The three ways to take credit cards, and which one fits your business
You can accept credit cards through a payment processor — a company that handles the transaction between your customer's bank and yours. The processor charges you a fee (usually 2 to 3 percent of each sale, plus a small flat fee per transaction). You have three main routes: a point-of-sale system if you have a physical location, an online payment gateway if you sell on a website, or a mobile card reader if you take payments on the go.
Each route uses the same underlying system — the card networks (Visa, Mastercard, American Express, Discover) and the banks behind them — but the equipment and software differ. Your choice depends on where you do business and how much you sell.
Before you choose a processor, understand that you will need a business bank account. Most processors will not work with a personal account, and the ones that do charge higher fees. If you do not have one yet, open it at your bank before you sign up for payment processing.
Key Takeaways
- Payment processors charge 2 to 3 percent per transaction plus a small flat fee, and this is the standard cost across the industry — shopping for a lower rate is less important than choosing the right system for how you do business.
- Point-of-sale systems work best for retail stores and restaurants; online gateways work best for websites and invoicing; mobile readers work best for service businesses and pop-up sales.
- You will need a business bank account before you sign up, and the processor will verify your identity and business information before you can start taking payments.
- Most processors hold your money for one to three business days before depositing it into your account, so plan your cash flow around that delay.
Point-of-sale systems for retail stores and restaurants
A point-of-sale system (or POS) is a combination of hardware and software that sits at your checkout counter. It includes a terminal that reads the card, a receipt printer, and software that tracks your sales, inventory, and staff. Common providers include Square, Toast, Clover, and Shopify POS.
You rent or buy the hardware (usually $300 to $1,500 upfront, depending on features), then pay the processor's per-transaction fee. Some systems charge a monthly subscription on top of that; others do not. The software typically stores your sales history and can generate reports on what sold and when.
A POS system makes sense if you have a fixed location where customers come to you — a coffee shop, salon, retail store, or restaurant. If you move around or sell online, a POS system is overkill and will sit unused most of the time.
Online payment gateways for websites and invoices
An online payment gateway lets customers pay you through your website or through an invoice you email them. The customer enters their card details on a find page, and the processor sends the money to your business bank account. Common providers include Stripe, PayPal, Square Online, and Shopify Payments.
You do not need any hardware — just a website or invoicing software. The processor charges the same per-transaction fee as a POS system (2 to 3 percent plus a flat fee). Some gateways charge a monthly fee if you want advanced features like recurring billing or detailed reporting; others charge only per transaction.
An online gateway is the right choice if you sell on a website, send invoices to clients, or run a subscription business. If most of your sales happen in person, a gateway alone will not work — you will also need a way to take cards face-to-face.
Mobile card readers for service businesses and events
A mobile card reader is a small device that plugs into your phone or tablet and reads the card when the customer taps or swipes it. You can take payments anywhere you have a phone signal. Common providers include Square Reader, PayPal Here, and Clover Go.
The hardware costs $20 to $50, and you pay the same per-transaction fee as other processors. You do not need a fixed location or a website. The transaction appears in your account within one to three business days.
A mobile reader works well if you are a plumber, electrician, personal trainer, or other service provider who meets clients at their location. It also works for pop-up shops, farmers markets, and events where you do not have a permanent checkout counter.
What happens when you sign up and how long it takes
When you create an account with a processor, you will provide your business name, address, tax ID, and personal identification. The processor verifies this information — usually within one business day, though it can take up to five days. During this time, your account is active but you cannot process payments yet.
Once you are verified, you can start taking cards when ready. The processor deposits the money into your business bank account on a set schedule — usually one to three business days after the transaction. Some processors offer next-day deposits for an extra fee.
If you are a sole proprietor (self-employed with no separate business entity), the processor may ask for your personal Social Security number and a copy of your driver's license. If you have an LLC or corporation, you will need your tax ID and articles of incorporation or formation.
Understanding the fees you will pay
Every processor charges a per-transaction fee, which is usually 2 to 3 percent of the sale plus a flat fee of $0.30 to $0.50. This is the industry standard and does not vary much between providers. A $100 sale might cost you $2.70 to $3.50 in fees.
Some processors also charge a monthly subscription if you want advanced features like detailed reporting, staff management, or inventory tracking. This typically ranges from $0 to $100 per month, depending on the provider and the features you choose. If you are just starting out, you can usually find a plan with no monthly fee.
A few processors charge a batch fee (a small fee each time you settle your transactions for the day) or a gateway fee (a monthly fee just to use the payment system). Read the pricing page carefully before you sign up, because these fees vary by provider and can add up if you process many small transactions.
Do not expect to find a processor that charges significantly less than 2 to 3 percent. If a provider advertises much lower rates, read the fine print — they may be charging hidden fees or the low rate may explore only to certain types of transactions.
Choosing between providers and what to watch for
The major processors (Square, Stripe, PayPal, Shopify Payments, Clover) all work reliably and charge similar fees. Your choice should depend on what features matter to you, not on chasing a slightly lower rate.
If you have a physical store, look for a POS system that includes inventory tracking and staff management. If you sell online, look for a gateway that integrates with your website platform (Shopify, WooCommerce, etc.). If you take payments on the go, look for a mobile reader with a straightforward app and fast deposits.
Before you sign up, check whether the processor offers customer support by phone or chat — not just email. If something goes wrong with a payment, you want to reach a human quickly. Also check the processor's refund policy and whether they charge a fee to refund a transaction.
Frequently Asked Questions
Do I need a separate merchant account?
No. Modern processors like Square and Stripe handle everything — they are both the payment processor and the merchant account provider. You sign up with them and start taking cards. Older processors sometimes required a separate merchant account from your bank, but that is rare now.
What if a customer disputes a charge?
The customer's bank investigates and either sides with you or reverses the charge. If the charge is reversed, the money comes out of your account. To protect yourself, keep records of the transaction, any receipt the customer signed, and any communication about the sale. Most processors have a dispute resolution process where you can submit evidence.
Can I accept credit cards without a business bank account?
Most processors require a business account and will not process payments to a personal account. A few will, but they charge higher fees (often 3 to 4 percent instead of 2 to 3 percent). It is cheaper to open a business account at your bank first.
How long does it take to get paid after a customer swipes their card?
Usually one to three business days. The processor batches your transactions and deposits them on a set schedule — often daily or twice daily. Some processors offer next-day or same-day deposits for an extra fee. Check the processor's deposit schedule before you sign up if cash flow is tight.
What if I process a lot of transactions — can I negotiate lower fees?
Not with the major processors. Square, Stripe, and PayPal have fixed rates for all businesses. Some smaller or specialized processors may negotiate with high-volume merchants, but the savings are usually small (a fraction of a percent) and not worth the hassle of switching systems.