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Credit card payments have become an integral part of modern business transactions. Credit card payments can be completed in person, online or over the phone. Knowing what credit card payments your business needs to accept will be an important step in learning how to accept payments. 

Also, knowing how to accept credit card payments will allow your business to create more sales. The more payment options you give your customers, the better. In this guide, we will walk you through how to accept credit card payments.

6 steps to accept credit card payments

Traditionally, payments are accepted through a combination of a merchant account and a payment gateway. The merchant account is a business bank account that lets the owner accept credit card payments. If the business sells items in person, it will need a point-of-sale (POS) system to accept card payments. 

The online payment gateway facilitates the transaction processing between the customer’s bank and the card issuer’s bank. Some examples of payment gateways are SecureNet (USA), Authorize.Net (USA) and eWay (Australia and UK). Depending on the service chosen, there can be fees associated with both the merchant account and the payment gateway.

A customer presents a card for payment. The card information is sent to the payment processor, which communicates with the customer’s bank account or card network. Once the issuing bank approves or denies the transaction, the payment processor will be made known of the decision. 

The payment processor then sends this information to the point-of-sale system. Once the transaction is approved, it is added to a batch of transactions that are typically closed at the end of each day. The customer’s account is charged once the transaction is closed and the money is then deposited into the business’s bank account.

Below are the detailed steps of gaining transaction approval: 

1. Sending data to credit card processing service

The online payment gateway or credit card processing system software sends the data to the credit card processing service.

2. Transfer of information to network

The credit card processor transfers the credit card transaction information to the correct payment network.

3. Authorization request

The credit card network sends an authorization request to the cardholder’s issuing bank.

4. Verify identity

The credit card approves or denies the purchase based on the verification of customer identity and available credit. This decision is sent to the payment network.

5. Gain approval

The credit card processing company approves or denies the transaction based on the information conveyed by the payment network. A transaction could be declined if there are insufficient funds, if the account is closed or if credit payments are past due.

6. Customer receipt

The payment processor or point-of-sale system records the sales data and generates a receipt for the customer.

Accepting different types of credit card transactions

Purchases can be processed in person, online or over the phone. No matter the method of choice, the merchant must have a payment gateway where customers can input their payment information and a credit card payment processor that collects payment information and communicates with issuing banks or credit card networks.

Accepting in-person credit card payments

In-person payments typically require a POS system and a card reader to accept the credit card. 

Most payment processing providers offer two types of hardware for in-person transactions:

  • Countertop card readers: These work best for businesses with physical counter space that allows customers to swipe or tap their credit card at the counter.
  • Mobile card readers: These are perfect for businesses that are on the go, like pop-up shops or contractors. They connect to mobile devices through a port or Bluetooth.

Accepting credit card payments online

In order for merchants to accept credit card payments online, they must have three things set up:

  • Digital storefront: This is the business’s online page where products can be showcased and customers can make purchases. These can be hosted on websites or external marketplaces like Etsy or Facebook marketplace.
  • Payment gateway: The payment gateway is the interface the customer inputs tier payment information into.
  • Payment processor: Payment processors communicate between the card issuing bank, credit card network and the receiving bank.

Accepting credit card payments on a phone

Accepting credit card payments over the phone may be the most straightforward method as it does not require any hardware. This involves the customer giving the merchant their credit card information over the phone. 

The merchant then manually inputs the card number into the point-of-sale terminal or interface. This may deter some customers due to privacy concerns.

How much does it cost to accept credit card payments?

Each transaction is subject to certain fees. The business owner has some say over what type of processing fee they incur depending on the method of sale and processing service they choose. 

“Businesses need to understand credit card processing fees because they vary depending on the transaction type and a selected provider. Several payment service providers will be available. These elements need to be balanced with the organizational needs when choosing a provider,” said Andrew Gosselin, a CPA and finance expert at Money Inc.

Credit card processing fees

The flat rate payment structure is a simple flat fee the business is charged for every card they accept. These fees are typically around 2.9% of the transaction total. Flat rate percentages may be a good option for small-business owners who have very low sales volumes or ones that rarely accept credit cards.

Although flat rate percentages are easy to understand and very transparent, they can end up costing a lot more to the business in the long run. Square is a popular example that uses this pricing structure.

Interchange plus fees are fees that the merchant’s bank account must pay to the card issuer, like Visa or MasterCard, when a customer uses a credit or debit card to make a purchase from their store. This rate can be anywhere from 1% to 3% of the transaction amount plus a flat fee.

The interchange amount is not controlled by payment processors, and every merchant is required to pay the interchange. The “plus” is the fixed markup that a credit card processor charges on top of the interchange fee. Interchange rates may fluctuate depending on the card type. The “plus” fee is a fixed percentage of the sale.

Software subscriptions and fees

Most credit card processors have a free app associated with the reader. In rare occasions, if they do not, then there may be a cost associated with the platform. 

Hardware costs

Point-of-sale transactions will require hardware to be able to accept the payment in person. On average, credit card readers can range in prices from free to around $1,000 for a full point-of-sale system. 

Square provides a free reader when you sign up for the payment processing service for the first time.

Top credit card processing solutions

Ideally, the credit card processing company that is chosen will allow merchants to process payments from all major credit cards no matter how they accept payments.


Stripe is an online payment processing solution that is ideal for online businesses looking to expand their customer base globally. With Stripe, businesses can accept payments, send payouts, automate financial processes and grow their brand. 

The platform allows for a one-click checkout and allows easy access to more than 100 payment methods. Stripe allows you to build your own online payment UI with customizable CSS styling options. Overall, Stripe is a highly customizable and user- friendly credit card processing solution.


Square offers credit card processing services and a variety of add-ons and integrations that allow businesses to manage their operations on one platform. Merchants can accept debit and credit card payments on their website with online payment solutions from Square. 

Their standard rates are designed for businesses that handle less than $250k per year and have separate packages for businesses with larger volumes. Square offers a free card reader for first-time users.


PayPal is a credit card processing service that has no upfront costs when setting up an account. PayPal offers a pay-as-you-go pricing model. The per-transaction fee ranges from 1.9% to 3.49%.  

PayPal offers an AI-powered fraud prevention tool which optimizes security for its users. PayPal Checkout allows for card processing as long as the merchant has a PayPal Business account set up.

Frequently asked questions (FAQs)

In order to accept credit card payments, you must find a credit card processing provider for your small business. Once acquired, open a merchant account and set up payment terminals. 

There are three main ways in which your business can accept credit card payments: 

  • In-person.
  • Online.
  • Over the phone.

Merchants can accept payments online and in person without a merchant account by using a payment service provider (PSP). Examples of PSPs include Stripe, Square and PayPal.

Merchant accounts hold funds from a customer sale immediately after the transaction, from which point they can be moved to the merchant’s primary business bank account. While merchant accounts are the traditional way to accept credit card payments, they can be expensive and time-consuming to set up. 

Payment service providers, also known as third-party payment processors or payment facilitators, offer an alternative to merchant accounts. 

Yes, you can accept credit card payments without a card reader. You can use a payment service provider or other mobile applications that enable businesses to process credit card transactions from a smartphone.

Accepting online payments are never truly free, but there are ways to cut costs by choosing the plan or service that fits best for your business. It is nearly impossible to receive online payments without paying a fee to credit card companies, processing networks or payment service providers. 

If businesses choose to use payment platforms like Venmo or PayPal, they are required to report any payments above $600 as taxable income.

In order to accept credit card payments over the phone, you must call the customer and ask them to provide their card details. Then, you can input the card information into your preferred processing software.

Payment gateways are used to securely transfer transaction data from the buyer’s bank to the merchant’s bank. It is the customer-facing interface and processing system that collects, transfers and authorizes customer information to the merchant’s bank.

A point of sale is where the merchant and customer conduct a retail transaction. The point-of-sale (POS) system is a set of devices, software and payment services that allow merchants to make sales in person. This system manages customer purchases, accepts payments and provides receipts.

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Joshmi Joseph


Joshmi has industry experience developing consumer-centric digital products as a product designer and has also gained valuable business skills while working as a product owner on cross-functional teams. She holds a management degree from Tufts University with hands-on experience building small businesses.

Alana Rudder


Alana is the deputy editor for USA Today Blueprint's small business team. She has served as a technology and marketing SME for countless businesses, from startups to leading tech firms — including Adobe and Workfusion. She has zealously shared her expertise with small businesses — including via Forbes Advisor and Fit Small Business — to help them compete for market share. She covers technologies pertaining to payroll and payment processing, online security, customer relationship management, accounting, human resources, marketing, project management, resource planning, customer data management and how small businesses can use process automation, AI and ML to more easily meet their goals. Alana has an MBA from Excelsior University.