More than half of small businesses still don’t accept credit cards, even though 80% of shoppers prefer using them. This gap means missed revenue and fewer opportunities to meet customer expectations.
Accepting credit cards makes any business more reliable, flexible, and accessible. And when paired with Remitly, you can manage international transactions just as smoothly. It’s a simple, smart way to build trust, increase sales, and run your business the way modern customers expect: easy and efficient.
In this article, we’ll break down everything small business owners need to know about how to accept credit card payments—both in person and online.
Accepting credit card payments: an overview
Nowadays, credit card payments are essential for most businesses. Over 80% of Americans owned at least one credit card in 2022, and most are accustomed to the convenience of quick, cashless transactions. Research shows that credit cards remain the second-most popular option for everyday shopping, just behind digital wallets.
If your business does not accept credit cards, you’re at risk of losing customers, often without a second thought. But setting up a payment system isn’t as complicated as it may seem.
By accepting credit cards, you can make your business more accessible, meet customer expectations, and boost your sales.
How credit card payments work
Credit card payments involve different stages, each designed to ensure transactions are handled safely and efficiently. Here’s a simple breakdown:
- Customer makes the purchase: The customer either swipes, taps, or inserts their credit card in person or enters their card details online. Your system captures important payment information (e.g., purchase amount and card details) to initiate the transaction.
- Getting approval: The payment processor (e.g., Stripe, Square, or PayPal) sends the customer’s card details to the bank. The bank checks if the card is valid, if there are enough funds, and whether there are signs of fraud. If everything checks out, the bank approves the payment.
- Batching: At the end of the day, your system bundles all approved transactions into one batch and sends it to the payment processor.
- Getting your money: The payment processor forwards the batch to their respective card network, like Visa or Mastercard. These networks then request the funds from the customer’s bank and transfer the money to your account, minus any fees. This process typically takes a few business days.
- Fees and chargebacks: During this period, you may notice fees charged by both the payment processor and the bank. If any issues arise, the chargeback process can help resolve disputes.
How to accept credit card payments
Choosing how to accept credit card payments depends on the type of business you run. You have to weigh up all your options to make the payment process as seamless as possible for both you and your customers.
In this section, we’ll explore the key differences between online and in-person payments, along with the essentials for setting up both payment system options effectively.
Online vs in-person credit card payments
- Online payments need a secure payment gateway that allows payment processing through an app, website, or other online platforms. While they’re convenient for remote shoppers, online payments require stronger security measures to protect sensitive customer data.
- In-person payments, on the other hand, need a physical point-of-sale (POS) machine or card reader to process transactions in-store. These systems are user-friendly and offer instant transaction processing.
Each payment method serves different needs, but choosing the right system (or even using both) can help your business run smoothly and meet your customers where they are.
Setting up online credit card payment systems
To start accepting online credit card payments, your first step is choosing a payment gateway. Payment gateways are electronic intermediaries that approve or reject payments while the customer is making a transaction. They check the payment information and encrypt any sensitive data before sending it to the payment system processor (PSP) for further processing.
Here are the key factors to consider when choosing a payment gateway:
- Transaction charges: Some payment gateways charge per transaction based on factors like payment method, transaction volume, and whether the payment is international. Some charge monthly or annually instead.
- Installation: Select a gateway provider that integrates easily with your e-commerce platform or website.
- Theft protection: Opt for a provider with robust fraud protection tools, like encryption and advanced fraud detection, to secure customer data.
- Customer support: Ensure that the provider offers reliable customer support to help address issues quickly when they arise.
Understanding online transactions and processing fees
Different payment providers have varying fees and transaction options. Here’s a quick comparison of the most popular gateways:
| Provider | Transaction fees | Supported transactions |
| PayPal | 2.9% + $0.30 (domestic)
4.4% + fixed fee (international) |
Credit and debit cards, eCheck, PayPal balance |
| Stripe | 2.9% + $0.30 (domestic)
3.9% + $0.30 (international) |
Credit and debit cards, digital wallets |
| Square | 2.6% + $0.10 (domestic)
3.5% + $0.15 (international) |
Credit and debit cards, digital wallets |
| Authorize.net | $0.10 per transaction + monthly fee for services | Credit and debit cards, eChecks |
| Braintree | 2.9% + $0.30 (domestic)
3.9% + $0.30 (international) |
Credit and debit cards, digital wallets |
| 2CheckOut | 3.5% per transaction (domestic)
4.5% per transaction (international) |
Credit and debit cards, digital wallets |
| WorldPay | Varies depending on the transaction volume | Credit and debit cards, digital wallets |
Securing customers with safe checkout processes
Security is a top priority for business owners when managing online credit card payments. Your customers expect a safe and seamless checkout process, and any security breach could harm your business’s reputation.
To ensure a safe transaction environment, choose a payment gateway provider that offers advanced data protection tools and strong security features. Most payment gateways use encryption and SSL (Secure Sockets Layer) certificates to prevent data breaches, but some add an extra layer of security with two-factor authentication (2FA) and one-time passwords.
As a business owner, you can also display trust signals (such as a security badge or third-party verification logos) on your website to reassure customers that their payment information is protected. You can also provide clear, step-by-step payment instructions to minimize fraud risks and encourage customers to use strong passwords or verification codes before completing a purchase.
Implementing in-person credit card payment solutions
While online credit card transactions are on the rise, traditional retail and mobile businesses still benefit from an optimized in-person payment system.
If you’re running a physical store or a mobile business, you’ll need a physical machine to handle the processing and verification of in-person transactions. That’s where point-of-sale (POS) systems come into play. POS card readers process payments in-store and act as a digital intermediary between the merchant and the financial institution.
When selecting a POS system for in-person transactions, consider factors such as hardware compatibility, transaction fees, fraud protection, and ease of use. Let’s take a look at some of the most popular Payment Service Providers and their key features:
| Provider | Key features |
| PayPal | Accepts PayPal, credit and debit cards, and mobile wallets in-person |
| Stripe | Supports credit and debit cards, digital wallets, and offers customizable hardware options |
| Square | Includes a mobile card reader, accepts contactless payments, and has a convertible stand |
| Adyen | Supports credit and debit cards, digital wallets, and offers high-level fraud protection |
| GoCardless | Supports automated bank payments (Direct Debit and Instant Bank Pay) |
Conducting in-person transactions securely
Protecting customer information and preventing financial loss are essential when managing in-person transactions.
One key security measure is the use of EMV chip-enabled card readers. Unlike magnetic stripe cards that store static data and can be easily compromised, EMV chip cards encrypt all transaction data and generate a unique code for every single purchase. With this technology, customers can tap their cards on a reader without exposing sensitive data.
Additionally, your POS system must comply with Payment Card Industry Data Security Standards (PCI DSS). These guidelines ensure that your in-person transactions are secure and adhere to official data protection protocols. PCI DSS-certified machines can also be updated to protect against new threats.
However, technology alone isn’t enough to secure in-person credit card payments. Operational practices and employee awareness are also key to preventing fraud. Training your staff to recognize tampered card readers or verify customer identities when necessary will further reduce the risk of fraud.
Managing costs and risks in credit card payment processing
Credit card fees per transaction
Understanding payment processing fees is crucial for small businesses, as they directly impact profitability. Here’s how fees are broken down before the money reaches your business:
- Interchange fees are set by card networks like Visa and Mastercard and are to be paid to the cardholder’s bank. This typically includes a percentage of the transaction amount plus a fixed fee.
- Network fees are also paid to the card networks to cover the cost of maintaining their payment processing systems. They typically amount to a small percentage of the transaction.
- Payment processor fees are charged by Payment Service Providers (PSPs). The amount varies depending on the provider.
Tips for minimizing chargebacks and fraud
| Chargeback | Fraud |
| This occurs when a customer is reimbursed after claiming that a credit card transaction is either incorrect or unauthorized. | Fraud involves a customer attempting to deceive a business with fake or stolen information. |
Chargebacks and fraud are serious concerns. In the US, over 60% of credit card holders have experienced fraud. In 2023, global chargebacks totaled 238 million, with projections expected to reach 340 million by 2026.
Both chargebacks and fraud can cause significant financial loss. Here are some helpful tips for any small business to prevent such losses from happening:
Tip 1: Secure the checkout process
Implement additional security measures to secure your payment process. For online purchases, ask customers for the Card Verification Value (CVV). For in-person transactions, ask for a Personal Identification Number (PIN) or a signature to authenticate the transaction.
Tip 2: Be transparent and provide great customer support
Establish clear return and refund policies, and respond quickly to customer questions or concerns. By addressing problems proactively, you can prevent issues from escalating and maintain a positive relationship with customers.
Tip 3: Keep a record of everything
Maintaining a detailed record of every transaction, communication, and shipping information is vital. These records can help you successfully dispute chargebacks and resolve fraudulent attempts if they arise.
FAQs
How can my business accept credit cards?
Accepting credit card payments involves several steps. First, review payment processors based on your business needs. You can choose providers like Stripe, PayPal, Square, or other reputable companies that securely handle transactions.
Once you’ve chosen a Payment Service Provider (PSP), decide whether you want to accept payments in person, online, or both. After setting up your chosen payment system, you’ll be able to immediately link your bank account to your payment processor to access your funds.
Can I accept credit card payments without a business account?
Yes, it’s possible to accept credit card payments without a business account through Payment Service Providers (PSPs). They process the payments online and send the funds directly to your personal account. Simply sign up, integrate the system, and start receiving payments. However, these services typically charge fees, so it’s a good idea to compare options and choose the one that aligns with your business goals.
What are the benefits of accepting credit card payments for small businesses?
- Stellar customer service: Today’s consumers expect fast, secure, and convenient payment options. Credit card payments speed up checkouts, reduce wait times, and improve the overall customer experience. Without this feature, your business could appear outdated or untrustworthy.
- Increased sales and conversions: Customers tend to spend more with cards than with cash. The ease of tapping or swiping a card can lead to increased impulse purchases, helping your sales grow.
- Reach more customers: Accepting credit cards expands your reach. Whether it’s tourists, online shoppers, or business clients, many customers prefer paying by card. This flexibility helps your business reach more customers and increase revenue.