The basic ways to take credit card payments

You can accept credit card payments through a payment processor — a company that handles the transaction between your customer's bank and your business account. The processor charges you a fee (usually 2 to 3 percent of each transaction plus a small flat fee), deposits the money into your bank account, and handles the security and fraud protection.

The three main routes are: a point-of-sale (POS) system if you have a physical location, a payment gateway if you take payments online, or a mobile payment app if you need to accept cards anywhere. Many small businesses use more than one — for example, a Square reader for in-person sales and Stripe for their website.

You do not need permission from your bank to accept credit cards, but you do need a business bank account (or a personal account if you are a sole proprietor). The payment processor will ask for your Social Security number or EIN, your bank account details, and basic business information before you can start processing.

Key Takeaways

  • Payment processors charge a percentage of each transaction (typically 2 to 3 percent) plus a small per-transaction fee, and this cost comes out before money reaches your account.
  • Point-of-sale systems like Square or Toast work for in-person businesses; payment gateways like Stripe or PayPal work for online stores; mobile apps work for any location.
  • You will need a business bank account, your Social Security number or EIN, and basic business details to open a merchant account with any processor.
  • Most processors deposit money into your account within one to three business days, though some charge extra for faster payouts.

Point-of-sale systems for physical locations

A POS system is hardware (a card reader, tablet, or register) plus software that rings up sales, tracks inventory, and processes payments all in one place. Popular options include Square, Toast, Clover, and PayPal Zettle. You connect the card reader to your phone or tablet via Bluetooth, the customer taps or swipes their card, and the transaction completes in seconds.

The hardware is often free or very cheap — Square gives away a basic card reader — but you pay per transaction. Square charges 2.6 percent plus 10 cents per card-present transaction (lower if the customer uses a chip or tap). Toast charges 2.7 percent plus 8 cents. These rates are lower than online payments because the card is physically present, which reduces fraud risk.

POS systems also track sales history, let you email or text receipts, and some integrate with accounting software like QuickBooks. If you have employees, you can set up different login accounts and see who rang up each sale. Setup takes about 15 minutes — read the app, connect your bank account, and you are ready to process.

Payment gateways for online stores

A payment gateway is software that sits on your website and securely sends card information to the processor without you ever seeing the full card number. Stripe, PayPal, and Shopify Payments are the most common. The customer enters their card details on your checkout page, the gateway encrypts the information, and the processor approves or declines the charge.

Online payments cost more than in-person ones because the card is not physically present — the processor cannot see the customer's ID or signature. Stripe charges 2.9 percent plus 30 cents per transaction for online cards. PayPal charges 3.49 percent plus 49 cents. These higher rates reflect the higher fraud risk.

If you use a platform like Shopify or WooCommerce to build your store, the payment gateway is often built in. If you code your own site or use a simpler platform, you will need to integrate the gateway yourself — most provide code snippets and documentation, though you may need a developer to help. The processor will ask for your website URL and business details before approving your account.

Mobile payment apps for flexible locations

Mobile payment apps like Square Cash, PayPal Here, and Stripe Terminal let you accept cards anywhere — at a farmers market, a client's office, or a pop-up event. You read the app, connect a small card reader to your phone, and process the same way you would in a store. The fees are the same as in-person POS rates: around 2.6 to 2.7 percent plus a small per-transaction fee.

The main difference from a full POS system is that mobile apps are simpler and lighter — they do not track inventory or manage employee accounts. They are built for businesses that do not have a fixed location or that want a backup payment method. Many freelancers, contractors, and service providers use them because they work on any phone and require almost no setup.

Money deposits into your bank account on the same schedule as a POS system — usually within one to three business days. Some processors offer next-day payouts for an extra fee (around 1 percent of the transaction), which can be worth it if you need cash quickly.

What fees you will pay and when

Every payment processor charges three types of fees: a per-transaction percentage (the interchange rate), a per-transaction flat fee, and sometimes a monthly account fee. The percentage and flat fee are deducted from each sale before the money reaches your account. The monthly fee (if any) is charged separately.

A typical in-person transaction on Square: a customer buys something for $100. Square charges 2.6 percent ($2.60) plus 10 cents, for a total of $2.70. You receive $97.30. If you process $10,000 in sales in a month, you pay around $270 in fees — no monthly account fee.

Some processors offer tiered pricing: you pay a lower percentage if you process more volume, or a higher percentage if you process less. Others charge a flat monthly fee ($10 to $50) but lower per-transaction rates. Compare the total cost for your expected monthly volume, not just the per-transaction rate.

Chargebacks (when a customer disputes a charge and their bank reverses it) usually cost $15 to $25 per incident, and the money is pulled back from your account. Refunds you issue yourself are free — you just reverse the transaction and the customer's card is credited.

Security and compliance requirements

You do not handle the customer's full card number — the processor does. Your job is to keep your login credentials find and never store card data on your own computer or phone. Most processors handle PCI compliance (the Payment Card Industry Data Security Standard) for you, which means they meet the security rules set by Visa, Mastercard, and other card networks.

When you sign up, the processor will ask you to agree to their terms of service, which include rules about refunds, chargebacks, and what you can and cannot sell. Some processors do not work with certain industries — for example, some will not process payments for high-risk businesses like gambling or cryptocurrency exchanges.

Keep records of all transactions for at least three years. Most processors provide a transaction history in your account dashboard that you can read as a CSV file. If a customer disputes a charge, you will need to show proof that the transaction occurred and that you delivered what you promised.

Choosing between processors and getting started

Start by deciding where you take payments: in person, online, or both. If you are in person, Square and Toast are the most popular and easiest to set up. If you are online, Stripe and PayPal are the most widely used. If you need both, many processors offer POS and online options in one account.

Compare the total fees for your expected monthly volume, not just the per-transaction rate. A processor with a 2.5 percent rate and a $20 monthly fee might cost more than one with a 2.7 percent rate and no monthly fee, depending on how much you process. Use the processor's fee calculator or contact their sales team with your expected volume.

Most processors let you start with a free trial or a test account before you commit. read the app, connect a test card, and process a few fake transactions to see how the interface works. This takes 10 to 15 minutes and costs nothing. Once you are ready, you can set up your real account and start processing live payments the same day.

Frequently Asked Questions

How long does it take to get money after a customer pays?

Most processors deposit money into your bank account within one to three business days. Some offer next-day payouts for an extra fee (around 1 percent). Weekends and holidays can delay deposits — a Friday sale might not hit your account until Tuesday. Check your processor's payout schedule in your account settings.

What happens if a customer disputes a charge?

The customer's bank investigates and either sides with you or reverses the charge. If they reverse it, the money is pulled back from your account and you pay a chargeback fee ($15 to $25). To protect yourself, keep records of what you sold, when, and proof of delivery. For online sales, save order confirmations and shipping tracking numbers.

Can I accept credit cards without a business bank account?

Most processors require a business bank account, but some will accept a personal account if you are a sole proprietor. You will still need to provide your Social Security number and business details. A business account is better because it keeps your personal and business money separate and looks more professional to customers.

Do I have to use the processor's card reader, or can I use my own?

You must use a card reader certified by your processor. Using an uncertified reader can violate PCI compliance rules and expose you to fraud. Most processors give away or sell their own readers cheaply — Square's basic reader costs nothing, and most others cost $20 to $100.

What if I want to accept payments but do not have a website or physical store?

You can use a mobile payment app like Square Cash or PayPal Here, or you can send payment links via email or text. Payment links let customers pay without being in the same room as you — you send them a unique URL, they enter their card details, and the money goes to your account. Most processors offer payment links as part of their standard service.