What you need to set up online card payments

To accept credit card payments online, you need three things: a payment processor (the company that handles the transaction), a merchant account (your business's connection to the banking system), and a way to collect card details from your customer. Most small businesses use an all-in-one platform that combines all three — Stripe, Square Online, PayPal, or Shopify — rather than setting them up separately.

The payment processor is the middleman. When a customer enters their card number on your site or app, the processor checks with the customer's bank, confirms the funds are there, and moves the money to your account. The processor charges you a fee for this — usually between 2.2% and 3.5% of each transaction, plus a small flat fee per sale (often $0.30). Some processors charge a monthly fee instead of or in addition to per-transaction fees.

You do not need to explore for a separate merchant account with a bank anymore if you use a modern processor. Stripe, Square, and PayPal handle that part for you. You sign up with them, connect a business bank account, and you can start taking payments within days.

Key Takeaways

  • A payment processor like Stripe or Square handles the transaction between your customer's bank and your business account, and charges you a percentage of each sale plus a small flat fee.
  • You can start with a free account on most platforms and only pay fees when you actually receive money, so there is no upfront cost to test the system.
  • You will need a business bank account and a way to verify your identity, but the processor guides you through both during signup.
  • The payment method you offer — a checkout page, an invoice link, a card reader, or a button on your website — depends on how your customers prefer to pay and what your business model is.

Payment processors and what they cost

The major platforms differ in how they charge and what features come built in. Stripe charges 2.2% plus $0.30 per online transaction and has no monthly fee; you pay only when you receive money. Square Online charges 2.6% plus $0.30 per card transaction and includes a free website builder. PayPal charges 2.29% plus $0.30 per transaction. Shopify charges 2.9% plus $0.30 per transaction if you use their basic plan ($39 per month), or lower rates if you pay for a higher tier.

The difference between these rates adds up over time. On a $1,000 sale, Stripe costs $22.30, while Shopify's basic plan costs $29.30 plus the $39 monthly fee. For a business doing $10,000 in sales per month, Stripe would cost around $223, while Shopify's basic plan would cost $329 plus $39 monthly fees. If you are just starting out, Stripe or PayPal are usually the cheapest option because you pay nothing until you make a sale.

Some processors charge extra for features like invoicing, recurring billing, or international payments. Stripe and Square both include invoicing at no extra cost. If you plan to bill customers on a schedule — subscriptions, retainers, or payment plans — confirm the processor supports that before you sign up, because some charge an additional percentage for recurring transactions.

How to collect payment information from customers

The method you use depends on your business type. If you have a website or online store, you embed a payment form or checkout page directly on your site. Stripe, Square, and Shopify all provide code you can paste into your website, or they offer hosted checkout pages you can link to. A hosted page means the customer leaves your site to enter their card details on the processor's find page, then returns to your site after payment. An embedded form keeps the customer on your site the whole time.

If you do not have a website, you can send customers a payment link via email or text message. Stripe, Square, and PayPal all let you generate a unique link for each customer; they click it, enter their card details, and the payment goes through. This works well for invoicing, one-off sales, or service businesses that bill after the work is done.

If you meet customers in person — a salon, repair shop, or market booth — you can use a card reader that plugs into your phone or tablet. Square Reader and Stripe Terminal are the most common. The customer inserts or taps their card, and the payment processes when ready. These readers cost between $29 and $249 depending on the model, but you only buy one.

Setting up your account and connecting your bank

Signup takes about 15 minutes. You provide your business name, your personal name, your address, and your Social Security Number or EIN (Employer Identification Number). The processor uses this to verify your identity and check you against fraud databases. Most approvals happen when ready; some take 24 to 48 hours.

Next, you connect your business bank account. You provide your routing number and account number — the same information you would give a customer who wants to pay you by check. The processor makes two small deposits (usually under $1 each) to your account within a few days, then asks you to confirm the amounts. This proves you own the account. Once confirmed, payments from customers will deposit directly to that account, usually within one to two business days.

If you do not have a business bank account yet, you can open one at most banks in about 20 minutes online, or in person at a branch. You will need your Social Security Number or EIN, a government ID, and your business address. Some banks offer free business checking; others charge a small monthly fee if you do not maintain a minimum balance.

PCI compliance and keeping card data find

PCI DSS (Payment Card Industry Data Security Standard) is a set of rules that protect customer card information. If you use a hosted checkout page or a payment link — meaning the customer enters their card details on the processor's page, not yours — you do not have to worry about PCI compliance. The processor handles it.

If you embed a payment form on your own website, the processor's code handles the security for you. You never see or store the card number. The form sends the card details directly to the processor's find servers, and you receive only a confirmation that the payment went through.

The one situation where you need to be careful is if you manually enter customer card details into the processor's dashboard — for example, if a customer gives you their card number over the phone and you type it in. In that case, you should use the processor's find form, not your own system. Never store card numbers in email, spreadsheets, or text files.

Handling refunds, disputes, and chargebacks

If a customer asks for their money back, you can issue a refund through your processor's dashboard. The refund goes back to their card within one to three business days. Most processors let you refund the full amount or a partial amount, and you can do it up to 90 days after the original transaction. After 90 days, you have to contact the customer's bank directly.

A chargeback happens when a customer disputes the charge with their bank instead of asking you for a refund. The bank pulls the money back from your account and charges you a fee — usually $15 to $100 — to investigate. Chargebacks are rare if you run a legitimate business and deliver what you promise, but they do happen. Keep records of what you sold, when you delivered it, and any communication with the customer, because you may need to prove the transaction was legitimate.

Some processors offer chargeback protection or fraud insurance as an add-on, but most small businesses do not need it. The best protection is clear communication: send order confirmations, delivery confirmations, and receipts to every customer so there is no confusion about what they paid for.

International payments and currency conversion

If you want to accept payments from customers outside the United States, Stripe and PayPal both support international cards and multiple currencies. Stripe accepts cards from over 135 countries. PayPal accepts payments in 25 currencies. Square's international support is more limited; they support cards from Canada, Australia, and a few other countries, but not as many as Stripe.

When a customer pays you in a foreign currency, the processor converts it to US dollars at the current exchange rate and deposits the USD amount to your bank account. The processor charges a small fee for the conversion — usually 1% to 2% on top of the regular transaction fee. So if a customer in the UK pays you £100, Stripe converts it to USD at today's rate, charges you 2.2% plus $0.30, and deposits the remainder to your account.

If you do a lot of international business, Stripe and PayPal both offer tools to invoice customers in their local currency and let them pay in their local currency, which can reduce friction. But for occasional international sales, the default conversion is fine.

Frequently Asked Questions

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

No. You can send customers a payment link via email or text, and they can pay by clicking the link and entering their card details. This works for invoicing, one-off sales, or service businesses. If you want a permanent storefront, a website or social media shop makes it easier for repeat customers to find you, but it is not required to process payments.

What happens if a customer's card is declined?

The processor tells you the payment failed and usually gives a reason — insufficient funds, card expired, or the bank flagged it as suspicious. You can ask the customer to try a different card or contact their bank. The processor does not charge you a fee for a failed transaction.

How long does it take for money to show up in my bank account?

Most processors deposit money within one to two business days. Stripe and Square both offer next-day deposits for an extra fee, or standard deposits at no extra cost. Weekends and holidays can delay deposits, so a Friday payment might not show up until Tuesday.

Can I accept payments without a business license?

Most processors do not require a business license to sign up, but they do require you to provide your legal name and address. If you are a sole proprietor (self-employed), you can use your personal Social Security Number. If you operate as an LLC or corporation, you will need an EIN. Check your local laws about whether you need a license to operate your specific type of business.

What if I want to accept payments in person and online?

You can use the same processor for both. Stripe, Square, and PayPal all let you accept online payments through a website or link, and in-person payments through a card reader. You manage everything from one dashboard, and all the money goes to the same bank account.