How To Accept Credit Card Payments Without A Merchant Account – Forbes Advisor



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Accepting credit card payments has become nearly a requirement to do business. But the prospect of extracting money from a piece of plastic in your customer’s wallet—or a string of ones and zeros in their phone—is intimidating.

A lot of the information on how to do it makes it more complicated than it needs to be—merchant accounts are just one example. Here’s how to accept credit card payments without a merchant account, so you can avoid this unnecessary and pricey step.


How Does a Merchant Account Work?

Traditionally, a business needed to open a merchant account to accept credit card payments from customers. A merchant account is a special kind of bank account that holds your money after a credit card transaction is run and while the credit card network processes the transaction. After that, the money is deposited into your business bank account.

With the traditional model, you had to work with a merchant services provider or directly with a bank to open a merchant account and negotiate a—usually yearslong—contract to pay monthly fees. Then you’d get the necessary hardware to process payments in store or set up the software you needed to process payments online.


This is all as complex and unnecessarily expensive as it sounds, so most new businesses skip this step and use an all-in-one payment service provider instead.


How To Accept Credit Card Payments Without a Merchant Account

Without a merchant account, you can accept credit cards the way many modern businesses do: with a payment service provider.

Payment service providers (PSPs) like PayPal, Square, Stripe and the like make this process a lot easier and, in many cases, cheaper than it used to be.

PSPs work similarly to merchant accounts because they accept and hold your money from credit card transactions, but you can sign up and manage the account entirely online. Plus, they don’t typically charge monthly fees just to have an account, and they process transactions in addition to holding your money.

Accepting In-Store Payments Without a Merchant Account

Modern point-of-sale (POS) systems like Square and Clover are easy to sign up for and come with all the hardware and software you need to process all transactions—cash and credit cards.


A simple system like this covers all of your needs as an in-person retail business: point of sale (i.e., your ability to check out customers), a card reader and a credit card payment processor.

They usually accept credit cards via swipe, chip reader or mobile payment reader (tap); let customers authorize a transaction by entering a personal identification number (PIN) or signing onscreen; and offer the option to print or email a receipt.

Accepting Online Payments Without a Merchant Account

The simplest way for any retailer to accept payments for an online business is through a payment service provider like PayPal, Stripe, Square or Shopify. You don’t have a terminal for customers to swipe a card, and you have to build payment processing into your website. Payment service providers are the easiest way to do that.

Most modern website builders, including Squarespace, Kajabi and Shopify, have built-in integrations with payment service providers. Integrations might be limited for some builders, so look into your options before starting on your site in case you want access to a specific provider.

If your website doesn’t integrate well with payment service providers, you can still accept payments from your online storefront by linking out to your payment account. Most payment providers give you the option to add a “pay now” button on your website that routes customers through their payment process, so you can offer a fairly seamless shopping experience—but you might have to put in more work to stay on top of your inventory and orders.

In-Person Mobile Payment Processing

If you don’t have a storefront or a cash register—like if you sell goods through a farmers market or art fair—you can still accept credit cards easily.

Using just your mobile phone with a mobile payment processing app, you can enter a customer’s credit card information or attach a small card reader where they can swipe their card to be read by your phone.

Square is the original mobile payment processor, and it sets the standard for a lightweight, easy-to-use system. Its card reader is an attachment about the size of a Scrabble tile that connects to your headphone jack or Lightning connector to turn your smartphone into an on-the-go POS.

Frequently Asked Questions (FAQs)

Do you have to have a merchant account to accept credit cards?

No. You don’t have to open a separate, pricey merchant account to accept credit card payments. You can set up an account with a payment service provider, like PayPal, Stripe, Square, Shopify or Clover, to get all the services you need to process credit card payments in one place.

How do I accept credit card payments without a reader?

Popular services like PayPal, Venmo and others allow users to accept online card payments without the need for any specialized devices. With that said, vendors like Square offer mobile card readers at a very low cost or even free depending on your service package.

Can I accept credit card payments without a business?

Anyone can set up an account with a payment service provider like PayPal or Stripe; you don’t have to be a legal business entity. Those accounts let you accept credit card payments from anyone, including friends, family, customers and clients. You can use them to accept credit card payments online or via their mobile apps by sending a link to request payment or giving the payer your email address. When you receive payment for goods or services (as opposed to money from family or friends), you have to pay a processing fee, usually a small percentage of the transaction.

What is the cheapest way to receive credit card payments?

The cheapest way to accept credit card payments for your company depends on the kind of business you run and how your customers pay. Payment processing companies use various pricing structures for their services. For most small businesses, a payment service provider is your simplest and cheapest option. You’ll pay a small fee per transaction but won’t have to worry about subscription fees or working with multiple service providers. Higher-volume businesses will probably benefit from a more complex payment processing system.

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