What you need to set up online credit card payments

To accept credit card payments online, you need three things: a way to process the payment (called a payment processor), a place to collect the card details (usually a website or app), and a business bank account to receive the money. The payment processor is the middleman — it talks to the customer's bank, checks that the card is real and has enough money, and moves the funds to your account.

You do not need to handle the card number yourself. Modern payment processors keep card details off your computer entirely, which protects both you and your customer. The processor stores the encrypted information on their find servers, and you only see a confirmation that the payment went through.

The cost varies by processor and by how you set things up. Most charge a percentage of each transaction (typically 2 to 3 percent) plus a small flat fee per payment. Some charge a monthly subscription instead of per-transaction fees. Understanding these costs matters because they come out of what you receive, not on top of what the customer pays.

Key Takeaways

  • A payment processor is a service that securely handles the card information and moves money from the customer's bank to yours.
  • You can accept payments through a website, a mobile app, an invoice link, or a physical card reader — the processor you choose determines which options are available.
  • Costs usually run 2 to 3 percent per transaction plus a small per-payment fee, though some processors offer flat monthly rates instead.
  • You will need a business bank account and a tax ID (EIN) to open a merchant account with most processors.

Payment processors and how they differ

The main payment processors fall into a few categories based on how they work. All-in-one platforms like Stripe, Square, and PayPal handle payments, invoicing, and sometimes inventory in one place. Shopping cart systems like Shopify and WooCommerce let you build a full store and handle payments as part of it. Invoice-based processors like FreshBooks and Wave let you send a payment link to a customer without needing a website at all.

Each has different pricing. Stripe and Square typically charge 2.9 percent plus 30 cents per online transaction. PayPal charges 3.49 percent plus 49 cents for online payments. Shopify charges a monthly subscription (starting around $29) plus transaction fees. Wave charges nothing for invoicing but takes a percentage if you want to accept credit cards through them. The right choice depends on your volume, whether you need invoicing or a full store, and whether you prefer per-transaction fees or a monthly cost.

Some processors require you to have been in business for a certain time or to have a minimum monthly volume. Others will work with brand-new businesses. If you are just starting out, Stripe, Square, and PayPal tend to be the most flexible about who they accept.

Setting up a merchant account

A merchant account is the bank account that receives the money from card payments. You do not open this with your regular bank — you open it through the payment processor or through a separate merchant services provider. The processor uses this account to deposit the funds after each transaction (usually within one to three business days).

To open a merchant account, you will need a business bank account, a tax ID (called an EIN if you are a business entity, or your Social Security number if you are a sole proprietor), and basic information about your business. Some processors also ask for your personal credit report or a bank statement to verify you are legitimate. If you are brand new, they may ask for more documentation or may decline you — in that case, a payment processor that specializes in new businesses, or a service like Square Cash for small informal payments, may work better.

The process usually takes a few days to a week. During that time, the processor verifies your information and checks you against fraud databases. Once approved, you can start accepting payments when ready.

Accepting payments on a website or online store

If you have a website, you can add a payment button or a full checkout page. The simplest route is a payment button — you paste a line of code into your website, and it creates a button that opens a payment form when clicked. Stripe, Square, and PayPal all offer this. The customer enters their card details in a pop-up window, and the money goes to your merchant account.

A full shopping cart is more complex but necessary if you sell multiple items or need to track inventory. Shopify, WooCommerce, and BigCommerce are the most common platforms. You list your products, set prices, and the platform handles the checkout process. The customer sees a cart, enters shipping details, and pays — all without leaving your store. These platforms integrate with payment processors, so you choose which one to use when you set up your store.

If you do not have a website, you can still send payment links. Most processors let you create an invoice or a payment request and email it to the customer. They click the link, enter their card details, and pay. This works well for service businesses, freelancers, and anyone who does not need a full store.

Accepting payments in person with a card reader

If you take payments face-to-face, you can use a card reader — a small device that plugs into your phone or tablet and reads the card's magnetic stripe or chip. Square, PayPal, and Stripe all make card readers. The customer inserts or taps their card, the reader processes it, and you get a receipt. The money goes to the same merchant account as online payments.

Card readers cost between $20 and $100 depending on the model and processor. Some are free if you commit to a certain monthly volume. The transaction fees are the same as online payments — usually 2.9 percent plus 30 cents. This setup works well for pop-up shops, farmers markets, events, or any business that moves around.

You can also use a virtual terminal — a website where you manually enter a customer's card details and process the payment. This is useful if the customer is on the phone or if their card reader is not working. Virtual terminals charge the same fees as other payment methods.

Security and fraud protection

When you use a modern payment processor, the card information never touches your computer. The processor encrypts it and stores it on their servers, which are protected by security standards called PCI compliance. This means you do not have to worry about storing card numbers safely — the processor handles that responsibility.

Most processors include basic fraud protection at no extra cost. They watch for suspicious patterns (like a card being used in two countries in an hour, or a sudden spike in transactions) and flag or block them. If a customer disputes a charge, the processor investigates and either refunds them or sides with you based on the evidence.

You should still take basic precautions: use a strong password for your processor account, enable two-factor authentication if available, and keep your software updated. If you use a card reader, keep it in a safe place and do not leave it unattended.

Understanding fees and what you actually receive

When a customer pays you $100 with a credit card, you do not receive $100. The processor takes a cut. If the fee is 2.9 percent plus 30 cents, you receive $96.70. That $3.30 covers the processor's cost to talk to the bank, the risk they take if the customer disputes the charge, and their profit.

Some processors offer lower rates if you process a high volume or if you accept payments in a particular way. Stripe, for example, charges less for in-person payments (2.7 percent plus 5 cents) than online payments (2.9 percent plus 30 cents) because in-person payments are lower risk. Others charge the same no matter how you accept the payment.

A few processors charge a monthly fee instead of per-transaction fees. Shopify's basic plan is $29 per month plus 2.9 percent and 30 cents per transaction. If you process very few payments, per-transaction fees are cheaper. If you process many, a monthly fee might save you money. Calculate your expected volume before you choose.

Frequently Asked Questions

Do I need a website to accept credit card payments online?

No. You can send a payment link via email or text, and the customer pays by clicking it. Most processors let you create invoices or payment requests without a website. This works well for service businesses and freelancers.

What happens if a customer disputes a charge?

The processor investigates and asks you for proof that the transaction was legitimate — usually an order confirmation, shipping receipt, or email exchange. If you provide good evidence, the processor sides with you and the customer does not get their money back. If you cannot prove the sale happened, the customer gets refunded.

Can I accept payments without a business bank account?

Most processors require a business bank account to deposit funds. If you do not have one, you can open a straightforward business checking account at any bank — you will need your tax ID and a small deposit. Some processors may accept a personal account if you are a sole proprietor, but this is less common.

How long does it take to get paid after a customer swipes their card?

Most processors deposit funds within one to three business days. Some offer next-day deposits for a small fee. The exact timing depends on your processor and your bank. Weekends and holidays can add extra days.

What if I want to refund a customer?

You log into your processor account, find the transaction, and click "refund." The money goes back to the customer's card within one to three business days. You do not pay a fee to issue a refund, but you also do not get back the processing fee you paid on the original transaction.