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

  • By Danielle Dixon
  • Jun 8, 2023
  • Day-to-Day Operations
How to accept credit cards - card at card terminal

For businesses, accepting credit card payments is no longer optional. In fact, businesses that don’t accept them risk being left behind.

Yet, how do you accept credit card payments? It starts with a payment processor. This is a company that processes the transaction and makes sure the funds land in your business bank account.

Businesses accept credit card payments using a payment processor. When a customer swipes their card, the processor verifies the details, checks for sufficient funds, and then approves or declines the transaction. If a transaction is approved, the processor transfers the payment amount from the customer’s account to the business’s.

How to Accept Credit Card Payments: A Quick Overview 

In other words, to to accept credit cards as a new business, you need two things:

  1. A card processing provider – This is the company that processes the transaction.
  2. A way to collect payment information – The three most common options are: 1) a POS system with a card reader, 2) a dedicated card terminal, or 3) a payment gateway (for online shops).

This guide will walk you through how to start accepting credit card payments in person, online, and credit card processing fees you can expect. But generally, if you have a payment processor (or merchant account) and a card reader, you can start. We’ll cover:

How Does Payment Processing Work?

Payment processing companies facilitate credit card transactions. In particular, they handle the authorization and settlement of the transaction, ensuring the funds are transferred properly and land in your business account.

In other words, they are intermediaries. Processors ensure secure and efficient payments between the customer and business.

Understanding how credit card payments are processed can help businesses troubleshoot issues and enhance checkout experiences. Here are the four steps:

  • Transaction Initiation – The customer provides their credit card details (generally with a card reader, or over the phone or by typing them in on an ecommerce site).
  • Authorization – The processor verifies the transaction with the card issuer.
  • Finalization – The merchant’s system confirms the sale, and the transaction is complete.
  • Settlement – Funds are transferred from the card issuer to the merchant’s account. (The best providers offer next-day settlements.)

Types of Credit Card Processors

The type of processor you work with is dependent on 1) whether you will be selling in-store or online, 2) the transaction volume, and 3) the cards / payment options you want to accept. The most common types of credit card payment processors include:

  • POS Providers – The best retail POS systems include credit card processing. Payment processing is a feature of the system, along with inventory management tools, CRM tools, and analytics tools. A benefit: You don’t need a separate terminal or device to handle credit card and electronic payments. This streamlines the checkout process, reduces errors, and creates a more seamless customer experience.
  • Payment Gateways – Payment gateways are necessary for accepting credit card payments online. These networks handle the transfer of payment information between the merchant’s website and the credit card network. is an example.
  • Merchant Account Providers: These are traditional banks or financial institutions that provide businesses with merchant services accounts. This account allows businesses to accept debit card and credit payments. Chase Paymentech is an example.
  • All-in-One Processors – These systems combine merchant services and payment gateways. These systems are user friendly and require minimal setup. Stripe is an example.

These are just the most common types. For example, a high-risk payment processor is another option, which offers credit card services for businesses in industries with a higher risk for fraud or chargebacks. High-risk providers generally charge higher credit card processing fees. For example, credit card processing for smoke shops may be subject to high-risk fees.

Payment Provider vs. Merchant Account

Choosing between a payment provider and a merchant account depends on your business’s priorities.

Payment providers offer easy setup, integrated tools, and flexibility for startups and businesses with limited technical expertise. However, they often have higher transaction fees and limited control.

On the other hand, merchant accounts offer lower fees for larger transaction volumes, customization options for checkout experiences, and direct fund deposits. Yet, they require more complex setup, potentially involving credit checks, longer approval times, and might suit businesses with technical know-how and a need for control. Evaluate your business needs before deciding.

Choosing a Credit Card Payment Processor

Although competitive rates are a deciding factors, there are many other considerations to make when choosing a processing company. Here are some factors to consider:

  • Rates – Credit card processors charge fees for each transaction. Don’t just choose the lowest transaction fees; be sure you understand the overall cost and if there are hidden costs like annual fees, minimums, etc.
  • Reliable Customer Service – A glitch during peak business hours can be disastrous. Ensure your processor is always reachable. (This is also why it can be difficult to work with a large company).
  • Technology – The best companies utilize the latest security technology, offer tools like NFC scanners for accepting mobile payments, and more. Choose a company that provides access to the latest payment options and advanced payment tech.

Pro Tip. Choose a system with integrated credit card processing in your POS, which is a key benefit of a POS system with integrated processing vs POS + third-party processor. The best marriage is a POS that offers card processing services. However, if you choose a third-party payment processor, be sure they offer support for your existing POS system.

How to Accept Credit Card Payments by Business Type

Before you start taking credit cards, think about how your customers use their cards. If the majority swipe their cards when they visit your physical location, a POS integration might suffice.

However, you might also want to accept credit cards over the phone, online, through several channels, or even on a mobile device. The type of credit card processing equipment you require will be determined by the types of payments you take.

1. Brick-and-Mortar Retail

When you run a brick and mortar business, like a store or medical practice, you are in this situation. At your place of business, you receive payments at one or more cash registers.

Equipment Needed: A hardwired countertop credit card terminal or a point of sale (POS) system. If your POS doesn’t support payment processing, you will need a stand-alone credit card reader. Be sure to look for a card terminal that allows you to process payments in offline mode.

2. Online or By Phone

If you operate an online store, a payment gateway is necessary for online credit card processing. Credit card processors may make a gateway available to customers, either directly or via a third party.

You often pay an extra monthly fee to a credit card processor for this service, so you should only set up a payment gateway if you sell products online or if the value of your rare but sizable online sales makes up for the expense.

Examine each processor’s terms and conditions before signing up because some impose a gateway setup fee and a per-transaction fee in addition to the monthly price.

Equipment Needed: A virtual terminal where you can manually input credit card information, as well as back-end interaction between your website and your payment gateway.

3. On the Go

Businesses that travel, frequently conduct business at trade exhibits, or simply need the ability to accept payments anywhere in their facility can benefit from mobile credit card readers. A significant benefit of using your phone to accept credit and debit card payments is that certain mobile credit card processing apps come with basic POS functions in addition to portability. For small businesses that aren’t yet prepared to make the investment in a full-fledged POS system, a mobile POS system can be quite beneficial because it not only accepts payments but also helps you monitor your sales and inventory.

Equipment Needed: You will need a mobile credit card reader or app in order to accept credit card payments on your phone or tablet. Many readers connect their headphones to their mobile device’s headphone jack. Bluetooth is used by more sophisticated mobile credit card readers to connect to your mobile devices. Swipe-only, swipe plus chip (EMV), and swipe, chip, and contactless (NFC) payments are all supported by mobile card readers.

You are not limited to accepting payments using a mobile credit card reader. With extra hardware, these readers can be utilized as components of a larger system.

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 transactions fall below this minimum, additional fees may incur to make up the difference.
  • 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 significant. This is generally dependent on the volume of transaction 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 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.

Pro Tip. Always be aware of the fees that your credit card processor will charge you. Generally, you’ll want to ask about annual or membership fees, or if there are minimums per transaction. However, you’ll also want to focus on strategies to reduce processing costs, like dual pricing or cash discounts.

Ecommerce: How to Accept Credit Cards Online

You would have these options if you wanted to accept credit cards online, depending on the gateway.

1. Direct Payment Links

Get the link from the company that handles your payments. Depending on your service provider, you might be able to modify the URL as you choose. Next, choose a location for the link on your website. Following that, the customer will do the following:

  • To access the payment page, click the link.
  • Enter the dollar amount.
  • Enter their contact information and billing information.
  • Press a button to finish placing their order.

2. Payment Pages

St. Jude Children’s Research Hospital is a wonderful example of an organization that employs this strategy. Already generated is the payment page.

  • Determine the size and frequency of your donation (or payment).
  • Decide on a payment option.
  • Provide the details of their credit card.
  • Type in their payment details.
  • To complete their order, click “Donate” or “Pay”.

3. Ecommerce Page

These are the payment pages you have encountered while conducting retail online shopping. Customers look through online stores for products before adding them to their shopping carts. When they’re prepared to leave, they do the following:

  • Type in their shipping details.
  • Enter the details of their debit or credit card.
  • Type in their payment details.
  • To finalize their order, click “Pay Now”.

4. Manual Processing

If you’ve been writing down credit card information on paper and then putting it into a terminal or POS after the call has ended, you’re doing things insecurely if your business accepts credit cards over the phone, such as if you run a restaurant that offers delivery or takeout.

Instead, if you run a service-based business like a law firm or marketing agency, utilize a virtual terminal or your payment gateway to produce and process payments for invoices as well as to accept phone payments.

  • Enter your payment gateway here.
  • Either create a customer invoice or choose the Payments tab.
  • Enter the payment and customer details.
  • To complete the transaction, click the button.
  • Select the delivery method for your receipts.

Each of these techniques will handle your money such that it enters your account once you’ve batched out and posts it to your dashboard.

Get Started with FTx Card Payments

Does your POS provider offer credit card processing? If not it might be time to switch. FTx POS offers full-service credit card processing for our customers. With us, you can count on:

  • Recieve next-day settlements
  • Start transactions online and complete in-store
  • We match or BEAT your payment processing fees
  • No high-risk fees for CBD or kratom sales
  • Clear payment terms and transaction fees

For more, contact our team today. We’d be happy to show you how FTx Card Payments can save you money!

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Business Experts & Contributors

A New Solution Coming To FasTrax

Danielle is a content writer at FTx POS. She specializes in writing about all-in-one, cutting-edge POS and business solutions that can help companies stand out. In addition to her passions for reading and writing, she also enjoys crafts and watching documentaries.

Danielle Dixon

Content Writer
A New Solution Coming To FasTrax

Matthew Davis is a content marketing specialist for FTx POS. With experience in marketing, brick-and-mortar retail, and ecommerce, Matthew enjoys writing about strategies and technology retailers can use to grow. Previously, he managed retail operations for a sports/entertainment facility and worked in marketing consulting.

Matthew Davis

SEO Specialist/Content Writer

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