How to Accept Credit Card Payments: A Retailer’s Guide

To accept credit cards in your retail store, you need a payment processor, a card reader or terminal, and a point-of-sale (POS) system to record sales. The Federal Reserve reports that cards accounted for 79% of U.S. noncash payments by number in 2024, making card acceptance a basic part of retail checkout.

Customers expect to pay by inserting a chip card, tapping a card or phone, or swiping when needed. A standalone reader can accept payments, but connecting it to your POS system also links each sale to your inventory and sales reports.

This guide explains how to set up card payments, how processing works, which fees to expect, and what to compare when choosing a provider.

Watch: Learn more about accepting credit card payments in this video.

Key Takeaways

• To accept credit card payments, choose a payment processor, complete the application process, set up your payment hardware or online gateway as needed, and run test transactions.
• Credit card processing involves several parties, including the customer, merchant, payment processor, acquiring bank, card network, and issuing bank.
• Processing costs can include interchange, network assessments, processor markups, transaction charges, and monthly or additional service fees.
• Integrated POS payment processing links sales with inventory, customer transactions, and reporting, thereby enabling retailers to bypass manual reconciliations.
• Secure payment hardware, PCI DSS requirements, encryption, and employee training all play a role in protecting cardholder data.

How to Set Up Credit Card Payments for Your Retail Business

Setting up card payments sounds like a big project, but it’s just these nine small steps. Do them in order and you’ll be ready for your first real sale.

Choose a Payment Processor

Your payment processor moves transaction data between you, the customer’s bank, and the card networks, so this choice affects everything that follows. Look for one that serves retail and works with your register.

Not sure you need a separate processor? Our post on how a POS and a payment processor differ breaks it down.

Apply for a Merchant Account or Payment Service

Card sales need a place to land before they reach your bank. That’s either a merchant account, which is set up just for your business, or a payment service, where the provider manages the account for you.

A merchant account usually costs less at high volume but takes longer to get approved. A payment service starts faster, though rates are often higher.

Choose Your Payment Hardware

Choose devices that accept chip, tap, and swipe payments. A countertop PIN pad works well for most stores, while a handheld terminal can be useful when you need to take payments on the sales floor.

An all-in-one setup like FTx POS brings your register, payment terminal, and cash drawer together, giving you fewer vendors to contact when you need support.

Connect Your Payment System to Your POS

This is where card payments start working for you instead of just collecting money. When your terminal talks to your POS, each sale updates inventory and reports without anyone typing it in.

Clean sales data also makes sales forecasting more reliable. Our guide to
integrated payment processing covers what to look for.

Configure Accepted Payment Methods

Decide which cards and wallets you’ll take, then switch them on. Most stores accept Visa, Mastercard, Discover, American Express, debit, and phone wallets, but check fees first, since American Express often costs more.

Set Up Online Payments if Needed

If you sell online too, you’ll need a payment gateway, which is the secure checkout that connects your website to your processor. Ask whether it shares reports with your in-store system.

Run Test Transactions

Test transactions using a chip card, contactless card, debit card, and mobile wallet. Then process a refund and confirm that the receipt prints and the transactions appear correctly in your reports.

Configure Security and Compliance

Security is not a one-off thing to be set. Enable encryption, change all default passwords, and fill out all Payment Card Industry Data Security Standard (PCI DSS) documentation, which we discuss further below.

Start Accepting Payments

Once the tests pass, you’re live. Compare your first week of deposits with your daily sales reports, and call your provider right away if the totals differ by more than the fees.

Key Participants in the Credit Card Payment Process

A single tap involves seven parties, and each one has a different job. Here’s who does what.

How Does Credit Card Processing Work?

Approval takes a couple of seconds at the counter, but the full process runs through eight steps. Here’s the path one sale takes.

Customer Initiates Payment

The customer taps, dips, or swipes a card, or holds up a phone. That starts everything else.

POS/Terminal Captures Payment Data

The terminal reads and encrypts the card details, then pairs them with the sale amount from your POS. These details include Protected Cardholder Data (PCD), or sensitive or confidential payment card information.

Processor Sends Authorization Request

Your processor sends the details through the card network to the customer’s bank. It’s asking one question: can this customer pay this amount?

Issuing Bank Approves or Declines

The issuing bank checks for funds or credit and signs of fraud, then sends back an approval or a decline within seconds.

Transaction Is Completed

The receipt prints and the shopper walks out, but your money hasn’t moved yet.

Transactions Are Batched

The day’s approved sales are grouped into a batch, often at close of business. Closing the batch sends them off for payment.

Funds Are Settled

The issuing bank pays the acquiring bank, which deposits the money in your account minus fees. This typically takes one to two business days.

Transaction Data Is Recorded

Every sale lands in your reports with the card type, time, and amount. If a customer later disputes a charge, that’s called a chargeback, and this record is what you use to contest it.

Tired of a terminal that doesn’t talk to your register? FTx POS builds card payments into the same system as your inventory and loyalty, so nothing gets matched up by hand. See what it takes to switch to an all-in-one retail POS.

Types of Payment Processing Solutions for Small Businesses

It all comes down to where you do business, how many transactions you process, and how closely you need payments tied to your register.

Integrated POS Payment Processing

Card acceptance is built into the system that runs your register. It suits most retail stores, because each sale updates inventory, loyalty, and reports automatically.

Standalone Payment Terminal

A standalone terminal takes cards and nothing else. Staff must enter each sale in the register separately, which is where mismatched totals come from.

Online Payment Gateway

A payment gateway is the checkout engine for an online store. You need one for web sales, but it won’t see what happens at your counter.

All-in-One Payment Solutions

These combine a merchant account and a gateway in one package, so setup is quick. Stripe is a well-known example. They suit new sellers, though flat rates get costly as volume grows.

High-Risk Payment Processing

Some industries see more fraud or chargebacks, so mainstream providers may turn them down or charge more. Smoke shops, vape stores, and CBD retailers are common examples.

If that’s your store, look for a specialist. Our post on credit card processing for smoke shops explains what to expect.

Credit Card Payment Methods Retailers Should Support

Shoppers expect more than a swipe. Offer these four, and you’ll cover most customers at your counter.

EMV Chip Payments

EMV, short for Europay, Mastercard, and Visa, is the chip standard. The chip creates a one-time code for each sale, so a stolen card number is far less useful to a thief.

Contactless Payments

Contactless payments commonly use near-field communication (NFC), allowing customers to tap a contactless card or phone instead of inserting a card. In 2022, 20% of in-person general-purpose card payments in the U.S. were contactless by transaction count, according to the Atlanta Fed, using Federal Reserve Payments Study data.

That’s one in five card sales at the counter, which is too many to ignore.

Mobile Wallets

Apple Pay, Google Pay, and Samsung Pay store a card on a phone or watch. They’re safer than plastic because the wallet sends a token instead of the real card number.

Card-Not-Present Payments

Card-not-present (CNP) payments happen when the card isn’t there, such as online, phone, and keyed-in orders. They carry higher fees and more fraud risk, since no chip or PIN proves the cardholder is present.

How to Choose a Credit Card Payment Processor for Your Retail Business

The right processor needs to suit your checkout workflow, disclose its fees clearly, and offer the payment methods your customers use. Don’t choose based on an advertised rate alone; consider the full service the provider offers.

You may also come across the term merchant services provider (MSP) when comparing payment solutions. An MSP provides services that help businesses accept and manage electronic payments, including credit and debit card transactions.

Here’s what you need to look out for:

Compare Total Processing Costs

Check out the transaction fees, processor markup, network fees, monthly fees, equipment fees, and anything else that is applicable. You may want to ask for an example of their statement so you can calculate the total cost of processing your sales.

Check POS Integration

Make sure that your processor is compatible with your POS and that your connection will allow for authorizations, denials, returns, and transaction logs. If you use inventory management and/or loyalty programs, make sure that your payment information integrates with these services.

Check Payment Methods

Make sure that the provider will accept the methods of payment that your customers would use. If you are running an online business, ask about the gateway service fees.

Evaluate Hardware

Look into the payment options available on the terminal, its dependability, warranties, and whether or not the terminal is compatible with your register. Don’t focus on the card reader by itself, but look at the entire setup, including the scanners and the cash drawer.

Review Security and Compliance

Find out what security controls the provider uses and how you have to act to become compliant yourself. Ensure that you know how your card data is safeguarded, whose responsibility it is to apply software patches, and how you will perform the necessary PCI DSS validation.

Evaluate Support

Issues with payment processing will cause delays during checkout and reconciliations. Inquire when the help desk is available, how communications will take place, and whether the team is capable of dealing with POS systems and payment terminals.

Check Settlement and Reporting

Find out when payments are deposited, what charges appear on your statements, and how refund and chargeback amounts are recorded. You want to have reports that help you compare your POS sales against payments and banking transactions.

Consider Scalability

A payment solution that is adequate for one register will not be sufficient for multiple registers or an expanding ecommerce business. Make sure that the service provider can accommodate extra terminals, locations, online payments, and future integrations that you may require.

If separate payment tools are creating extra work at checkout, look for a POS that connects sales and payment records in one workflow. Explore FTx POS to see how an integrated retail system can support day-to-day store operations.

Payment Processing Fees: What to Expect

Payment processing costs and fees vary widely depending on the payment provider, the type of transaction, the payment method used, and other factors. Generally, payment processing fees include:

1. Merchant Account Fees

A merchant account includes a monthly fee. These fees include account maintenance charges, statement fees, and/or gateway access fees.

2. Transaction Fees

This is a fee for each individual transaction. It can be a fixed fee, a percentage of the transaction amount, or a combination of both. These fees cover the costs of processing the payment.

3. Interchange Fees

The card-issuing bank may charge the merchant’s bank a processing fee. Interchange fees vary based on factors like the type of card (credit, debit, rewards, etc.), the transaction method (card-present, card-not-present), and the industry. American Express, for example, has a higher interchange fee.

4. Assessment Fees

Card networks charge assessment fees. Typically, these are fixed fees that vary based on the network and the type of card.

5. Chargeback Fees

Chargeback fees occur when a customer disputes a transaction. Merchants often have to pay a fee for each chargeback to cover administrative costs.

Other Fees

In addition, there are some less common fees you should be familiar with. These fees occur based on the type of account you have:

• Cross-Border Fees: If you’re processing international payments, there might be additional fees for currency conversion, cross-border transactions, and compliance with international regulations.
• Monthly Minimum Fees: Some payment processors might require a minimum processing volume each month. If your business doesn’t meet that minimum, the provider may charge an additional fee.
• Gateway Fees: If you’re using a payment gateway to securely transmit payment data between your website and the payment processor, there might be associated gateway fees.
• Additional Services: Some payment processors offer additional services such as fraud protection, subscription management, and reporting tools. These services might come with their own fees.

To get specific information about payment processing costs and fees, it’s best to contact payment processing providers directly and ask for a detailed breakdown of their pricing structure based on your business’s needs.

What Does It Cost Per Transaction?

The cost per transaction that you pay can vary significantly. This is generally dependent on the volume of transactions your business does and the provider’s fee structure. However, most credit card processors structure their fees using one of the following methods:

• Flat Fee: Some payment processors charge a flat fee per transaction. This fee could range from around $0.20 to $0.50 per transaction, regardless of the transaction amount. This model is common among providers targeting smaller businesses and online startups.
• Percentage Fee: The most common structure. Your processor charges a percentage fee based on the transaction amount. This percentage could be around 2% to 3% of the total transaction. This model is good for larger businesses and those with higher transaction volumes.
• Tiered Pricing: Some processors use a tiered pricing model where the percentage fee depends on the type of card used for the transaction. The fee might be lower for debit cards and higher for rewards cards.
• Interchange-Plus Pricing: This model provides transparency by passing on the actual interchange fees from the card networks along with a separate markup set by the POS payment processor. This markup is a fixed percentage over the interchange cost, plus a flat fee.
• High-Risk Business Fees: If your business is high-risk due to your industry or other factors, you might face higher transaction fees to account for the increased risk. This is common for products like kratom, electronics, or other industries prone to fraud.

Credit Card Payment Security and PCI Compliance

Card security comes with the job once you take cards. Here are the seven layers that do most of the work.

PCI DSS

PCI DSS is the rulebook for handling card data. It’s maintained by the PCI Security Standards Council, which American Express, Discover, JCB, Mastercard, and Visa founded in 2006.

The Council doesn’t enforce the rules itself. Your processor or acquiring bank tells you how to prove compliance, often with a self-assessment questionnaire.

Encryption

Encryption scrambles card data so it’s unreadable if someone intercepts it. It should be on from the moment the card is read.

Tokenization

Tokenization replaces the credit card number with a random token. Your company will store the token and not the credit card, making any breach useless to the thief.

EMV

EMV chips make counterfeit cards much harder to use at your counter. Insert the chip whenever possible and avoid falling back to the swipe unless the chip fails.

Point-to-Point Encryption

With point-to-point encryption (P2PE), the card data is encrypted until the data makes it to the processor from the terminal, and thus your POS doesn’t have access to the actual card information.

Fraud Detection

The tools that detect fraud recognize unusual behavior, such as multiple denials or strange amounts. They are very important for e-commerce transactions and keyed transactions when one cannot see the card.

Employee Security Practices

Staff habits matter as much as software. Train your team to never write down card numbers, check terminals for tampering, and limit who can issue refunds.

Simplify Credit Card Payment Processing with FTx POS

Many retailers juggle a register from one company and a terminal from another. FTx Card Payments, part of FTx POS, puts both in one place.

Transparent Payment Processing

Unclear pricing can make payment providers difficult to compare. Contact FTx Card Payments for a personalized quote and compare the proposed rates and fees with your current processing statement.

POS Integration

A terminal that doesn’t talk to your register creates double entry. With FTx POS, each card sale updates inventory, earns points in the Loyal-n-Save customer loyalty program, and feeds your reports automatically.

Security & PCI Support

PCI compliance requirements can feel overwhelming for a small team. FTx Card Payments includes end-to-end encryption for in-store and online transactions, and FasTrax-supported self-assessment questionnaires help simplify PCI compliance.

Flexible Payment Options

FTx POS processes payments via chip, swipe, and tap, as well as various credit, debit, and electronic benefit transfer
(EBT) cards.

Retail-Focused Solution

Liquor, tobacco, and vape merchants may require specialized payment services that a general merchant services provider may not offer. FTx Card Payments offers high-risk merchant services for smoke shops, vape stores, CBD retailers, kratom retailers, liquor stores, and other eligible businesses, with onboarding typically beginning the same day approval is received.

Cash Discounting/Dual Pricing

Card fees can eat into thin margins. FTx POS has cash discounting and dual pricing built in, so you can offset those costs right at the register.

Conclusion

Taking credit cards is not only about choosing a card reader. You will need a processing company that offers fair rates, works with the payment methods your customers use, provides good customer support, and offers adequate security solutions for your business. If you use a POS system, see how well the payments are linked to sales data, inventory, and reporting.

Consider your options based on rates, terms of the contract, hardware, and integration possibilities. The right solution can make checkout easier and give you better insight into activity in your store.