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How to Accept Credit Card Payments Using Your Phone

Simone Johnson
Simone Johnson

Accepting credit card payments using your phone is an easy, inexpensive way to get paid.

Accepting credit card payments has never been easier for businesses. In addition to using credit card terminals and point of sale (POS) systems, small businesses can accept payments on their mobile devices. It requires signing up for an account with a payment processor that offers mobile credit card processing, downloading an app and purchasing a mobile card reader.

Editor's note: Looking for the right credit card processor for your business? Fill out the questionnaire below to have our vendor partners contact you about your needs.

Can I use my phone to process credit card payments?

You can accept credit card payments on your phone by partnering with a payment processor that offers mobile credit card processing solutions. Some of the most popular brands are SquareSumUp and PayPal; each company offers mobile credit card readers and pay-as-you-go terms specifically for mobile credit card processing.

To get started, select the credit card payment app that works best for you, download it from the processor and provide basic information about your business to sign up for an account. Many processors provide a free mobile credit card swiper so you can begin accepting payments, but you should order a mobile credit card reader that accepts chip cards, as they deter counterfeit fraud. Using chip technology shields you from liability if you unknowingly accept a counterfeit card.

Mobile credit card readers connect to your phone either by Bluetooth or through your phone's headphone jack. When you accept card payments, the transactions are encrypted and transmitted to the processor, and no sensitive card data is stored on your phone. After the transaction is settled, the money from the transaction is deposited into your bank account, less the processor's fee.

Accepting mobile credit card payments offers businesses a cost-effective way to accept payments by card. Another benefit for businesses is that they can accept cards at events or throughout their establishment, such as a restaurant that accepts payments tableside. For businesses that don't yet accept credit card payments, opening an account and purchasing a card reader from a payment facilitator such as Square, SumUp or PayPal is an easy solution. For businesses that already process credit cards using a POS system, mobile credit card payments can generally be set up through your current full-service payment processor. [Related article: Understanding PayPal Credit Card Fees.]


Working with a payment facilitator is generally easy and straightforward. Most businesses fill out a form online. There are often no credit checks or requirements to submit processing statements or marketing materials, which is helpful for businesses looking to accept credit cards for the first time.

Partnering with a full-service processor for mobile credit card payments can be more complicated, though, as you will likely need to apply for an account. These companies require more information and documentation, but sales reps are eager to work with you, and often offer to help you fill out the application over the phone.

Once your application is submitted, there is often a waiting period prior to approval. If you don't meet the processor's standards, your application could be rejected.

How much does it cost to accept credit cards using your smartphone?

There are three main pricing models you'll likely encounter. The model that is best suited for your business often depends on the type of business you run, and the volume and value of your credit card transactions.

If you work with a payment facilitator like Square, SumUp or PayPal to accept credit cards using your phone, you will pay flat-rate pricing. If you work with a full-service credit card processor, you often are given a choice of interchange-plus or tiered pricing.

Here's how each pricing model works.

  • Flat-rate pricing: Flat-rate pricing is the simplest pricing model. Although its rates often appear had higher than advertised prices for other models, there are usually no additional fees and no lengthy contracts, which make it a better value for businesses that process less than $3,000 per month. Flat-rate pricing is usually expressed as either a flat percentage of the transaction value or a flat percentage plus a small per-transaction fee.

  • Interchange-plus pricing: With interchange-plus pricing, the merchant pays what is known as the wholesale rate, along with the processor's markup. The wholesale rate consists of the interchange fee, a rate set by the card networks that all processors must pay, and the assessment fee, another non-negotiable rate charged to processors by card brands. The processor's markup in this model represents its profit on facilitating your credit card transactions. The markup is the only negotiable part of the price, and it's the rate you are quoted when you call for pricing. This pricing model is favored by industry experts because of its transparency.

  • Tiered pricing: Tiered pricing categorizes all transactions into tiers: qualified, midqualified and nonqualified. Qualified transactions are basic credit or debit cards swiped at the point of sale; these have the lowest rates (and this is typically the rate advertised by the processor). Midqualified transactions are usually rewards cards swiped at the point of sale. Nonqualified transactions often include premium rewards cards, corporate cards and keyed-in or card-not-present transactions (such as cards accepted over the phone); these have the most expensive rates.

Ultimately, the rates you pay will be influenced by your monthly processing volume, your average transaction value and the industry your business operates in. Processors may consider your history, as well as your business and personal credit, when determining your rates. With these factors in mind, you can expect most processors' rates to range from 2-4% for each transaction.

If you choose to work with a full-service payment processor, there are additional fees, and in many cases, you'll be asked to sign a service contract (the best are month to month; many contracts, though, have three-year terms with expensive early cancellation penalties). [Read our review of Payment Depot, they don't require contracts and have no early termination fees.]

Here's a sampling of some of the fees full-service credit card processors charge:

  • Monthly fee: This covers the processor's cost for preparing monthly statements and customer service. It is also known as a statement fee and typically ranges between $5 and $15. 
  • Gateway fee: If you want to accept online payments, you'll need a payment gateway. This fee varies, depending on the gateway you use, and although it's usually a flat monthly fee, some providers tack on a small per-transaction fee. 
  • PCI compliance fee: The payment card industry (PCI) sets strict regulations to prevent fraud and assure that your credit card transactions are secure. You are required to annually certify as compliant, and most full-service processors charge a fee to help you do this. It's usually charged annually and costs approximately $100. 
  • PCI noncompliance fee. If you fail to achieve PCI compliance, you're charged this fee monthly until you certify. This fee is quite expensive – sometimes $50 or more – to discourage you from letting your PCI compliance lapse. 
  • Monthly minimum: Some processors charge a monthly minimum, which means you must process a certain dollar amount of transactions each month. For example, if the monthly minimum is $25, and you only have $12 in processing fees, you will be charged an additional $13. Remember, the minimum is usually based on processing fees – not transaction value – so you need to check with your processor about how much you must process each month to meet the minimum.

How can you accept credit card payments without fees?

There are always processing fees associated with accepting credit card payments – the banks, credit card networks and credit card processing companies all want a small cut of every transaction you run.

In some states, you can pass transaction fees on to your customers as a surcharge, but the laws around this are tricky, so you should consult a lawyer before doing this. You should also be aware that this strategy could be a turn-off to your customers.

Typically, the best way to handle the expense of accepting credit cards is to build it into your pricing. The alternative is to set a minimum purchase requirement for customers who pay by credit card. [For information on a processor that offers low transaction rates, read our review of National Processing.]

What is the best way to accept credit cards?

While most payment processors will send you a free mobile credit card swiper that scans the magnetic stripe on cards, it is wise to invest in an EMV-compliant card reader. EMV chips work with card readers to encrypt the transaction data and protect it while it is in transit; EMV chip cards are far more difficult to counterfeit than magstripe cards.

EMV-compliant readers have become the standard in credit card and debit card transactions; failing to use one opens your business up to liability for any counterfeit fraud that results from unwittingly accepting a counterfeit card using a card swiper.

Even though it's not free, an EMV-compliant mobile card reader is generally very affordable, costing between $20 and $50. The best mobile card readers are also NFC-enabled. NFC stands for near-field communication, and it allows you to accept contactless payments, such as those from digital wallets like Google Pay, Samsung Pay or Apple Pay, as well as contactless cards.

How do you accept credit card payments without a merchant account?

To accept card payments without a merchant account, you need to set up an account with an account aggregator – also known as a mobile credit card processor – like Square, PayPal and SumUp.

Working with this type of processor is usually less expensive for small businesses, because even though processing fees are higher, you aren't charged monthly or annual account fees. Really, the only fee you pay are processing fees for the transactions you accept.

Accepting credit cards on iPhone vs. Android

The best mobile credit card processors offer applications that are platform-agnostic. These apps work across all devices, and on iOS and Android operating systems. Some processors work exclusively with one platform, but most companies have mobile apps for both iOS and Android.

Some apps offer different functionality based on the operating system, though. Apple's iOS, for example, tends to be more popular, thus some processors give the iOS-based mobile applications more attention and more frequent updates. However, some mobile apps vary more in functionality based on the device itself rather than the platform. For example, some mobile payment processing apps have more feature-rich offerings on a tablet than on a smartphone.

Mobile credit card payments improve POS transactions

Accepting credit card payments on mobile devices offers benefits to businesses small and large. For new businesses or small businesses on a budget, mobile credit card processors lower the barrier to entry by cutting costs, allowing virtually anyone to accept a credit card payment from their customers. For established businesses that frequently travel to trade shows or that want to offer convenience and flexibility to their customers, mobile credit card payments serve to increase sales and boost customer satisfaction.

Whatever your reason for accepting mobile credit card payments using your phone, you have many options. Choose a credit card processor or payment facilitator that offers advantageous terms as well as a user-friendly and effective mobile app. Once you find the right vendor for your mobile card transactions, consider investing in hardware that is EMV-compliant and NFC-enabled.

By following these tips, you'll be processing mobile payments in no time. Your customers – and your bottom line – will undoubtedly thank you.

Additional reporting by Adam Uzialko

Image Credit: Cameravit / Getty Images
Simone Johnson
Simone Johnson Staff
Simone Johnson is a and Business News Daily writer who has covered a range of financial topics for small businesses, including on how to obtain critical startup funding and best practices for processing payroll. Simone has researched and analyzed many products designed to help small businesses properly manage their finances, including accounting software and small business loans. In addition to her financial writing for and Business News Daily, Simone has written previously on personal finance topics for HerMoney Media.