How to accept credit card payments as a small business

For a small business, accepting credit cards can boost sales and lead to more satisfied customers. It shows your company is flexible and on the same level as your larger competitors and that it’s ready and able to accept credit card payments in-store, online or wherever you sell your products and services.

While some business owners may avoid accepting credit cards because of the processing fees, embracing this common payment method can unlock a much wider customer base and drive more sales. This guide highlights the different acceptance methods, the benefits of taking credit cards and how to get started.

What you’ll learn:

• After getting your business set up for credit card payments, you can accept them in person, online, by phone or via a mobile device.

• Accepting credit card payments can lead to increased sales, improved cash flow and better protection against fraud and payment disputes.

• While convenient, accepting credit card payments also means your business will incur processing fees for each transaction.

Once you’ve decided that accepting credit card payments would benefit your company, you can follow a few steps to get started. These steps include:

• Comparing payment service providers and their fees

• Choosing a payment processor that’s right for your business

• Selecting a payment gateway, the technology used to transmit payment information

• Opening a merchant account

• Acquiring the right software and hardware

• Setting up your payment processing systems

After completing the necessary steps to start accepting credit card payments for your small business, you can process those payments in several ways.

To accept credit card payments in person—whether you’re a restaurant, retail store or a vendor at a local market—you’ll typically need a point-of-sale (POS) system or a mobile card reader. Customers can swipe, tap or insert their card to complete their purchase and, in some cases, finalize the transaction by signing a paper receipt or tapping an on-screen acceptance button.

If your business sells products or services online, or you’re an e-commerce shop, you can accept credit card payments through your website. These are called card-not-present (CNP) transactions, since the customer isn’t physically handing you their credit card. 

A payment gateway is necessary for online credit card purchases, as it securely transmits customer card information from your website to the payment processor.

If your business takes orders over the phone, accepting credit card payments this way can be helpful. Phone payments are another type of CNP transaction. The customer will read their card details over the phone, and the charge is processed through your POS system to finalize the sale.

In some instances, you might need to accept credit card payments for your small business using your mobile device. Using your phone or tablet to process payments can be especially helpful for sales on the road or if you offer in-home or on-site services.

You’ll have to set up an account with a credit card processor for mobile credit and debit card payments. Typically, you’ll also work with a payment facilitator—like PayPal—to act as the go-between for your company and the credit card network so you can start accepting payments.

Accepting credit card payments can be beneficial to your business in several ways. Here are some advantages to consider when deciding whether it’s the right choice for your company.

There’s no doubt that consumers today appreciate the convenience of paying with a credit card, as carrying cash is becoming less common. In fact, according to the Federal Reserve, 81% of adults in the United States have at least one credit card—which means if your business doesn’t accept credit cards, you could be missing out on sales. 

Plus, if your business offers online sales, customers can make purchases with their credit cards anytime from anywhere in the country—or even the world.

Accepting credit cards as a payment method can lead to increased sales, which results in more revenue for your company. That’s because customers paying with a credit card are more likely to make impulse purchases and spend more than they would if using cash. 

Plus, credit card payments typically process faster than other payment methods, often depositing into your business bank account within a few days. Faster access to cash can also help improve your business’s cash flow.

Processing credit card payments can be easier than counting the cash your company earns every day, giving you more time to focus on important business operations and potentially speeding up other processes. 

Additionally, accepting credit cards can help improve customer satisfaction and make the checkout process faster since cashiers don’t have to handle cash or make change.

Credit cards are a secure form of payment for your business. Credit card processors typically offer increased security measures, such as fraud prevention, to help reduce the risk of handling credit card fraud on your own. They may also provide charge-back protection, featuring detailed transaction data to help your business manage or avoid disputes.

The downside to accepting credit card payments for your small business is that they come with certain fees. For example, for every credit card transaction, your small business will pay a processing fee to the payment processor. That processing fee includes a baseline fee that’s typically between 1.5% and 3.5% of each transaction, plus a fixed fee of 10 to 40 cents. 

Your customer’s bank may also charge interchange fees, which differ based on the type of credit card being used. These fees are set by the card network and paid to the card-issuing bank. You might also incur assessment fees from payment networks, like Visa® or Mastercard®, when processing credit card payments.

Accepting credit cards can make it easier for your customers to pay, boost your sales and improve your cash flow. Whether you process credit card payments in person, online, by phone or on the go, the right setup can streamline your operations and provide additional security. Just remember that processing fees are part of the equation, so you should factor them in when considering whether to accept credit cards as a payment method.

Looking to better manage your business finances? Capital One offers a range of business credit cards tailored to fit your needs. You can even see if you’re pre-approved before you apply, with no impact on your credit.