How to Accept Credit Card Payments

Accepting credit cards can give small businesses a boost

Running a small business means keeping a tight handle on cash flow. One way to facilitate the movement of money in and out of your business is to expand your payment options to include credit cards.

Allowing customers to pay via credit card can make managing cash flow less stressful and eliminate the delays associated with waiting for check payments. If your business isn’t yet accepting credit card payments, changing that may be easier than you think.

Key Takeaways

  • Accepting credit card payments for your business can make managing cash flow easier and potentially boost sales. 
  • More Americans are relying on credit and debit cards as a payment method instead of cash or checks. 
  • You can accept credit card payments whether you run a large business or a small one. 
  • Setting up your business to accept credit card payments doesn’t have to be complicated.

Benefits of Accepting Credit Card Payments

Allowing your customers to pay with credit cards can yield a number of advantages for your business that could lead to greater growth. According to the National Federation of Independent Business, there are many benefits to accepting credit cards.

Major reasons to accept credit cards include:

  • Improving cash flow, since it can speed up payment times and reduce delays
  • Legitimizing your business in the eyes of customers
  • Potentially boosting sales volume, since your customers will have more ways to pay

If you’re still not sold on the idea of accepting cards, consider the growth of credit card payments compared to other payment methods. Research from Deloitte shows that credit cards made up nearly $4 trillion in payment volume in the United States in 2018. From 2016 to 2018, credit card transactions increased while the percentage of Americans using cash to pay declined.

That trend may continue if demand for contactless and/or digital payments also rises. As a result of the 2020 economic crisis, for instance, 64% of small businesses said they were trying to steer clients away from using cash and checks in favor of digital payments, such as credit cards. Credit cards could become an even more common payment method as Americans move a greater portion of their transactions online—even when buying from brick-and-mortar businesses, such as local restaurants offering delivery services or stores with curbside pickup.

What Types of Businesses Can Accept Credit Card Payments?

The short answer is that virtually any kind of business can accept credit cards. For example, you could choose to accept credit cards if:

  • You run a brick-and-mortar business
  • Your business operates completely online
  • You have a traditional small business with employees
  • You’re a sole proprietor with zero employees
  • You’re an independent contractor or freelancer 
  • You have a mobile business (such as a food truck or dog grooming service)

In any of those scenarios, accepting credit card payments could work in your favor if it makes it easier for customers to pay. Deciding not to accept credit cards in your business usually comes down to personal choice, rather than the type of business that you run. 


If you decide to accept credit card payments, federal law requires that you verify that those payments are authorized by the customer before processing them. That is typically done behind the scenes, and virtually instantaneously, by a payment processing service.

How to Accept Credit Card Payments

If you’re ready to accept credit card payments for your small business, then you’ll need to follow a few steps. But once you get a system set up, it’s relatively easy to oversee and manage. 

1. Decide How You’ll Accept Credit Card Payments

The first step is determining when and how to accept credit card payments. For example, you can take credit card payments:

  • Online
  • In person
  • Using a mobile card reader
  • Over the phone

The option that you choose may depend on the type of business that you run. For example, if you have a brick-and-mortar retail store, you may accept credit cards in person at checkout or online if you’ve set up an ecommerce store. But if you run a mobile business, using a mobile card reader may be the best option. 


You’ll also need to decide which of the major credit card networks (Visa, Mastercard, Discover, or American Express) you want to accept.

2. Choose a Payment Processing System

When a customer gives you their credit card to pay, there’s more to it than simply swiping or inserting the card. The customer’s card and account details have to be reviewed and processed electronically so that the payment to you can be authorized. All of this happens digitally behind the scenes in a matter of seconds, but you need to hire a payment processor to make it all work. 

If you want to accept credit card payments, you can do it one of two ways: merchant accounts or payment service providers. A merchant account is an account that you open with a bank to accept credit card payments. Payment service providers are companies that allow you to accept credit card payments without setting up a merchant account. 

Of the two, a payment service provider may charge lower processing and transaction fees. So it may work well for you if you have a newer business or relatively small credit card payment volumes. But if you do a large volume of sales from credit cards, then a merchant account could be an easier way to manage your credit card payments. 


When comparing merchant accounts and payment service providers, consider whether you have to sign a long-term contract and what fees you’ll pay for credit card processing.

3. Get Your Credit Card Payment Software and Hardware in Place

Once you have a method of processing credit card payments in place, you may need to update your point of sale software and hardware to actually accept them. 

For example, if you run a brick-and-mortar business, you may need to purchase checkout software to accept card payments or install a card reader that’s EMV chip-enabled at checkout. Some payment service providers will also supply the equipment that you need to get set up for accepting credit card payments in-store or via a mobile card reader.  

How to Accept Credit Card Payments Online

Many small businesses are now online-first, or even online-only. Whatever type of business you own, giving your customers the ability to pay with their credit card online provides them with more convenience and can boost sales. Ecommerce shops, restaurants that accept orders online, and digital services companies wouldn’t be able to function without this capability.

Providing this service to your customers is not difficult. If you plan to accept credit cards online, then you’ll also need to set up a payment gateway for that. Again, this may be included with your merchant account or payment service provider plan.

You will need a digital storefront, and the most common way of obtaining one is to sign up for an account with an ecommerce platform provider. Credit card payments are such an important part of contemporary ecommerce that all of the major ecommerce platform providers will allow you to take credit cards as a form of payment.

Just be aware that there is generally a cost associated with this. Online credit card transactions typically have higher processing fees than in-person transactions.

Using Credit Cards Safely: Tips for Small Businesses

Despite the advantages of accepting credit cards for your small business, some risks are involved in giving customers this option. The most prominent are:

  • Fraud. Some credit card systems are safer than others, and there have been instances in which businesses have been affected by credit card fraud.
  • Processing fees. If your margins are very small, the processing fees associated with accepting credit cards can easily add up to a major business expense. Small businesses with thin margins will need to assess whether accepting credit cards makes business sense.
  • Chargebacks. A chargeback is a disputed transaction that customers initiate when they aren’t satisfied with a purchase. Even if you’re in the right and the customer is not, it’s difficult and costly to dispute chargebacks.

Small businesses that want to accept credit cards but also want to avoid these risks should be wary, and should follow best practices for credit card payment systems:

  • Only use approved, well-known software and equipment. There are lots of different payment processors on the market today, but make sure to check the credentials of the company that you choose to work with.
  • Don’t store customer credit card data. Although you are allowed to do so, it makes you very vulnerable. It’s better to have a use-and-delete process.
  • Train your employees to handle credit card data and spot potentially fraudulent transactions. This can save you a lot of time in the long run.
  • Verify shipping and billing addresses. This can dramatically reduce the potential for fraud.
  • Be extra vigilant when accepting credit card payments online. With this kind of payment, if your company accepts a bad or stolen credit or debit card, then the total liability of the loss is yours.

Pay Attention to Credit Card Payment Processing Fees

Accepting credit cards through a merchant account or a payment service provider isn’t free; each charges service fees to facilitate those payments. As you get ready to accept credit card payments, consider how those fees factor into your operating and overhead costs. 

If the fees are going to take a serious bite out of profits, you might compensate by increasing prices for your products or services. Or you could add on a surcharge or convenience fee for processing credit card transactions below a certain dollar amount. But be sure that you’re aware of state and federal regulations on credit card surcharges to avoid any illegal practices.

Can Companies Refuse to Accept Credit Cards?

Yes. However, it’s not a great idea for the business. Any business is within its rights to refuse a method of payment. The question is whether this will affect their customer base by doing so, especially as the use of non-cash payments is growing fast.

Can You Accept Credit Card Payments Without a Merchant Account?

Yes. You can accept credit card payments without a merchant account by using a third-party processor. Third-party processors work through a different business model, which allows you to accept these payments into a standard business account. This can provide an easy way for very small businesses to accept credit card payments.

How Much Do Small Businesses Pay in Credit Card Fees?

Credit card processing fees will typically cost a business 1.5% to 3.5% of each transaction’s total. For a sale of $100, that means you could pay anywhere from $1.50 to $3.50 in credit card processing fees. For a small business, these fees can be a significant expense. However, most businesses find that this is more than made up for by the increase in sales associated with taking credit cards.

The Bottom Line

Nowadays, it’s unusual to find a small business that doesn’t accept credit cards. This is because giving customers as many options as possible when it comes to payment can drive sales and boost customer satisfaction. And while there are some risks and costs associated with accepting credit card payments, these generally are more than made up for by an increase in convenience and sales.

Article Sources
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  1. National Federation of Independent Business. “Top 10 Benefits of Accepting Credit Cards.”

  2. Deloitte. “Getting Ahead of the Curve.”

  3. Mastercard. “Mastercard Study Shows COVID-19 a Catalyst for Digital B2B Payments Adoption.”

  4. Federal Deposit Insurance Corporation. "Risk Management Examination Manual for Credit Card Activities," Pages 164-166.

  5. Payment Depot. “What Are the Average Credit Card Processing Fees That Merchants Pay?

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