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11 Min. Read

How to Accept Credit Card Payments: A Small Business Guide

How to Accept Credit Card Payments | A Practical Small Business Guide

Small businesses can accept credit card payments by using an online merchant gateway like Stripe or PayPal, by setting up a POS system with a merchant account, or by using a mobile card reader to accept card payments through a smartphone app. Learning how to accept payments made by credit and debit can help small businesses boost their sales, improve cash flow and provide a better experience for their clients. But a recent study found that 55 percent of small businesses in the US don’t accept credit card payments.

Key Takeaways

  • Credit card payments are key to staying competitive
  • Accepting credit cards can boost sales and increase customer loyalty
  • You can choose from in-person, mobile, and online credit card payment systems to fit your business needs
  • Explore different merchant providers to find one that offers competitive rates, fraud protection, and reliable customer service
  • Use credit card payment data to gather information on customer spending and make taxes and accounting easier

These topics will show you how to accept credit card payments as a small business:

How to Accept Credit Card Payments for Small Business

How to Accept Online Credit Card Payments

How to Accept In-Person Credit Card Payments

How to Accept Mobile Credit Card Payments

Why Should Businesses Accept Credit Card Payments?

What Are Credit Card Transaction Fees?

Benefits of Accepting Credit Card Payments

Which Types Of Businesses Can Accept Credit Cards?

5 Popular Payment Providers For Small Business Owners

Conclusion

Frequently Asked Questions

How to Accept Credit Card Payments for Small Business

Small businesses interested in accepting credit card payments first have to do some research and decide what credit card payment methods work best for them. These are the steps to follow to start processing credit card payments:

Want To Get Paid 2x Faster?

Decide How You’ll Accept Credit Card Payments

First, decide how you’ll allow your clients to pay by credit card. There are three primary ways you can accept credit card payments:

  • Online credit card payments
  • In-person credit card payments
  • Mobile credit card payments

If you’re a freelancer who mostly conducts business with clients remotely via email and phone, processing credit card transactions online might be the only method your small business requires. If you have a physical retail store that sells products to customers, you’ll want to accept in-person payments within your store. And if you’re a contractor or landscaper working on-site for your clients, a mobile POS system might be the most convenient payment method since it allows clients to pay from the job site using a card reader powered by your smartphone.

Choose a Merchant Service Provider

Once you know how to process client credit card payments, you’ll need to choose a merchant service provider. Merchant service providers are companies that provide businesses with the products and services needed to process credit and debit card payments. When evaluating a payment service provider for your business, it’s important to ask yourself the following questions:

  • What fraud protection do they offer?
  • Do they offer other related services, like payroll solutions?
  • What kinds of payments can the MSP process: online, mobile, or in-store?
  • What fees does the MSP charge the business owner?

Choose a merchant service provider that suits the specific needs of your business and charges fees you’re comfortable paying.

Choose a merchant service provider that suits the specific needs of your business and charges fees you’re comfortable paying.

Open a Merchant Account

When you’ve selected the merchant service provider best suited to your particular business model, you’ll need to open a merchant account with them. A merchant account allows your business to accept credit cards, process payments, and receive those payments in your business account. Opening a merchant account through a reputable MSP is the simplest way for small businesses to accept credit cards, although it’s also possible to open a merchant account through a local bank.

How to Accept Online Credit Card Payments

To accept credit cards online, you’ll need to sign up for an online payment gateway such as Stripe or PayPal. These services work by processing your client’s online payments for you and charging credit card processing fees for each transaction your business accepts. If you use a cloud-based accounting solution, you probably already have access to online credit card solutions through app integrations within your online accounting software.

Struggling to accept online payments for your business? FreshBooks Payments helps you with your online payment process, creating a smoother experience for clients so you can get paid faster.

FreshBooks accept online payments

How to Accept In-Person Credit Card Payments

To accept in-person transactions made by card, you’ll need to purchase a point-of-sale (POS) system. A POS system includes hardware (like a card payment terminal) and software to process in-person payments. Customers can insert or swipe their credit or debit card using the card reader and the transaction will quickly either be approved or declined. If a transaction is approved, your merchant account will then receive the funds and transfer them to your business bank account within a matter of days.

How to Accept Mobile Credit Card Payments

To accept mobile card payments, you’ll need a mobile credit card reader, such as Square. A mobile credit card reader is a portable device that plugs into your smartphone and pairs with a credit card processing app to accept credit card payments anywhere, as long as there’s an internet connection.

Why Should Businesses Accept Credit Card Payments?

Accepting credit card payments offers flexibility and convenience to your clients and can also benefit your business. The benefits of accepting contactless payments for small businesses include:

Boosts Sales

Accepting credit card payments is a benefit that can help you attract new clients to your business, improving your sales. If you are a business that sells products, accepting credit card payments can translate into increased sales because people tend to spend more when they’re using a card. A recent study found that people spend between 12 and 18 percent more when they use credit cards rather than cash.

Improves the Client Experience

Offering flexible payment options that include credit and debit cards gives your clients a better experience and encourages loyalty. Many clients prefer to pay using credit cards because they can quickly and easily process the payment online rather than having to fill out and mail a check.

Increases Cash Flow

Unlike checks, which often take between five and ten business days to clear through your bank, credit cards are processed relatively quickly. Often, card payments are cleared and the money appears in your business bank account within a day or two of the transaction.

Put the Focus Back on Your Focus

Saves Time

Most card processors allow you to accept credit payments with a few simple clicks, saving you time. You won’t have to go to the bank to deposit checks or spend as much time requesting payment for invoices.

Improves Payment Security

Accepting credit cards can mean your business has less cash on hand, which lowers the risk of theft or loss. Although there are security risks with accepting credit cards, in many cases, fraudulent charges can be recovered when you use a merchant service provider.

Provides Useful Reports

Most credit card processors provide robust sales reports based on your transactions. You’ll be able to gather useful data about the types of payment clients use, how long it takes them to pay, and the average payment amount your business receives. Credit card reports also include information that’s useful when you file your taxes.

What Are Credit Card Transaction Fees?

Credit card transaction fees are charged by the processor every time a business accepts a credit card payment. There are two types of fees charged for every credit payment that’s processed: the processing rate and the transaction fee.

The processing rate is a percentage charged for every payment that’s based on the business’s average transaction amount. The transaction fee is a flat rate that’s charged every time a business accepts a credit card payment.

Benefits of Accepting Credit Card Payments

Accepting credit cards improves the transaction experience for both you and your customers. The benefits include:

  • Quick and convenient transactions: Both at the point of checkout and for the money to reach your business account.
  • Improved competitiveness: Offering more ways to pay helps you stand out from competitors or remain competitive if other businesses offer credit transactions
  • Increased legitimacy: Forbes found that displaying credit card logos near the checkout created a positive association with customers’ credit card companies who they know and trust.
  • Credit transactions encourage spending, as customers aren’t limited to the cash they have in their wallet
  • Spending: Credit transactions encourage spending, as customers aren’t limited to the cash they have in their wallets.

Which Types Of Businesses Can Accept Credit Cards?

Any type of business can accept credit payments. Even individuals who aren’t incorporated can accept credit cards as long as they’re equipped with a payment processing system and merchant service provider. Whether you’re setting up your business as an individual or a company, adding credit card payment is an easy way to boost sales and improve convenience for your customers. 

The advantages of card payments depend upon which payment service providers you use. Browse five of the top-rated accept payments online providers to find the right fit for your business:

  • FreshBooks Payments 

Rated the top choice by the Globe and Mail, FreshBooks payments offers a quick and easy system to invoice your clients and accept online payments. With competitive rates, FreshBooks is a popular choice for service and trade-based businesses. 

  • Square

Square offers affordable payments on a flat rate structure. You can choose from different support plans; however, Square doesn’t work with high-risk merchants.

  • Stripe

Stripe also offers a flat rate system and is particularly popular with retail and e-commerce businesses.

  • Venmo

While most popular for peer-to-peer payments, businesses can also use Venmo for quick processing and reliable security.

  • PayPal

Popular for domestic and international payments, Paypal offers variable fees and volume discounts and can accept a variety of different credit cards.

Payment Methods

Conclusion

Finding an efficient way to accept credit card payments is essential for keeping your small business competitive. There are a variety of payment processors that can accept credit cards for in-person, online, and mobile sales. When looking for a merchant provider, consider their rates, fraud protection, and customer service options. 

In addition to boosting your sales, credit card data can be helpful for analyzing your business. It offers helpful insights into customer spending and can be used as records to simplify taxes and accounting.

Easy payments aren’t just for clients – streamlining your payroll process helps you with the busy work so you can focus on the big work. With FreshBooks payroll software, you can access unlimited payrolls, easy tax filings, direct deposit, and much more.

FAQs on How to Accept Credit Card Payments

How can I accept credit card payments as an individual?

To accept credit payments as an individual, simply set up an account with a payment processing system. This lets you easily accept online or mobile payments, or you can purchase further options like a credit card terminal to accept in-person credit card transactions. 

Which platform is best for credit card payment?

Choosing the best credit card payment platform depends on your business needs. Consider whether you need in-person, online, or mobile payment options, as well as provider fees and fraud protection. FreshBooks Payments makes it easy to invoice your clients and accept online credit card payments.

How much does it cost to accept credit cards?

Credit card processing fees vary according to your service provider, with an average between 1.5% and 3.5%. Some providers may offer options for flat rates or volume-dependent rates.

What is the safest way to accept payment?

Any form of payment will carry some risks, but credit and debit cards offer the advantage of reducing theft by not having large sums of cash on location. Service providers also offer various options for fraud protection, so ask potential providers what they can do to reduce your risk.

What types of credit cards can I accept as payment?

The types of credit cards you can accept as payment will depend on the payment processor or service provider you use. However, most payment processors and service providers allow you to accept payments from major credit card networks like Visa, Mastercard, and American Express.


Jami Gong headshot
Jami Gong, MPAcc, CPA

About the author

Jami Gong is a Chartered Professional Account and Financial System Consultant. She holds a Masters Degree in Professional Accounting from the University of New South Wales. Her areas of expertise include accounting system and enterprise resource planning implementations, as well as accounting business process improvement and workflow design. Jami has collaborated with clients large and small in the technology, financial, and post-secondary fields.

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