how to accept credit cards - person using an emv chip credit card terminal

How to accept credit card payments

Thursday, October 21, 2021

In today’s economy, more and more consumers are turning to cashless and contactless payment options. With the rise of mobile payments, it’s easier than ever for shoppers to leverage the power of credit cards – even from their mobile devices. So as consumers put more and more of their purchases on credit cards, they expect businesses of all sizes to accept these payments.

With so much information out there, it can be difficult for small business owners to know where to start. So we'll lay out the basics of credit cards to help you further understand the benefits and costs of accepting credit card payments.

To start, it’s important to understand the difference in processing credit cards and debit cards.

The difference between debit and credit cards

Not all cards are equal. While they look the same, debit and credit cards have a few considerable differences that small businesses like yours should know.

Debit cards are essentially cash cards, meaning that someone is paying your business using money out of their own pocket. In contrast, credit cards allow the cardholder to “borrow” money from credit card companies. Because there’s less risk with debit cards (since it's the cardholder's money), the fees you’ll pay as a business to process debit cards are lower than credit card fees.

However, not all consumers will want to use debit cards at your business, as credit cards offer more protection for consumers than debit cards. While credit cards benefit consumers, there are plenty of reasons why accepting credit cards can benefit your business, too.

The benefits of accepting credit cards


Gain your customers’ trust


Let’s face it – cash-only businesses carry a stigma, often leading consumers to wonder why these businesses can’t accept other forms of payment. But luckily, accepting major credit cards like Visa, MasterCard, Discover, and American Express is a simple way to garner trust with your customers and lend credibility to your business.

Easier to use

Thanks to technological advancements, credit card acceptance is easier for customers and your business. For customers, they can purchase your goods and services even without their wallets – thanks to mobile wallets and Near-Field Communication (NFC) payments. For businesses, accepting credit cards means less cash, which lessens the burden of driving to the bank, making change, and balancing the cash register. Put simply – credit cards can simplify your business.

Improve your cash flow

When your business processes payments from credit cards electronically, the funds get settled and deposited into your business’s bank account more quickly – giving you faster access to your money. Plus, offering your customers an option to pay with a credit card can lessen the risk of faulty checks, while also reducing the need for check processing and waiting on check processing times.

Boost your sales

When you start to accept credit cards, you’ll attract new customers who may have previously avoided your business because of the limited payment options. Plus, credit card users typically have a higher spend than cash buyers. The added payment flexibility helps consumers buy on credit while giving you a boost, too.

We’ve reviewed the benefits of accepting credit cards, and now you’re eager to accept credit cards. Here’s the process to make it happen:

Accepting credit cards

One of the first big decisions you’ll have to make is to decide how and where you’ll accept credit cards. You can accept cards online, in-store, or even on the go with mobile card readers. We’ll touch on each of these methods and discuss them in more detail.


You’ve got your business website up and running – you’ve done all the legwork, but now how do you accept online payments? This is where a payment service provider enters the picture. When you set up your online shop, you’ll need a payment gateway in order to take the customer’s credit card information and get paid for your goods or services. Payment service providers help facilitate the transaction from this gateway to all the necessary parties so that you get paid. You’ll want to make sure that the payment processing solution you’re using is compatible with your ecommerce platform (such as Shopify), so that payments are seamless for your customers. The more seamless the experience for customers, the faster you’ll get paid.


For those who operate a brick-and-mortar store, the process is a bit different. To start accepting credit cards in-store at checkout, the first thing you’ll need is an EMV chip card-enabled reader. Essentially, this allows you to read physical credit cards and accept payments from your customers in person. These are more secure than magnetic-stripe card readers–adding more credibility to your business.

Many EMV chip card readers also provide payment flexibility with tap-to-pay and smart payment options (like Samsung Pay and Apple Pay), allowing customers to pay you even when they forget their wallet. You have the choice between a standalone credit card terminal or a full point of sale system (POS). POS systems are typically seen as more robust options, allowing you to do more than just accept credit card payments, while most credit card readers just accept credit cards.


Mobile credit card readers have gained popularity in recent years because of their portability and ease of use when synced to mobile apps. If your business operates largely on the go, you’ll certainly want to take advantage of credit card payments no matter where you are. From art fairs to food truck alleys, a mobile payment solution can be invaluable to your business – turning your phone into a mobile payment terminal and increasing sales. These mobile card readers can fit right in your pocket and connect to your phone quickly and safely. The result is a fast, secure payment method that you can take wherever your business takes you.

Over the phone

Do you run a business that takes over-the-phone orders? If yes, you’ll utilize your credit card terminal and POS system in-store to manually enter a customer’s information at checkout. Keep in mind, these transactions do pose more risk since you don’t have a physical card to reference when inputting the transaction. Talk with your payment processor to see if they can help decrease your risk by running CVV2 data for over-the-phone payments.

Once you've decided to accept credit card transactions and chosen a payment processing partner, you'll need to set up a merchant account. This merchant account is what allows you to receive card payment funds.

We’ve talked about the benefits of accepting credit cards and the various ways you might do so. Now let’s recap the equipment you might need to get started accepting credit cards.

Equipment you may need


  • Point of sale system – for in-store and over-the-phone orders
  • Credit card terminal/credit card reader – for in-store and over-the-phone orders
  • Mobile terminal – for mobile orders
  • Payment gateway or virtual terminal – for online orders

Your business can either lease or buy this equipment. The best solution for your business will depend on your particular needs and payment processing partner.

Now that you understand the benefits and equipment needed to accept credit cards, you’ll need to know the costs of accepting credit cards at your business.


Costs of accepting credit cards

Typically, when you accept credit cards, there are fees associated with each transaction that you’ll have to pay. However, it might be more apt to think of each transaction fee as a “bundle of fees.” This bundle of fees can typically range from 1.5-3.5% of each transaction. Let’s break down what's usually included as part of a transaction fee.

Payment processing fees

Usually, the payment service provider charges fees for using their services. These can vary in cost and how they’re billed, depending on the agreement. The payment processor might also charge fees for terminal usage or for providing a gateway for online transactions.

Interchange fees

When someone swipes a credit card at your business, the bank that issues the card gets paid a fee. This fee covers handling costs, fraud and bad debt costs, chargeback fees, and reissuing compromised cards. Since the institution is taking on the risk of the cardholder not paying the money back (as well as these costs), it makes sense that they’d need to charge a fee to protect themselves. Interchange fees are constantly changing and are based on a large number of variables including card type, business size and industry, and transaction type. These fees are standard and do not change based on who you use as your payment service provider.

Assessment fees

As a business, you'll pay assessment fees directly to the card networks, i.e., Visa, Discover, MasterCard. This is how credit card networks make their money. Similar to interchange fees, assessment fees are a fixed cost and because they are set and standardized by the card networks, they cannot change based on your payment service provider.

Other fees

There are other fees associated with payment processing that vary by provider. Some common miscellaneous fees include chargeback fees – the fees you have to pay to return the customer’s money to their account; setup fees – one-time fees to get your account started with the payment service provider; or non-sufficient funds fees – fees charged to you should you not have enough money in your bank account to cover the payment processor’s charges. Keep in mind that there could be equipment costs – either as an initial cost or as a rental fee, depending on your business’s situation.

While these fees are an added cost for your business, it’s important to remember that not only will accepting credit card payments increase traffic to your business, it will also increase the average sales of your business. In contrast, you could look at reevaluating your pricing structure in order to offset these fees.

Processing fee structure

When it comes to transaction fees, there are typically 3 types of pricing models that payment processing companies use:

  • Tiered – in this pricing model, the merchant services provider divides transactions into various buckets and charges a different rate for each tier.

  • Flat-rate – in this pricing model, the merchant services provider charges the merchant a fixed percentage of each transaction.

  • Interchange plus – in this pricing model, the merchant services provider charges the merchant the interchange rate and then adds on their fees, typically a percentage of each transaction plus a fixed fee per transaction.

Now that we’ve discussed the most important fees you’ll incur processing your customer’s credit cards and the fee structures associated with them, you’re probably wondering: is there any way for small business owners to lower the fees they pay? Spoiler: yes!


Lowering credit card processing fees

As we’ve discussed, credit card processing fees are a bundle of fees. As part of the bundle, the card issuers set the interchange fees (which go to the banks issuing the cards). The card networks set the assessment fees (the cost for using the cards). These are both fixed and non-negotiable. So in order to lower your credit card processing fees, you’ll have to work directly with your payment service provider. There are several factors that go into their ability to lower your fees. Here are a few of the factors:

High monthly processing volume

The more transactions your business processes, the more valuable your business is to a payment processor. Therefore, you might be able to negotiate a lower rate.

High average ticket size

If your business has a high value average ticket, a payment processor may see you as a more valuable customer.

Accepting credit cards in person at a fixed location

If you’re in a fixed, brick-and-mortar location, only accepting cards in-person, your transactional risk is lower because you can verify the physical card and therefore pose a lower risk of fraudulent transactions.

Good processing history

Like all businesses, a strong history of processed sales is an indicator of a reliable partner and could entitle you to a lower rate.

Excellent business and personal credit

The better the business’s and your own personal credit history are, the more likely you are to be able to negotiate fees. This makes sense because you’ve proven that you are capable of being a responsible borrower.

How long does it take to get paid?

You’ve seen the impact credit card acceptance can have on your business, but you’re worried about getting paid. And rightfully so – as cash flow is paramount to any business. So how long does it take for the funds from a credit card payment to get deposited into your business’s bank account? The best answer is it depends. But typically, you’ll see the funds from transactions in your bank account within 48 hours of the customer’s purchase.

Although the full process is outside the scope of this article, the basics of the process are these:

  • When someone swipes a card, the payment is authorized, authenticated, and then verified

  • At the end of each business day, the transactions made at your payment terminal are sent to your payment processor to be processed

  • Your payment processor sorts and sends batches of transactions to the specific card networks, who in turn request the funds from the issuing banks

  • Once the funds are released from the issuing banks, they are sent to your merchant account or business bank account

Credit card acceptance is a great way to reach more customers and increase your sales. After reading through this article, you’re well on your way to implementing credit card acceptance at your business.

Ready to start but need a partner to handle your payment processing needs?

Heartland is the point of sale, payments, and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back, and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind.