How to Accept Credit Card Payments: A Complete Guide for Your Business

Credit cards are becoming an increasingly popular form of payment, especially when it comes to online purchases. A rise in credit and debit card use in the US between 2022 and 2023 saw 32% of payments per month being made with credit cards and 30% with debit cards.¹

In this article, we break down how to accept credit card payments as a small business, so that you don’t miss out on potential sales.

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How to Accept Credit Card Payments: Methods for Accepting

There are different ways you can accept credit card payments online or in person, depending on your business. Whichever method you use, you’ll need a payment processor to handle the transactions and a merchant account to collect the money. If you want to offer customers multiple payment options, look for a payment service processor that has a unified commerce. These can connect your in-person, mobile, and online sales.

In-Person Payments

To accept payments in person with a physical card, you need to have a point-of-sale (POS) terminal with payment software and a card reader. For a fixed till or checkout counter, you can use a countertop card reader. For an option that works throughout the store, you can choose a portable card reader.

The POS terminal sends the transaction details to the payment processor. The processor then verifies the details and facilitates the payment.

Online Payments

To accept online payments, you can use a fully integrated merchant account service. Alternatively, you can tailor a system by combining different service providers.

You need to have an online storefront where customers can select your products or services. This can be on your website, a hosted page, or a third-party marketplace.

You then need a payment gateway for customers to enter their card details. The payment processor collects the information from the payment gateway to complete the transaction.

Mobile Payments

Apps like Square, Zettle, and PayAnywhere allow you to accept payments using a smartphone or tablet paired with a mobile card reader. This is ideal for businesses on-the-go, such as plumbers, cleaners or food trucks.

The mobile card reader connects to a device such as a phone or tablet with POS software installed.

In addition, digital wallets, such as Apple Pay and Google Wallet, are becoming increasingly popular. These digital wallets store customer’s credit card information on their mobile device. Customers can make mobile payments in-person from the wallet by tapping their device on a card reader. This happens via NFC technology, or they can use the wallet to pay for online purchases through a mobile app or browser.

When the customer initiates a payment, the digital wallet creates a tokenized transaction. This in turn protects the card details.

Setting Up Credit Card Payments for Your Business

If you’re wondering ‘how do I accept a credit card payment from someone?’ or how to receive payments from a credit card, the first step is to set up a system tailored to your business needs. Follow the steps below to get started.

Step-by-Step Guide

1. Choose a payment processor: Do your research to find a provider that suits your business, such as Square, Stripe, PayPal or Adyen.

2. Open a merchant account: If your payment processor does not provide a merchant account, you’ll need to open one with another provider.

3. Set up your payment system: For in-person sales, you’ll need a POS system or card reader; for online sales, you’ll need a payment gateway.

4. Integrate the payment system: Link the payment system to your online store, app, or in-store system.

5. Test payments: Ensure your transactions are processed smoothly before accepting payments from customers.

6. Keep on top of compliance: Conduct regular reviews to ensure your business complies with regulatory requirements and payment industry standards.

Costs to Expect

Accepting credit card payments involves a number of charges, which vary by payment processor and payment method. Common costs include:

• Processor fees: Charged by the payment processor. Can be charged as a percentage of each transaction’s value, a flat rate, monthly, or a combination.
• Interchange fees: Charged by the card networks for conducting transactions. This is typically 1.5-3.5% per transaction plus an additional charge for international cards. Credit card fees can depend on the card type (Visa/Mastercard, American Express, etc.) and whether the payment is made online or in person.²
• Payment gateway fees: Payment gateway providers can charge separate fees per transaction, monthly, or both.
• Monthly fees: For account service or access to certain features.
• Equipment and setup fees: For opening a merchant account and renting or purchasing POS systems or card readers.
• Batch fees: For grouping multiple transactions together for settlement.
• Chargeback fees: For handling costs if customers dispute their card transactions and the funds must be returned.
• Early termination fees: Some merchant service providers charge a fee for terminating a contract before the end date.

Understanding Credit Card Payment Processing

When running a small business, it’s important to understand how credit card processing works. It can affect your cash flow, business operations, and customer satisfaction.

What Is a Payment Processor?

A payment processor is a third-party service provider that manages debit and credit card transactions. A payment processor is the intermediary between the business, the customer’s bank, and the card network.

The payment processor takes the customer’s details from the POS system or online payment gateway. It then completes the transfer of funds while ensuring secure transactions.

How Credit Card Payments Work

While a card payment appears to take place in seconds, there are several stages that must take place for the transaction to be completed:

• The customer presents their physical card or enters their card details to initiate payment.
• The business’ payment software or payment gateway transmits the transaction information to the payment processor.
• The payment processor sends the data to the credit card network.
• The card network sends the authorization request to the bank that issued the card.
• The issuing bank verifies the cardholder and checks whether there are sufficient funds in their account. After that, the bank identifies whether the transaction is potentially fraudulent.
• The bank approves or declines the transaction and transmits its decision to the card network.
• The card network relays the decision to the payment processor, which sends the authorization response to the business’s POS system or payment gateway.
• If the transaction is approved, the sale to the customer is completed. The POS system or payment gateway retains the transaction data and provides the customer a receipt.

At the end of each day, the business sends a batch of all the approved transactions to the payment processor for clearing and settlement.

The card networks and issuing banks transfer the funds to the business’s merchant account. The acquiring bank transfers the money into the business’s bank account, typically within 1–3 business days.³

Choosing a Credit Card Payment Processor

When researching credit card payment systems, it’s best to compare several options to find the best solution for your business. These can be full-service systems to more customizable setups. Keep in mind that some credit card processors do not work with companies in industries that are considered high-risk. Examples of such industries are gambling, cryptocurrency, and dropshipping.

Features to Consider

When selecting a processor, consider these features:

• Supported payment methods
• Sales and processing volumes supported
• POS equipment and software compatibility
• Third-party integrations, such as accounting software and e-commerce platforms.
• Processing, transaction and other fees
• Customer service support
• User feedback
• Transparency on fees and service features
• Reports and analytics offered
• Regulatory compliance
• Fraud detection/prevention tools
• Dispute management

Popular Processors Compared

How do some of the most popular credit card processors stack up?

• Adyen: Offers global reach and scalability for rapidly growing businesses. Adyen supports over 200 payment methods in multiple currencies. Additionally, Adyen provides advanced unified commerce solutions, as well as fraud prevention. As a customer, you will also get real-time data insights.

• Stripe: Offers out-of-the-box solutions. It also provides a range of application programming interfaces (APIs) and integrations. These are ideal for businesses that have unique payment setups and require customized systems. You can also connect Wise and Stripe to save money when receiving international payments.

• Square: Well-suited to small businesses that accept both in-person and online payments. Square provides a free POS system, e-commerce integrations, and transparent pricing. Additionally, Square offers mobile card readers to its customers.

• PayPal: Popular among freelancers and online sellers. Its services are widely used as a trusted option for customers internationally. PayPal offers invoicing tools and recurring payment options. However, its transaction fees can be relatively high.

• Zelle: Popular among service-based businesses in the US. Zelle is often free to use and supports instant bank-to-bank transfers.

Discover Wise Business: The Easy Way to Manage Payments in Multiple Currencies

To set up credit card payments for your business, you need a business account to transfer funds from your merchant account. This is where many businesses get stuck, as the minimum balance requirements and time needed to set up a business account end up being blockers. Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. There are no monthly fees or minimum balance requirements, and you can save money on international payments at the mid-market rate.

A Wise Business account can be set up 100% online, so there is no need to stand in line or set up appointments.

Register with Wise Business 🚀

Wise business is designed to manage multiple currencies all in one place. You can hold over 40+ currencies and receive payments like a local with major currency account details. That means you can receive payments in Euros, for example, to Euro account details, even as a US business.

	Author:
	Nicole is a professional journalist with two decades of experience in writing and editing, and she has run her own freelance business for the past five years. Her expertise spans the financial and technology industries, including payment processing and small business banking.

	Editor & Business Expert:
	Panna is an expert in US business finance, covering topics from invoicing to international expansion. She creates guides and reviews to help businesses save time and make informed decisions. You can read more useful business articles on her author profile.

Sources:

All sources checked January 2025.