS systems come at a significant cost. If you’re on a budget or don’t need a complete POS system, standalone card reader terminals are a good option. Most modern fixed credit card readers accept swipe, chip (EMV) and tap-to-pay (NFC) transactions.

Mobile equipment

To accept credit card payments on your phone or tablet, you’ll need a mobile credit card reader or app. You can connect readers by plugging them into a mobile device’s headphone jack or wirelessly via Bluetooth. 

Mobile card readers can accept:

• Swipe-only
• Swipe plus chip (EMV)
• Swipe, chip and contactless (NFC) payments

A mobile credit card reader doesn’t limit you to accepting payments on your mobile device; these readers can be used as part of a larger system with additional hardware.

Merchant accounts vs. payment service providers

A merchant account temporarily holds funds from your credit card sales before transferring them to your bank account. Businesses need merchant account services before they can accept credit card payments with a traditional POS system and credit card processor. However, if you use a payment service provider — such as PayPal, Square, Shopify or Stripe — you can skip this step.

Setup process: Step-by-step for each payment method

Determining your processor needs

Before choosing a credit card processor and setting up your system, you must evaluate your business’s unique needs.

“Factors like business size, transaction volume, fee structures and security requirements should guide the decision,” Weiss said. 

For example, our PayPal review and Square review show how these processors work well for new businesses with low transaction volumes because they don’t charge many of the fees you’d incur with other processors. However, their credit card processing rates are higher than many competitors, so they’re not always a cost-effective choice for high-volume businesses.

High-volume businesses should choose a processor with lower transaction fees, as it can reduce total costs, according to Weiss.

When evaluating payment processors, determine if their rates, service and technology meet your business’s requirements:

• Competitive rates: Don’t always look for the lowest rate possible. Some advertised rates are deceptively low because they apply only to specific transactions. Many processors also charge monthly and annual fees that you must consider when comparing costs.
• Knowledgeable and available customer service: You can’t afford system downtime when it comes to accepting payments. Payment processors should provide reliable and responsive customer support. Check out customer reviews before signing up with a payment processor to see if their customer service is up to the task.
• Fast, secure and reliable payment equipment: Payment processors tend to offer a limited range of equipment, so if you know what you want or you already have hardware make sure the processor you’re considering is compatible with it. Some processors will provide hardware as well, so review it to make sure it meets your needs.

Application and setup

Once you decide on the right payment processor for your business, you’ll need to apply. Generally, applications can be submitted online and take two days for the processor to review.

Once approved, the processor should help you set up your account and walk you through the process of selecting hardware, if necessary. When the hardware arrives, the processor should help you set it up and test it.

Korf provided an example of what a small business, such as a local coffee shop, should expect when setting up their credit card processing system.

“A local coffee shop looking to accept credit card payments would start by choosing a payment processor like Square, which offers simple pricing and integrates easily with a tablet-based POS system,” he said. “The shop would set up a business bank account, ensure their system is PCI-compliant and get a card reader for in-person payments. After training the staff on how to use the system, the coffee shop would be ready to process payments securely and offer customers the convenience of paying by card.”

Online payment setup options

To accept online payments, you’ll also need to set up a virtual terminal or payment gateway. Depending on the gateway, you’ll have the following options when accepting credit cards online:

Direct payment link

Get the payment link from your payment service provider. Depending on your provider, you may be able to customize the link. Then, determine where to put the link on your website. 

The customer will then follow these steps:

1. Click the link to open a payment page
2. Enter the dollar amount
3. Enter their contact information and billing information
4. Click a button to complete their order

Payment webpage

After you create a payments page on your website, your customers follow these steps:

1. Choose a payment (or donation, if applicable) amount and frequency
2. Select a payment method
3. Enter their credit card information
4. Enter their billing information
5. Select Pay (or Donate, if applicable) to finalize their order

St. Jude Children’s Research Hospital is a good example of an organization that uses a payments page to accept credit cards.

Online shopping cart

Online shopping carts are payment pages for online retailers. Customers browse e-commerce shops for products and add them to their carts. When they’re ready to check out, they follow these steps:

1. Enter their shipping information
2. Enter their credit or debit card information
3. Enter their billing information
4. Click Pay Now to complete their order

Costs & fees: Full breakdown of expected fees and pricing models

Most processors charge 1.5 to 4 percent of the transaction value, plus a small transaction fee. This fee is usually based on your monthly processing volume, average ticket size, industry and processing history. In addition, processors may charge several other fees, such as chargebacks and PCI compliance fees.

Three primary pricing models

Payment processors typically charge one of three pricing models:

• Flat-rate pricing: Flat-rate pricing is a payment model used by payment facilitators such as Square and PayPal. It means fixed rates for specific transaction types. PayPal’s credit card fees are organized in a flat-rate pricing structure, for example. There are usually no additional fees or lengthy contracts with flat-rate pricing, making it ideal for businesses that process less than $3,000 per month.
• Interchange-plus pricing: This pricing model is based on the interchange rate that all credit card processors pay, plus a processor’s markup fee. It is the most transparent model available because it’s based on a universal rate. The markup, which is how the processor makes money, is usually negotiable in this pricing model. It is expressed as a percentage plus a per-transaction fee. For instance, you may be quoted 1.5 percent plus $0.25. The 1.5 percent is the interchange rate and the $0.25 is the processor’s markup.
• Tiered pricing: This pricing model differentiates between qualified, mid-qualified and nonqualified transaction types. Qualified transactions are generally made with basic debit and credit cards physically swiped or tapped at a terminal. These are the cheapest rates in a tiered pricing model. Slightly more expensive are mid-qualified transactions, which often include physically swiped rewards cards. Non-qualified transactions — the most expensive type — include premium rewards cards and card-not-present transactions, such as when you key in card numbers that your customers read to you over the phone.

Common credit card processing fees

In addition to the rates you pay for each transaction, credit card processors that use the interchange-plus and tiered pricing models charge account maintenance fees including monthly fees, monthly minimums, payment gateway fees, PCI compliance fees and various network fees. Some processors also charge a setup fee, a payment gateway setup fee and others.

Modern trends: Digital wallets, tap-to-pay, international payments

Digital wallet adoption

Digital wallets continue to gain momentum in the payments landscape thanks to the expansion of near-field communication (NFC) technology, which facilitates contactless payment methods. NFC mobile payments make checkout faster, are easy to implement and can help deepen consumer engagement.

The practice of making digital wallet payments via QR codes is also expanding market share. Nearly 100 million Americans are expected to make payments via QR code in 2025.

Buy Now, Pay Later (BNPL) expansion

Buy Now, Pay Later options are expanding given their flexible financing capabilities. As the cost of housing, utilities and groceries rises, BNPL usage has grown significantly. For example, roughly half of consumers ages 18 to 79 have used a BNPL service, according to a CNBC survey.

Popular BNPL services include Klarna, Afterpay and Affirm. Many payment processors can make these options available on online checkout screens.

AI and fraud prevention

Artificial intelligence has become increasingly important in payment processing. An estimated 94% of payment industry professionals believe AI is best used for fraud detection or preventing fraud. This trend aligns with the growing need for sophisticated fraud prevention as digital payments expand.

Approximately two-thirds of online merchants reported they were currently using or planning to use generative AI in e-commerce fraud management within the next 12 months.

Comparison table: Methods vs. complexity, tools, use cases

Best practices: Testing, compliance, reconciliation, fraud prevention

Testing and compliance

Select an EMV-compliant chip card reader for the most secure option when you sign up with a credit card processor. Select an NFC-enabled reader if you want to accept payments from contactless cards and mobile wallets, such as Apple Pay.

Any business that accepts credit and debit card payments must comply with the PCI-DSS requirements. Compliance with PCI-DSS is required even if the department or a service provider engaged by the department doesn’t directly store any credit card data.

Credit card reconciliation

Corporate credit card reconciliation is the process by which finance and accounting teams confirm that the transactions showing in a business’s credit card statement are accurate and matching with entries made in the company’s general ledger. The process usually takes place at the end of every month, with more comprehensive reconciliation happening quarterly or annually.

Key steps include:

1. Set up a tracking system: Use automated expense management systems that integrate with your corporate cards to track and report expenses at the point of transaction
2. Obtain documentation: Keep receipts, invoices, or financial statements for all charges
3. Reconcile discrepancies: Match transactions with supporting documentation and identify errors such as duplicate charges, incorrect prices, or unauthorized charges
4. Make adjustments: Correct any discrepancies in your internal records and ensure all adjustments are documented
5. Generate reports: Create detailed reconciliation reports that outline all transactions, discrepancies, and adjustments

Fraud prevention

Best practices for credit card fraud prevention include:

• Use a credit card provider that has excellent reporting capabilities and can generate exception reports
• Develop a working relationship with your credit card issuer’s fraud department
• Keep current on new fraud detection solutions and attend relevant training
• Monitor account statements regularly and report suspicious activity immediately
• Use multi-factor authentication when available
• Never store credit card information unless necessary and PCI-compliant
• Train staff on proper handling of credit card information

Amanda Clark and Jennifer Dublino contributed to this article.