Best Ways for Small Businesses to Accept Credit Card Payments Online

Check out the top payment methods for online businesses.

If you run an online business today, a likely big concern for you is finding a way to accept credit cards and other payments online that’s safe, secure, and cost-effective. More and more people are conducting all types of business on their computers, tablets, and mobile devices. Apple Pay and Google Pay have even made it unnecessary to input card information when making mobile payments. People buy online and want to conveniently pay for things online.

This article explains what you need to know to find the best credit card payment option and payment service provider, depending on your unique business situation.

Options for accepting credit card payments online

Online ACH and E-check payments

Although not technically a credit card transaction, ACH (automated clearing house) transfers are typically the most cost-effective way to accept payments online. If you have ever received a direct deposit from your employer or tax authority or paid your bills online using your bank account, you’ve taken advantage of ACH payments. Social payment apps like Venmo also use ACH to transfer money from person to person for free.

For businesses, ACH payments often come with much lower transaction fees than credit or debit card payments. It’s a popular option for businesses that invoice customers or have recurring payments, such as subscription meal services.

The downside of using ACH is that the card payment approval process isn’t instant and can take time to process. (People have less tolerance for processing delays, especially since chip cards have made real-world transactions effortless and almost instant.) They also require the customer to enter their bank account and routing numbers, which is cumbersome and time-consuming. This step is less than ideal for transactional businesses like retailers.

Some popular ways to accept ACH payments online include:

  • Chase Payments accepts online ACH payments with no minimum and no cap at only 25 cents per transaction.
  • Helcim is a free merchant account that includes relatively low-cost ACH processing. It’s better for larger businesses than very small ones.
  • Stripe is a no-cost invoicing solution for online businesses. It comes with low-cost ACH processing and competitive credit card payment processing fees.
  • Quickbook Payments offers low-cost ACH processing for individuals and small businesses that invoice customers.
  • Square Invoices is free invoicing software. ACH payments are charged one percent per transaction with a one-dollar minimum.

Online credit card processing companies and debit card payment processors

Retailers and most other transactional online businesses must be able to accept traditional credit and debit card payments because consumers are unlikely to put in the effort of providing their banking information for one-time or occasional purchases.

There’s no way to accept major credit cards and debit card payments for free. However, choosing a credit card processor with reasonable fees can save your business a considerable amount of money. Let’s take a look at some of the possibilities.

Ecommerce platforms

If you’re a retail business and you need to accept credit and debit cards online to complete sales, the simplest and most cost-effective way to do it is to run your company through an e-commerce platform or website builder that comes with built-in payment processing. Choosing an e-commerce store with integrated payments simplifies setting up and managing your operation. Another benefit: It allows you to collect a great deal of information about your customers and act on it without using additional software.

The two most popular and cost-effective online retail solutions that include payment processing are:

  • Square is one of the best-known, simplest, and most cost-effective solutions for accepting payments online. It’s free to set up and comes with an online store, invoicing capabilities, a virtual terminal, a mobile card reader and in-store credit card reader, a credit card terminal, and a point-of-sale system. Square comes with no formal application process or monthly minimums. You can sign up and start accepting payments online almost immediately for a standard 2.9 percent plus a 30-cent transaction fee.
  • Shopify is an affordable small-business solution with e-commerce plans starting at nine dollars per month. Shopify is usually best for new e-commerce businesses. It comes with a significant amount of built-in functionality. Online transaction fees range from 2.4 percent plus 30 cents to 2.9 percent plus 30 cents, depending on the plan.

Square and Shopify include tools that allow you to set up recurring billings or subscriptions.

Traditional merchant accounts

If you have an established online business that consistently processes more than $20,000 in monthly transactions, accepting credit card payments via a traditional merchant account could be the best and most cost-effective option for your business.

A merchant account is a type of bank account. That makes it a more formalized — and time-consuming — application and approval process than Square or PayPal. The extra time could be worth it because established higher-volume businesses could earn more competitive rates from a merchant account provider than from an e-commerce platform.

In short, existing brick-and-mortar businesses already processing in-person transactions through a merchant account could negotiate competitive online processing rates with their current payment processor.

If you’re using a merchant account provider to accept credit cards at your physical store, you may also need a payment gateway to connect your merchant account with your online store. There are several options available to you. Some merchant account providers, like Stax by Fattmerchant and Payment Depot, come with built-in gateways at no extra cost. Others, such as, make you pay a monthly fee. Another option for services like is to use a separate gateway.

Some of the most popular merchant services for online payments are:

  • Helcim offers low-cost interchange-plus processing that comes with no monthly fee. It also provides volume discounts for all your online and in-person payments.
  • Payment Depot is a solid and affordable option for businesses processing more than $10,000 in monthly sales through any combination of online and offline channels.
  • Stax by Fattmerchant is a cost-effective option for online-only companies processing more than $20,000 in transactions per month.

No-cost credit card processing

In some U.S. states, online and brick-and-mortar merchants can legally pass their credit card processing fees to consumers. Depending on where a business is located, they can use the following methods to do this:

  • Convenience fee is a fixed amount added to the total purchase amount at checkout.
  • Credit surcharges allow you to add credit card processing fees to the price of the products you sell.

Adding these surcharges to your purchase totals or product prices doesn’t allow you to avoid other merchant processing fees, such as merchant account costs and PCI compliance fees. It’s also essential to make sure that your website has a system in place to ensure that customers are located in states that allow convenience fees and credit surcharges to be added. This is particularly important if your state allows these things, but you have customers from other states. Several payment processing providers offer this service, including:

  • Stax is suitable for small and growing businesses looking for secure online credit surcharging.
  • PaymentCloud is a reasonable option for high-risk merchants that want both traditional and online credit surcharging payments.

Either of these options will help your business avoid incorrect charges to customers that could violate state laws.

Recurring payments

Businesses that provide memberships, subscriptions, regular deliveries, and professional services typically require the ability to collect the same fees from customers regularly. Recurring payment processors have tools for generating quotes, handling billing, and sending invoices to help you with the financial issues associated with customers and clients who consistently do business with you. They also come with a way to ask customers to sign a one-time authorization form, collect payment information, and safely store it according to PCI compliance regulations.

All-in-one payment processors that support recurring payments include:

  • Helcim is a good solution for larger merchants that will benefit from its high-volume discounts.
  • Square is best for newer small businesses or startups that could benefit from a free POS system.
  • Paypal is a reasonable solution for seasonal or occasional businesses.
  • Stripe comes with capabilities that make it an excellent choice for businesses that operate across the globe.
  • Stax is a traditional merchant account provider that includes a recurring payment option.

Make sure you read the fine print before you sign on with a recurring payment provider. You don’t want to be caught by surprise by unexpected fees or charges that could cut into your bottom line.

Buy now, pay later (BNPL) customer financing

Long considered a financing relic, BNPL has become popular again with consumers because inflation has made many goods too expensive to pay for all at once.

This short-term financing option allows customers to pay for their purchases in installments which are deposited into your business bank account. These programs typically come with minimum interest, usually much lower than the rates on credit cards. BNPL capabilities can be integrated into most popular online payment processors, while some, like PayPal and Square, provide it as a service built into the app.

Some of the most popular BNPL apps include:

  • Affirm, because of its pricing structure, is best for businesses that sell relatively expensive products.
  • Afterpay is the BNPL add-on for businesses using the Square POS system.
  • Klarna comes with several payback options and no fees.
  • PayPal Later is the BNPL app for businesses that accept PayPal.

Always do your due diligence to select a BNPL system with a payment structure that is effective for your business.

Payment system pricing: The basics

How much you pay for payment processing depends on the type of payments you receive and the provider you choose. Typically, if you select a provider with no monthly fees, you can expect to pay relatively high transaction fees, typically around three percent. If you pay an up-front monthly fee for your service, the transaction fees will be lower. Transaction fees, whether for one-time payments, recurring fees, or invoice payments, could be a percentage of the transaction, a flat fee, or a combination of the two. If you sell high-ticket items, it could make sense to choose a provider with low flat fees. If your offering is less expensive, paying a percentage of them with no set fee could be the better option.

If your online operation includes a brick-and-mortar business, it’s important to note that online processing fees are usually higher than in-store fees.

There’s no way to accept credit cards online for free because credit card issuers like Visa and MasterCard charge a processing fee for every transaction. This is known as an interchange fee. Your merchant account provider or payment processor pays this fee, then passes it along to you with a markup to cover their costs. The markup can take the form of a transaction fee, monthly fee, or a combination of the two.

Because of these interchange fees set by credit card providers, direct bank payments and ACH or e-check payments are the most affordable way to accept payments online. However, most people prefer the convenience of paying online with a credit or debit card.

Here are some things to look out for when evaluating payment processing services.

  • Transaction fees. Solutions like Square and PayPal that come with flat fees and no monthly minimums are usually the most affordable for small businesses and startups. As a business grows, solutions with interchange-plus or membership pricing, such as Payment Depot and Stax by Fattmerchant, are usually the most cost-effective.
  • Tiered pricing. Tiered pricing models allow the processor to charge different rates and fees depending on the type of card used, whether it’s American Express, Visa, MasterCard, or Discover. This is typically the priciest and least transparent online payment option. It’s also almost impossible to gain control over your fees.
  • Monthly fees. These are flat-rate monthly fees that allow you access to the payment system. Be aware that some solutions offer low transaction rates but come with high monthly fees. Always take time to figure out how all the costs associated with a payment system could impact your business’s cash flow and bottom line.
  • Set up fees and applications. Merchant services accounts usually take longer to set up than third-party credit card processing solutions because you must go through an approval process. You may also need to pay a fee to apply for — and start working with — these services.
  • Contracts and requirements. Specific payment solutions could require you to sign long-term contracts for a year or more. Others might make you meet monthly transaction minimums, or they’ll charge you a penalty. Make sure you don’t lock into a contract you can’t get out of if your business changes or grows. And always look out for unexpected or hidden fees.
  • Website integration. Check that the payment service you select integrates with your website hosting service.

Checking for all these things will help ensure your online payment system will be effective for your operation.

Saving on online payment processing fees

Here are some things you can do to control online payment costs:

  • Offer cash discounts. Incentivizing ACH or e-check payments can often cost less than paying transaction fees.
  • Set minimums. Requiring a minimum purchase amount for credit card payments can help ensure payment fees are covered and increase average order value (AOV).
  • Negotiate rates. Some providers have hard-and-fast fees that can’t change. Others may be willing to negotiate. Some may even reduce rates as your business grows.
  • Cut ancillary services. If your payment processor includes add-on benefits, features, or tools, check that you’re not paying for them if you don’t use them. If you DO use and pay for them, consider whether they’re necessary.
  • Prevent fraud. Small business owners can lose a lot of time and money to online scammers. Leverage chargeback prevention tools to help prevent payment fraud.

These steps will help ensure you’re doing everything possible to control your online payment costs.

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