How to Accept Credit Card Payments for Small Business: Complete Setup Guide

To accept credit card payments for your small business, you need a payment processor, a method to capture card information (terminal, card reader, or online gateway), and a bank account to receive funds. The setup process takes 1-3 days with a payment service provider like Square, or 1-2 weeks with a traditional merchant account. Most small businesses can start accepting cards for under $100 in upfront costs.

Step 1: Choose Your Payment Acceptance Method

How you accept payments depends on how you sell:

In-Person Payments

For retail stores, restaurants, and service businesses:

• Countertop terminal: Traditional credit card machine for fixed locations
• Mobile card reader: Connects to smartphone/tablet for mobile businesses
• POS system: Integrated hardware and software for inventory, sales tracking

Online Payments

For e-commerce and online services:

• Payment gateway: Integrates with your website checkout
• Payment links: Send payment links via email or text
• Hosted checkout: Customers pay on provider's secure page

Phone/Mail Orders

For orders placed over the phone or by mail:

• Virtual terminal: Enter card details through web browser
• Keyed entry: Manually enter card numbers on terminal

Omnichannel

For businesses selling multiple ways:

• Unified platform: Single provider for in-person, online, and phone
• Integrated reporting: All transactions in one dashboard

Step 2: Select a Payment Provider

Small businesses have two main options:

Payment Service Providers (PSPs)

Examples: Square, Stripe, PayPal

Pros:

• Fast setup (minutes to hours)
• No monthly fees (usually)
• No long-term contracts
• Simple, flat-rate pricing
• Easy-to-use interfaces

Cons:

• Higher per-transaction rates
• Less account stability (risk of holds)
• Limited customization
• May outgrow as you scale

Best for: New businesses, low volume (under $10,000/month), simple needs

Traditional Merchant Accounts

Examples: Bank merchant services, independent processors

Pros:

• Lower rates at volume
• More stable accounts
• Dedicated support
• Customizable solutions

Cons:

• Longer approval process (1-2 weeks)
• Monthly fees common
• May have contracts
• More complex setup

Best for: Established businesses, higher volume, complex needs

Cost Comparison

Step 3: Gather Required Information

To apply for payment processing, prepare:

Basic Information:

• Legal business name
• DBA (doing business as) name if different
• Business address
• Phone number and email
• Website URL (if applicable)

Business Details:

• Business type (LLC, sole proprietor, corporation)
• Industry/product category
• Estimated monthly sales volume
• Average transaction amount

Financial Information:

• Business bank account details
• Tax ID (EIN) or SSN for sole proprietors
• Business start date

For Merchant Accounts (additional):

• 3 months of bank statements
• Business license
• Processing history (if switching providers)

Step 4: Apply and Get Approved

PSP Application Process

1. Create account: Sign up online (5-10 minutes)
2. Verify identity: Provide SSN/EIN, may need ID upload
3. Link bank account: Connect for deposits
4. Order equipment: If needed for in-person
5. Start processing: Often same day

Merchant Account Application Process

1. Submit application: Online or through sales rep
2. Underwriting review: 1-5 business days
3. Approval notification: Sign merchant agreement
4. Equipment setup: Receive and configure terminal
5. Test transactions: Verify everything works
6. Go live: Start processing

Step 5: Set Up Your Equipment

For In-Person Sales

Mobile Card Reader (simplest option):

1. Order reader from provider ($0-$50)
2. Download provider's app
3. Pair reader with phone/tablet via Bluetooth
4. Test with small transaction

Countertop Terminal:

1. Receive terminal from provider
2. Connect to internet (ethernet or WiFi)
3. Enter merchant credentials
4. Run test transactions
5. Train staff on operation

POS System:

1. Install hardware components
2. Configure software and menu/inventory
3. Set up user accounts and permissions
4. Integrate with other business systems
5. Train staff thoroughly

For Online Sales

1. Choose integration method: Plugin, API, or hosted
2. Install on website: Add payment plugin or code
3. Configure settings: Currency, accepted cards, fraud rules
4. Test thoroughly: Run test transactions
5. Go live: Enable live processing mode

Step 6: Ensure Security and Compliance

PCI Compliance Requirements

All businesses accepting cards must comply with PCI DSS:

Basic Requirements:

• Use secure, compliant equipment
• Never store card numbers in plain text
• Use strong passwords
• Keep software updated
• Complete annual PCI questionnaire

Your provider helps with:

• Secure transmission of card data
• Compliant payment pages
• Tokenization for stored cards
• Compliance documentation

Fraud Prevention

For in-person transactions:

• Use EMV chip readers
• Check card signature (when required)
• Verify ID for large purchases
• Watch for suspicious behavior

For online transactions:

• Require CVV codes
• Use Address Verification (AVS)
• Implement 3D Secure
• Monitor for fraud patterns
• Review suspicious orders manually

What It Costs to Accept Credit Cards

Startup Costs

Ongoing Costs

Per-Transaction Fees:

• PSPs: 2.6%-2.9% + $0.10-$0.30
• Merchant Accounts: 1.5%-2.5% + $0.10-$0.20

Monthly Fees:

• PSPs: Usually $0
• Merchant Accounts: $10-$30

Example: $10,000 monthly volume

At lower volumes, PSPs are often cheaper due to no monthly fees. At higher volumes, merchant accounts typically save money.

Frequently Asked Questions

How long does it take to start accepting credit cards?

With a PSP like Square or Stripe, you can start accepting payments the same day—often within hours. Traditional merchant accounts take 1-2 weeks for approval and equipment setup.

What's the cheapest way to accept credit cards?

For very low volume (under $3,000/month), PSPs with no monthly fees are cheapest. For higher volumes, merchant accounts with interchange-plus pricing typically offer lower total costs.

Do I need a business bank account?

Most processors require a business checking account for deposits. Some PSPs allow deposits to personal accounts for sole proprietors, but a business account is recommended for accounting and liability reasons.

Can I accept credit cards without a website?

Yes. For in-person sales, you just need a terminal or card reader. For remote payments without a website, use payment links, invoicing features, or a virtual terminal to key in card numbers.

What about accepting cards on my phone?

Mobile card readers from Square, PayPal, and others connect to your smartphone via Bluetooth or headphone jack. Download the app, pair the reader, and accept cards anywhere with cell service.

How soon do I get my money?

Most processors deposit funds within 1-2 business days. Some offer same-day or instant transfers for additional fees. Weekends and holidays may delay deposits.

Key Takeaways

• Choose a payment service provider (Square, Stripe) for fast setup and no monthly fees, or a merchant account for lower rates at higher volumes
• Basic setup requires a processor, payment capture method (terminal, reader, or gateway), and bank account for deposits
• Startup costs range from $0-$60 with PSPs to $100-$600 with merchant accounts
• Ongoing costs typically run 2-3% of sales volume in transaction fees
• Maintain PCI compliance by using secure equipment, completing annual questionnaires, and following security best practices

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Red Rock Payments helps small businesses accept credit cards with competitive rates and personalized support. Get started with a free consultation.