Accepting credit card payments online is now essential for businesses of all types and sizes. Offering your customers the convenience of paying by card quickly and securely on your website or invoices brings major benefits like improved cash flow, reduced missed invoices, and better customer satisfaction.
This comprehensive guide will walk through the major methods and providers for accepting credit card payments online. By evaluating the pros and cons of solutions like PayPal, Stripe, Square and more, you can determine the best approach for your business needs and budget.
Let’s get started with the basics of accepting credit card payments online and how it benefits your business.
Table of Contents
Benefits of Accepting Credit Card Payments Online
Here are some of the key advantages to offering credit card payment acceptance through your website, shopping cart, or invoices:
Around the clock payments
Allow customers to pay invoices or make website purchases whenever is most convenient for them – 24/7/365.
Faster payments
Receive credit card payments instantly or within a couple days rather than waiting 30+ days for checks to clear. This improves cash flow.
Reduced administrative work
Online payments through a gateway or processor handle much of the work like sending receipts and collecting customer details.
Lower missed payments
Credit card payments can be automatically retried if a charge is initially declined, reducing unpaid invoice rates.
Better customer experience
Customers appreciate the simplicity and ease of paying by card online. It can increase sales conversion rates.
More sales opportunities
Accepting online payments allows you to sell to anyone with internet access rather than just local customers.
Data and analytics
Detailed reporting provides insights into your sales performance, revenues, best selling items, and more.
Cost savings
Online payment fees are often lower than setup costs of a physical in-store POS system.
Accepting cards online typically only takes a few minutes to setup but delivers significant long term benefits.
How Online Credit Card Processing Works
Here is a high-level overview of what happens when a customer pays by credit card through your website or online invoice:
- Customer types in card details like number, expiration, CVV code and billing information.
- Your payment gateway encrypts the details and sends them via a secure connection to the payment processor.
- The processor contacts the card issuer to authorize the transaction amount.
- The issuer approves the charge and registers the authorization.
- Authorization confirmation is relayed back to the processor then your website or payment gateway.
- You receive a notification that the payment succeeded and funds will be settled to your bank account within 1-5 days.
- The customer receives a payment confirmation and receipt.
The gateway and processor facilitate the secure handoff between your business and the card issuer to complete the transaction.
Major Credit Cards Accepted Online
If you set up credit card acceptance through an online payment gateway or processor, here are the major card brands they will typically support:
- Visa – The most popular card network. Consumer and business cards.
- MasterCard – The second biggest card network after Visa. Consumer and business cards.
- American Express – Next most widely held. Used heavily by business travelers.
- Discover – Smaller network but still commonly held by US consumers.
- JCB, Diners Club – Smaller international cards you may want to accept.
Most providers let you specify whether to accept all major brands or only Visa/Mastercard if desired. Amex, Discover, JCB and Diners Club often involve slightly higher processing fees.
Methods for Accepting Online Card Payments
There are several methods businesses use to accept credit card payments online. Here are the major options:
Payment Gateways
A payment gateway acts as an intermediary between your website and your merchant account held with a card processor. The gateway handles encrypting/decrypting card data, processing the transaction, and sending payment confirmation.
Popular standalone gateways include Authorize.Net, Stripe Payments, and Braintree.
Merchant Accounts
A merchant account is a type of business bank account that lets you accept card payments. The account provider handles submitting transactions to the card network, depositing funds to your account, and transferring money to your regular business checking account.
They are often paired with a payment gateway. Popular providers include Helcim and Fattmerchant.
All-In-One Solutions
Many providers offer integrated payment gateways and merchant account services so you only have to work with one vendor. Examples are Square and PayPal which handle the gateway and banking.
Third-Party Processors
Third party processors like PayPal, Stripe, and Square sit between your customers and your merchant account. They handle the gateway technology and manage the movement of money between accounts.
Payment Service Providers
Payment service providers (PSPs) offer end-to-end payment acceptance including gateway, processor, merchant account services. Providers like Square and Stripe operate as PSPs.
Point-of-Sale Software
Specialized POS software often includes integrated payment processing capabilities or integrations with major gateways. Useful for physical and online stores.
Which method(s) make most sense depend on your business model and existing setup. We’ll explore the leading options in more detail next.
Top Credit Card Payment Processors for Small Businesses
We researched over 20 of the top payment processors, gateways, and merchant services based on fees, features, user feedback and ease of use for small businesses.
Here are our picks for the top credit card payment processing solutions:
1. Stripe
Stripe is our choice as the best overall processor for small and midsize businesses. Used by over a million businesses, Stripe offers:
- Simple pricing – 2.9% + 30 cents per successful card charge in the US
- Integrated payment gateway and merchant account
- Fast account setup and integration
- PCI compliance built in
- Excellent reporting and analytics
- Easy to split payments between contractors
- Great for online and offline payments
- Additional features like invoices and Stripe Capital
Stripe makes accepting cards incredibly fast and straightforward for any type of business.
2. Square
Square is another top contender, best for small businesses with a retail presence. Features include:
- Flat 2.6% + 10 cents fee per tap, dip, or swipe (3.5% + 15 cents for keyed payments)
- Free square reader for tap & dip payments
- Integrated online and offline payments
- PCI compliant
- Send digital invoices -process payments through Square POS app
- No early termination fees
Square offers a seamlessly integrated solution for retail stores, restaurants, and service businesses.
3. PayPal
As a pioneer in digital payments, PayPal remains widely used by smaller ecommerce businesses. Benefits include:
- 2.9% + 30 cent transaction rates in the US
- Instant account setup
- Email invoices with Pay Later option
- Simple checkout integration for websites
- PCI compliant processing
- Micropayment pricing as low as 1.5% + 5 cents
- Virtual terminal to manually enter card payments
PayPal makes it fast and easy to invoice clients online and accept payments with minimal setup.
4. Payline Data
Payline Data (now WorldPay) offers customized payment solutions for mid-market and enterprise ecommerce. Features include:
- Omnichannel retail, online, and mobile
- Unique pricing for high volume clients
- Worldpay gateway included
- Data insights for fraud protection
- Inventory management integration
- Shopping cart plugins available
- Optional in-store POS capabilities
Payline caters to higher volume merchants with advanced payments needs and business management tools beyond just processing transactions.
5. Fattmerchant
Fattmerchant targets subscription-based service providers with flat monthly pricing:
- Uncapped monthly card processing for $99/month
- Integrated payment gateway and merchant account
- Virtual terminal and mobile card reader
- Invoice generation capabilities
- Syncs with QuickBooks Online and Xero
- PCI compliance included
- Email and chat support 24/7
The subscription model makes it simple to budget credit card processing expenses.
6. QuickBooks Payments
QuickBooks Payments makes sense for users already on Intuit’s accounting platform. Benefits include:
- 2.4% + 25 cents card rates (or 1.6% + 25 cents on QuickBooks Payments Pro plan)
- Seamlessly integrates transactions into QuickBooks
- Virtual terminal and QR code payment options
- Accept payments online or in-store
- Send custom estimates/invoices
- Sync payment data with sales forms
QuickBooks Payments enables easily combining payments with accounting and financial workflows.
7. Helcim
Helcim is a full-service merchant account provider catering to many types of businesses:
- Interchange-plus cost-plus pricing from 0.18% to 0.5%
- Lower negotiated rates for some industries
- Integrates with 200+ payment gateways
- Multi-currency processing
- Virtual terminal and custom POS options
- PCI compliant with security tools
- Free proprietary Helcim gateway available
Helcim brings customized pricing and support for diverse business models.
The majority of small businesses will be best served by user-friendly solutions like Stripe and Square that make accepting online payments extremely quick and straightforward.
But for large ecommerce stores with high order volume, providers like Payline bring enterprise-grade tools and pricing. Evaluate your current and future needs to determine the right fit.
Next let’s compare some of the top contenders in more detail on features and pricing.
PayPal vs Stripe vs Square: Key Feature Comparison
PayPal, Stripe, and Square are among the most widely used online payment systems for small businesses. Here is how they compare across some key features:
| Features | PayPal | Stripe | Square |
|---|---|---|---|
| Account Setup Time | Instant | 1-2 Days | 1-2 Days |
| Payment Gateway | Proprietary | Stripe | Square |
| Merchant Account | PayPal holds funds | Integrated | Integrated |
| Online Payments | Yes | Yes | Yes |
| In-person Payments | With card reader | With reader | Yes, with free reader |
| Invoicing | Yes | Yes, through Square Invoices | Yes |
| Virtual Terminal | Yes | No | Yes |
| Transaction Rates | 2.9% + $0.30 | 2.9% + $0.30 | 2.6% + $0.10 card present rates |
| Chargeback Fee | $20 per chargeback | No fee for occasional; account cancellation for excessive | No fee for occasional; excessive can lead to account review |
| Payment Speed | 1 day transfer | 2 day transfer | 1 day transfer for card payments; 2 days for bank/ACH |
PayPal, Stripe and Square have very similar basic features, pricing, and speed. All three are excellent choices. Square stands out with free POS hardware while Stripe has a slight edge in overall user experience.
For complete details visit their websites or consult with a payments expert. But assessing needs against this comparison chart is a helpful starting point.
Important Credit Card Payment Processing Considerations
Here are some key factors businesses should consider when choosing an online payment acceptance solution:
Transaction Fees – Compare rates like 2.9% + $0.30 per charge across providers. It really adds up for higher volumes.
Contract Length – Many force 1-3 year contracts with early termination fees. Go month-to-month if possible.
PCI Compliance – Required for card security. Most processors include compliance.
Integration Difficulty – Look for turnkey integration with minimal coding and headaches.
Processing Speed – Faster is better. Within 3 days at most is reasonable.
Mobile Payments – end-to-end mobile payment acceptance is key for on-the-go businesses.
Data Security – Ensure PCI certification and data encryption.
Fraud Protection – Tools like address verification services and customer screening help avoid chargebacks.
Support Options – Chat, phone, email and resources help troubleshoot problems quickly.
Reporting – Robust reporting on payments, reconciliation, fees, and disputes aids transparency.
Carefully weigh each of these elements against your business needs and priorities to make the right choice. Getting the wrong solution adds unnecessary fees and headaches.
Do You Need a Merchant Account to Accept Credit Cards Online?
At a minimum, you need a payment gateway connected to your bank account in order to accept credit card payments online. However, you may also want a dedicated merchant account.
Benefits of having a merchant account include:
- Funds from credit card transactions can be directly deposited into the merchant account instead of your regular checking account. This separates card revenues from general business finances which can aid reporting and transparency.
- Dedicated merchant accounts are designed to handle frequent deposits and withdrawals of card transactions.
- Merchant services often provide dedicated support to quickly handle transaction disputes and chargebacks. This protects your normal business bank account.
- If your primary business checking account is ever frozen or shut down, you can keep receiving credit card funds through your merchant account and not miss deposits.
- Merchant accounts can offer specialized pricing, rewards, or volume discounts from credit card processors.
While a regular business checking account typically suffices, there are advantages to dedicating a separate merchant account for accepting credit cards online.
How to Choose the Right Credit Card Payment Processor
Follow this methodology when evaluating payment processing solutions:
1. Assess your needs
- Do you need in-person POS, virtual terminal, or online payments?
- What volume do you expect to process monthly?
- Any international or recurring billing requirements?
- Need invoicing capabilities?
2. Research top providers
- Consult reviews on sites like CardFellow, CardPaymentOptions and merchantmaverick.
3. Compare pricing
- Factor in rates, fees and add-ons like chargeback fees.
4. Vet security and compliance
- Make sure the provider is PCI compliant.
5. Review integration difficulty
- Test ease of setup and integration with your shopping cart, accounting software, etc.
6. Validate customer support
- Email, chat or call support to evaluate responsiveness.
7. Check contract terms
- Opt for month-to-month flexibility if possible.
Following this process will help you make an informed decision and confidently get started accepting online payments.
Tips for Integrating a Payment Gateway on Your Website
Here are some tips for smoothly integrating an online payment gateway or processor with your website:
- Make sure your web host meets security requirements for PCI compliance.
- If using a shopping cart, look for a plugin or extension for your payment provider to integrate with the cart.
- If accepting payments for services, integrate payment forms directly into the relevant pages on your site.
- Test end-to-end payments thoroughly before going live.
- Ensure your SSL certificate is active and force HTTPS access to pages with payment forms.
- Turn off caching temporarily on pages with payment forms to avoid outages.
- Review the payment provider’s documentation for detailed API instructions and troubleshooting. Their support team can also assist with technical integration questions.
- Monitor transactions closely right after launch to catch any issues quickly.
Proper integration results in seamless payments for customers and minimal headaches on your end.
Managing Online Payments and Credit Cards Securely
You must follow PCI compliance standards when handling online payments:
- Encrypt sensitive cardholder data end-to-end.
- Never store full credit card numbers or CVV codes on your servers. Only last 4 digits if required.
- Only share details via secure HTTPS connections.
- Restrict payment access to authorized staff only.
- Contractually require compliance from vendors or third parties who may access data.
- Use dedicated secure networks and firewalls rather than public internet.
- Carefully monitor servers and traffic for any abnormal activity.
- Maintain up-to-date anti-virus software and security patches.
- Complete annual risk assessments and vulnerability scans.
- Have a tested incident response plan in case of a compromise.
Staying vigilant in adhering to these standards ensures you don’t put customer data at risk.
Accepting Credit Cards Over the Phone Payments
If you need to manually charge customer cards without swiping or having them enter details online, you have two options:
1. Virtual Terminal
Many payment gateways and processors provide a virtual terminal you can login to on your website and securely enter credit card numbers, expiry date, CVV code and charge amount to process payments.
2. API integration
You can build your own custom payment forms that use the provider’s API and SDK to securely collect card details, tokenize them, and process the charges without the data touching your servers.
Either method allows taking card payments over the phone or submitting transactions manually for customers. Just make sure you are PCI compliant.
Is a Payment Gateway Needed to Accept Credit Cards?
A payment gateway facilitates the secure handoff of card details between your website and processor. The key functions it performs are:
- Encrypting sensitive card data for secure transmission to processors
- Authenticating with processors to run the charge
- Confirming transaction results back to your site
- Handling data interchanges between involved parties
You typically need a gateway to provide the connectivity between your ecommerce site or shopping cart and the actual payment networks.
Many processors like Stripe include proprietary gateways so you may not need a third party gateway. But for taking payments online, a gateway is usually necessary behind the scenes.
How Much Do Credit Card Payment Processors Charge?
Pricing from leading processors typically involves:
– Transaction fees – Typically 2.6% to 3.5% of transaction amount plus a small fixed per transaction fee (eg. 2.9% + $0.30 per charge is common).
– Monthly fees – Can range from $0 for basic accounts to $25+ for premium accounts with enhanced features and support.
Comparing Card Swipers and Readers for In-Person Payments
If you need to accept in-person card payments in a retail or mobile business, you’ll need card reading hardware. Here’s an overview of different options:
- Card swipers – Basic swipe-only terminals from vendors like Ingenico and Verifone connect to your payment processor to authorize transactions.
- Contactless + Chip readers – Modern readers like Square’s combine tap-to-pay, chip insertion and swipe capabilities.
- Mobile card readers – Small portable readers like Square’s plug into smartphones to turn them into payment devices. Useful for making sales on the go.
- High-end terminals – More advanced all-in-one POS terminals integrate card reading with sales systems and inventory management.
When selecting a card reader, look for one that supports EMV chip cards, contactless payments like Apple Pay, and end-to-end encryption for security. Mobile card readers offer flexibility for businesses on the move.
Tips for Reducing Credit Card Processing Fees
Here are some tips for minimizing the rates and costs your business pays to accept credit card transactions:
- Negotiate your rates – many processors are willing to lower rates for higher volume businesses. Seek discounts.
- Ask about interchange-plus pricing to pay lower interchange fees set by card networks instead of marked up tiers.
- Process higher ticket transactions which typically have lower percentage fees vs. micropayments.
- Encourage customers to pay via lower fee funding sources like bank transfers instead of cards if possible.
- Compare rates across providers regularly – many run seasonal promotions.
- Use a processor that provides a virtual terminal so you aren’t paying card present vs card not present rates.
- Pass processing costs to customers with a credit card surcharge (where permitted by law).
- Bundle add-on fees into your base pricing instead of separately charging customers.
Avoiding nickel-and-diming from excessive fees helps maximize the revenue you retain from payments.
Should Businesses Develop Their Own In-House Payments System?
While it may seem attractive from a cost perspective to build your own in-house payments platform, in most cases leveraging third-party processors is more beneficial:
Pros of custom in-house payments:
- Avoid monthly processor fees which add up, especially on higher transaction volumes
- Ability to customize to your unique business needs and workflows
- Full control over your payment systems and data
Cons of custom in-house payments:
- Very expensive and complex to build a truly scalable and robust platform
- Significant drain on internal engineering resources to develop and maintain
- Increased PCI compliance burden – at the mercy of your internal team staying on top of security patching and monitoring
- Higher risk exposure if systems are compromised
- Lack of support teams to assist merchants with disputes or issues
- Limited payment options – major card networks prefer third-party processor relationships
Unless your engineers have deep expertise in payment systems and your volume is extremely high, offloading to an established processor is typically the more effective route. The costs often outweigh the risks of managing payments in-house.
Options to Accept Apple Pay, Google Pay and Digital Wallets
To accept mobile and digital wallet payments like Apple Pay and Google Pay, you need payment hardware and software that supports contactless transactions. Here are a few options:
- Many POS systems and modern card readers from vendors like Square already support NFC contactless payments natively.
- For online payments, Stripe and Braintree integrate directly with digital wallets to collect payment details.
- Third party contactless payment modules like Motion Payments allow adding contactless support to your existing card readers.
- Mobile card readers that plug into smart devices typically support contactless payments.
Given the rise in adoption of digital wallets, make sure your payment acceptance hardware and software enables tapping to pay. This gives customers the most flexibility.
High Risk Merchant Accounts for Certain Business Types
Some industries like CBD, telemarketing, and cryptocurrency trading are deemed “high risk” by processors. Here’s what these merchants need to know:
- You will likely pay higher transaction fees due to increased risk.
- Fewer providers may be willing to onboard your business. Specific high risk specialists are best.
- Prepare to provide more documentation like business licenses and financial statements.
- A reserve holding a percentage of your transactions may be required to mitigate risk.
- Higher chance of sudden account freezes or cancellations for suspected fraud.
- Customer disputes and chargebacks will be scrutinized more closely.
While being categorized as high risk makes getting a merchant account more challenging and expensive, specialists do exist to provide solutions tailored to these industries.
Offering Financing Payment Options
Beyond just credit cards, consider offering additional flexible payment options:
Installment plans allow customers to split up payments interest-free over a defined number of months. This helps with large purchases.
BNPL financing through providers like Affirm give customers short-term loans to buy now but pay later in multiple installments.
Volume discounts incentivize customers to prepay for packages of your services upfront at a reduced rate vs paying-as-you-go.
Retainer models allow for recurring payments on a fixed schedule -great for consultants providing ongoing services.
Layaway programs allow customers to pay towards an item over time until the balance is complete then receive the product.
Additional financing and installment options beyond standard credit cards give customers more ability to pay while increasing cart sizes for your business.
