How to accept credit card payments as a small business



Love them or hate them, credit cards are an integral part of the modern world. As such, having a successful small business these days means knowing how to accept credit card payments from your customers.

In fact, according to the Atlanta Fed, nearly 80% of American consumers have at least one credit card in their wallet. And more than a quarter of all payments made in 2020 were made with a credit card.

Still not sold? Here’s why and how to accept credit card payments as a small business.

Reasons to accept credit card payments

While setting up your business to accept credit cards can come with additional hassle and expense, it can be worth it. Here are a few reasons to consider it:

  • Sales increase: You could lose customers by insisting on cash payments. Cash is becoming less popular every year, and in its place, credit cards have become the preferred form of payment. A recent poll from The Ascent found that over 45% of respondents prefer credit cards over debit cards or cash. That’s an increase of almost 10% from our 2019 survey.
  • Efficiency: Credit card payments are often faster and easier to implement than cash. This can speed up transactions and reduce waiting times. Card payments can also help streamline accounting as they integrate easily with most software.
  • Security: Having large sums of money on hand in your business can be dangerous for your employees. Plus, cash is easy to lose, whether through theft or simple human error.

In addition to the above, adopting credit card payments can also help add a layer of credibility to your business. Stores and service providers that do not accept credit cards may appear less professional or of lower quality.

How to accept credit card payments

The first thing you need to do to accept credit card payments for your small business is create a business bank account. This is where the payments will be made once they have cleared.

Next, you will need to create a merchant account with a credit card processing company. These are third-party services that handle the heavy lifting for credit card transactions.

Regardless of your type of business, credit card payments work the same basic way:

  1. The customer provides their credit card information. In person, they use a credit card terminal to swipe, insert or tap their card. For online purchases, they put their credit card information in the payment form.
  2. The transaction information is sent through the credit card processor to the issuing bank for approval.
  3. The bank checks that the card account has the necessary funds and that the transaction is not fraudulent.
  4. The funds are passed back to the merchant through the processor.

The equipment and setup you need depends on how you do business. In-person payments require physical equipment, while online payments may require a bit of web development knowledge.

Accept credit card payments in person

If you’re old enough to remember the cumbersome manual credit card machines of yesteryear, this can seem like a daunting task. But you don’t need medieval machines to allow your customers to pay with a credit card.

Small business owners with a physical store will need a point of sale (POS) system and a terminal or credit card reader. Many modern point of sale systems have a built-in credit card reader or come with a detached terminal. Today, most readers accept magnetic stripe cards, EMV® chip cards and contactless cards.

Service providers who want to make in-person payments on the go can use a mobile payment processor app. They usually come with small credit card readers that plug into the headphone jack of a tablet or cell phone.

Accept credit card payments online

Many small businesses are now operating entirely online. In this case, you don’t have to worry about getting a physical point of sale or credit card reader. However, you will still need to work with some sort of payment processor to handle your credit card transactions.

If you operate your own website, you will need to connect your payment account to your e-commerce site. Most of the popular processing services used by online retailers simplify the integration, often providing a piece of code to copy and paste.

Websites that are not configured for easy payment integration may require an offsite solution. In these cases, consider adding a link or button on your website to direct your customers to a third-party payment website like PayPal or Amazon Pay.

Ecommerce sites that rely on a paid website builder, like Squarespace or Wix, have a much easier job. Most of these services offer automatic integration or simple widgets that you can add to your website with just a few clicks. Depending on your department, you will also be able to add your own branding to the payment screens to maintain a consistent customer experience.

Payment processors have no shortage of options, each with their pros and cons. You can shop around to find the company that best suits your credit card processing needs.

Some companies may be good at handling face-to-face transactions, offering top-notch card readers and point-of-sale systems. Other vendors may specialize in ecommerce payments and integrate seamlessly with your website.

Here are some of the more popular providers:

  • Bandaged
  • Square
  • Shopify
  • Pay Pal
  • Intuit
  • Clover

While comparing your options, be sure to explore how – and how much – each processor charges for credit card transactions. For example, some processors may rely on a per-transaction fee structure, while others charge a fixed monthly fee.

Things to consider before accepting credit cards

While there are certainly many great reasons to accept credit card payments, it’s not just about cash flow and happy customers. There are a few downsides to credit card transactions.


Each credit card transaction incurs charges for the merchant. These include interchange fees, which go to the credit card issuer, as well as evaluation fees charged by the card network. Transaction fees are completely unavoidable and generally non-negotiable.

Your payment processor will also charge you various fees that may include transaction, equipment, and service fees. These fees can be minimized by finding the most affordable provider and choosing the right payment structure for your needs.

Waiting time

The time it takes for credit card payments to reach your bank account may vary. It can be a day or several. Some providers may even withhold payments from your merchant account for several days before you can transfer the money to your bank account.


One of the reasons consumers love credit cards is that they can dispute charges for products or services that haven’t met their expectations. If you decline a refund but the credit card company approves the customer’s dispute, you may need to pay the fee.



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