Key takeaways

Many card processing providers offer similar services. Finding the best fit comes down to the number of transactions you expect to process and how you plan to accept payments -- in person, online or over the phone.

In-person payments come with lower processing fees, while over-the-phone payments can be more costly due to the risk no-card-present transactions attract.

When weighing options, don't simply go for the cheapest: Think about your business's needs and whether the provider offers tools that can scale with your business as it grows.

In a small business, every sale matters. So, when you don't accept credit card payments, you could miss out on customers who prefer swiping their card over cash.

Since today's best credit cards offer enhanced security features, generous spending limits and rewards, who wouldn't want to pay with plastic? Whether you're running an online store, getting a side hustle off the ground or boosting an already booming storefront, your small business can accept credit card payments with the help of an affordable credit card processor.

Steps to begin accepting business credit card payments

You might want to start by researching Bankrate's Small Business Hub before you let your customers swipe to their heart's content. But once you nail down the right credit card processor with affordable processing fees and the type of payment terminals you need, it's a breeze. Follow these four steps to start accepting credit card payments at your small business:

1. Find a credit card processing provider for your small business

There's no shortage of credit card payment processors offering similar services, but to find the right one, you'll need to consider a few things about how your business currently handles payments. You can start by answering the following questions:

How will you primarily process credit card transactions? In person, online and over the phone?

What type of credit cards do you plan to accept? Visa, Mastercard ( MA ), Discover, American Express ( AXP ) or all of them?

How much of a processing fee are you comfortable with? Processing fees vary among transaction types and card networks. Find the provider that offers the most competitive fees for the type of transactions and credit cards you'll process the most.

How many transactions do you process on average? Some providers offer better rates for processing higher transaction volumes.

If you run an online-only business, make sure the payment processor you choose integrates easily with your website. For brick-and-mortar businesses, you might need to purchase certain hardware and software -- like payment terminals -- which then need to be compatible with your current point of sale (POS) system.

2. Compare pricing

Once you narrow down the credit card processing providers you're thinking of working with, get quotes or an estimate from each so you can compare them side-by-side. You're not just looking at price -- you also need to consider how many transactions they allow you to process, whether you'll need to buy or rent their preferred equipment and payment processing times.

3. Open a merchant account

For in-person transactions, you'll need to have a merchant services account if you don't already have one. Most banks offer in-house merchant services for business account holders to help them accept multiple forms of payment, keep track of sales and offer loyalty programs. Other providers, like Intuit, Clover and Square, offer merchant services separate from your bank and need to be connected to your business bank account.

Since online companies don't typically accept in-person payments, this often means less hardware and a lower cost than the requirements for a physical business. Online businesses, like freelancers or online stores, often lean on prevalent payment service providers like Paypal ( PYPL ), Stripe or Square to process payments from their customers directly to their business bank accounts. And yes -- you do need a business account to enable your company to accept credit card payments.

4. Set up payment terminals

The final step to accepting credit card payments is setting up payment terminals across your business. You'll probably skip this step if you're an online business since you'll accept payments through secure online payment gateways instead.

If you have a brick-and-mortar shop, this involves ordering and setting up hardware, like a card reader and a point-of sale (POS), if you don't have one already. There are many card readers on the market that let you accept payments via a swipe, an inserted chip or a contactless tap.

If you do any sales online, you'll need to set up online payments too. E-commerce platforms like Shopify ( SHOP ) have a built-in payments portal. If you've built your own website, you may need technical support from your card processing provider or website developer to set up small business credit card acceptance through your website.

Bankrate's take

Concerned about learning to use a new system? Most credit card processing providers offer training resources to help you (and your staff) make the most of their hardware and software. Check to see what training your card processor offers.

Ways to accept credit cards

There are three main paths to credit card acceptance for small businesses. Businesses can choose to accept credit card payments in person, online and over the phone. These methods come with their own technology needs and incur different fees.

In-person

In-person credit card processing is useful for brick-and-mortar retailers, on-site service providers -- think plumbers or HVAC servicing -- and mobile business merchants (like food trucks or farmers market vendors). These types of transactions call for a mobile card reader.

With in-person transactions, the customer physically presents the card to make a purchase, or they use a digital wallet on their phones NFC transactions. Because the cardholder and card, digital or physical, are present for these types of transactions, they're considered a lower risk of fraud, which in turn carries lower fees than other types of transactions.

You'll need a card reader and a POS system to process credit card payments in person.

Fixed location payment systems

Most fixed location payment systems generally include the hardware and software needed to process and manage transactions at its fixed location. While setup costs can be significant, the system can often provide functionality by synchronizing with the business's ordering system, managing daily cash flow, printing receipts, tracking inventory or building loyalty programs and discounts.

Most established stores prefer a countertop POS system to accept transactions, operate the cash drawer and print receipts for customers. If your business doesn't need that extra functionality or already has a POS system in place, you could opt for a cheaper stand-alone credit card reader to accept swipe, chip (EMV) or NFC transactions.

Mobile device payments

Mobile device payments are optimal for businesses that move to different locations, such as farmers markets, trade shows or contractors working on home repairs and services. With the increase of digital wallet payments, the ability to accept mobile payments has quickly grown in importance. Mobile device payment options can also offer some of the inventory and tracking capabilities of a full-fledged fixed payment system, while also having the functionality to operate as a part of a larger fixed location system.

POS systems and payment processors offer portable credit card readers to pair with your smartphone or mobile app. Many of these devices connect to your phone through the headphone port or via Bluetooth. Depending on the device you choose, they can also accept swipe, chip (EMV) or NFC transactions. A good system ideally features shopping cart integration, an easy-to-use payment page or the ability to send payment links for customers to pay directly.

Best for in-person retail

Paypal

Details

PayPal ( PYPL ) started as a way to transfer money between friends and family, but the company now offers merchant solutions for processing credit cards both online and in person. Paypal ( PYPL ) is widely trusted amongst individuals and businesses and has competitive transaction fees.

Retail businesses tend to enjoy its multitude of options, which makes PayPal ( PYPL ) customizable to their needs. But the vast array of options can also be a double edged sword if you suffer from analysis paralysis. Take your time to work through its offerings and determine which option and fee structure best suits your business.

Pros and cons

Pros

Widely trusted name that helps build confidence with customers

Competitive transaction fees with other providers

Multiple options for processing credit cards, including checkout for online payments, a POS system and invoicing for billing for services

Cons

Difficult to decipher differences and choose one that works best for your business

Many account services -- including chargeback protection, account monitoring and recurring billing -- require additional fees

Fees

PayPal ( PYPL ) charges the following processing fees for credit card payments.

Best for mobile businesses

Square Payments

Details

Square is known for its innovative, petite card reader that attaches to smartphones, turning any device into a payment terminal. You've likely seen these when ordering from mobile vendors like food trucks or the larger registers that local cafes and small businesses have. These card readers don't take much set up or extra hardware.

Pros and cons

Pros

Square is a leader in smartphone credit card reader hardware.

Its mobile card reader is typically offered to its merchants for free.

The card reader works offline to allow for credit card payments in places without reliable Wi-Fi.

Contactless payment solutions are also available.

Cons

High fees for in-person transactions.

Fees

As of publishing, Square charges the following processing fees for credit card payments:

Online

To accept online credit card payments, you'll need a digital storefront, such as an e-commerce store or website, and a payment gateway. E-commerce shops, restaurants accepting orders online and companies providing digital services are all examples of businesses that rely on online credit card processing. Online transactions typically have higher processing fees than in-person transactions since there is a higher potential for fraud.

Direct payment link

Direct payment links can help reduce the need to deal with cash and are becoming increasingly more popular as more businesses shift to an online and cashless operation. Merchants can create a shareable link from the payment service provider which can be sent to customers via email, text message or through an invoice to easily make direct online payments. The customer simply has to click the link and follow the instructions you set to make their payment faster and more efficiently.

Online shopping cart

Online shopping carts are used by online retailers, allowing customers to browse their site for the products they want, add them to a shopping cart and pay online. The customer provides their billing and shipping information along with their credit card information to finalize their order. Frequent shoppers can opt to store their information to expedite the checkout process for future orders.

Payment page

Another online payment option would be to set up a centralized payment page. These differ from online retailers since they don't involve adding products to a cart. Instead, customers can securely enter their credit card, billing information and the amount they want to pay to finalize their payment. These are generally used for charitable organizations, medical billers or contractors with fixed pricing that has previously been provided to the customer

Best for e-commerce

Shopify

Details

Shopify ( SHOP ) helps businesses sell products online with its top-rated e-commerce platform. Shopify Payments supports in-person and online credit card payments. The biggest plus with Shopify ( SHOP ) is that your e-commerce platform and payments are handled in one place which is perfect for busy online boutique owners. However, if you don't have your website through Shopify ( SHOP ), it won't process payments.

Pros and cons

Pros

Built to be used with Shopify's ( SHOP ) signature e-commerce platform

Offers competitive fees for processing credit cards

Charges the same fee to process card-not-present transactions as it does online payments

Cons

Must have a website through Shopify ( SHOP ) to access its payment processor

Monthly fee for the platform plus regular credit card transaction fees

Fees

The most basic Shopify Starter plan costs $5 per month and delivers credit card payment processing, invoicing capabilities and the ability to turn your non-Shopify ( SHOP ) website into an e-commerce platform. If you want more robust e-commerce capabilities, you'll need to pay at least $29 per month for a different Shopify ( SHOP ) plan.

As of publishing, Shopify ( SHOP ) charges different processing fees for credit card payments based on your plan. Here's how high they can go:

Best for online businesses that want to scale

Stripe

Details

Stripe specializes in offering sophisticated payment processing solutions that can grow with your company. For online service providers like freelance graphic artists or copywriters, this platform can grow as quickly as you do. Stripe's robust interface helps you easily integrate its payment platform with other software solutions in your tech stack, like accounting and customer relationship management software.

Pros and cons

Pros

Competitive rates for processing online credit card transactions

An application programming interface (API) with options to customize the software to your needs

Financial solutions include invoice processing and quotes designed for businesses with their sights set on growth

Cons

In-person transaction fees are more expensive than those of other providers, making it a bad choice for brick-and-mortar retail

Manually entered or card-not-present transactions are more expensive

Fees

At time of publishing, Stripe charges the following processing fees for credit card payments:

Best for online-only businesses

Venmo

Details

Venmo is known for its safe mobile money transferring service. It primarily works by transferring money between bank accounts, but it has released credit card processing solutions for businesses. For fast-moving businesses like barbers, nail techs or furniture flippers, giving your clients a QR code to scan for payment or by Tap to Pay could eliminate any payment hassles.

To accept credit card payments via Venmo, you'll have to link your Venmo for Business account to Braintree, which is owned by PayPal ( PYPL ). Then, customers will be able to use the Venmo app to make payments through the credit cards and digital wallets linked to their accounts.

Pros and cons

Pros

A familiar and convenient payment method for customers

No additional setup fees

Free standard transfers from your Venmo account to your bank account (usually takes one to three business days)

Cons

Not yet available for in-person payments (but customers can pay through the app while in-store)

Higher cost per transaction to accept online or in-app payments

A fee for instantly transferring money from your Venmo account

Fees

As of publishing, Venmo charges the following processing fees for credit card payments via Braintree:

Over-the-phone

Accepting a credit card payment over the phone is considered a card-not-present or CNP transaction. Restaurants commonly use this type of transaction to accept payment for take-out orders. This process involves the customer sharing their credit card number with the merchant, and the merchant manually entering that information into their card reader.

These types of transactions typically incur the highest processing fees because they pose the greatest risk for fraud. To process credit card payments over the phone, you'll need a credit card reader and a POS or an online payments gateway. Most credit card processors aren't designed to primarily host these types of transactions although some of the previous options offer it as an alternative payment method.

What are the benefits of accepting credit card payments?

When you offer your customers a new way to pay for their goods and services, it has the potential to boost your bottom line. A 2024 Federal Reserve study found that consumer preference for paying with credit cards has consistently increased each year since the initial study in 2016 -- growing from 18 percent to 32 percent within the eight year span of the study. So when customers prefer to swipe, accommodating their payment preferences could pay off.

While the largest benefit might include improved sales, there are other benefits you may have overlooked. Those include:

The safety of carrying fewer large cash deposits to the bank

The ability to conveniently deposit payments directly to your business account

Gaining an edge over cash or debit-only competitors

Quick settlement and deposit times

Fraud protection and prevention measures

The added convenience and speed of payment for customers

Even with the fees for small business credit card acceptance, the benefits often outweigh the costs per transaction.

Credit card processing fees

Credit card processing providers charge fees for the services they provide -- like conducting fraud checks and verifying available funds with the cardholder's bank. The payment terminal conducts these critical security measures in just a few seconds as soon as a customer swipes, taps or dips their credit card.

So, what's the average fee for credit card processing for small businesses? The good news: There typically aren't any monthly fees for credit card processing. Instead, most providers charge fees per transaction, which is based on the type of credit card used (Visa, Discover, Mastercard ( MA ) or American Express ( AXP )). American Express ( AXP ) tends to charge higher fees than its competitors, which is why some businesses don't accept Amex cards.

Fees also depend on which card processing provider you choose, such as PayPal ( PYPL ), Stripe or Square, as well as the way you accept payment. Each one has its own pricing which typically ranges from 1.5 percent to 3.5 percent per transaction plus a flat fee.

Average credit card network processing fees

As a savvy merchant, you're probably looking for the best and cheapest way to accept credit cards. If you weigh your business needs -- like the volume of transactions and where these transactions take place -- you should be able to narrow your search down to several providers that offer convenient solutions at favorable rates.

The bottom line

If you're running a small business in this day and age, taking credit card payments is key to your survival and growth. The number of consumers who prefer the convenience and security (and yes, rewards) of using a credit card is already high and only growing. So, if you're not accepting credit cards, you could be letting potential customers and profits slip away.

By understanding what your business needs out of a credit card processor, you can analyze providers and find one that suits the needs of your business. Although the fees might seem like a cumbersome downside, the benefits of more sales, fraud protection, convenience and competitive advantage could balance the scales.