How Do You Accept Credit Card Payments as a Small Business?

Do You Need a Merchant Account or a Payment Facilitator?

Either works. With a payment facilitator, "the payfac effectively 'rents out' merchant account functionality under its larger master merchant account," which is why Square or Stripe can approve a new business in minutes and charge one flat rate.

A traditional processor gives the business its own merchant account, which "can take time and often involves a detailed application process and credit checks," but opens up interchange-plus pricing as volume grows. The difference is explained in what is a merchant account.

How Do You Take Cards in Person?

With a card reader or terminal at the counter, or with the phone itself. Square says Tap to Pay on iPhone lets you "accept contactless payments anywhere on-the-go with just your iPhone," on an iPhone XS or newer. Note the limits: "offline payments are not supported with Tap to Pay on iPhone." More in Tap to Pay for small business.

How Do You Take Payments Online, by Invoice or by Link?

Without building a website checkout, if you want. Stripe notes that "invoicing and Payment Links are two ways you can start using Stripe to accept payments without writing any code," and that a payment link can be shared "on social media, in emails, or on your website." Square offers the same tools. For a full online store, the checkout runs through a payment gateway; see what is a payment gateway.

What Is PCI DSS, and What Does a Small Business Have to Do?

PCI DSS is the card industry's security standard. The PCI Security Standards Council says it "provides a baseline of technical and operational requirements designed to protect payment account data."

For a small business the basics are simple: use a provider that keeps card numbers off your own systems, complete the PCI validation your provider asks for, and change default passwords. The Council warns that "the use of weak and default passwords is one of the leading causes of payment data breaches for businesses."

What Do You Need to Apply?

Identity and business details. Square tells applicants that "federal law and banking industry regulations require that all financial institutions verify and record information that identifies each person who opens an account." For a sole proprietor, that includes a Social Security number or ITIN and a date of birth.

How Much Does It Cost to Accept Credit Cards?

On flat-rate plans, about 2.4% to 2.7% plus a fixed fee in person and more online; Stripe charges 2.9% + 30¢ for domestic online cards. Benchmarks are in average credit card processing fees.

BatchOut sets up all of it, matched to how the business takes money, with hardware free for qualifying volume, leased or bought. See the setup for your business type.