How to accept credit cards online

Ruth G. | October 22, 2020
21 mins

People are shopping online more than ever. Credit and debit cards have become more widespread and the rise in the use of portable digital devices like smartphones and tablets means that you can make an online purchase from anywhere. It’s not surprising, then, that according to, 42% of online shoppers state that a credit or debit card is their preferred payment method.

It probably goes without saying that if you’re a retail business, selling your wares online is essential. Gone are the days of checks, money wiring, and – heavens forbid! – sending money in an envelope as a means of paying for things. Accepting credit and debit cards is a necessary part of doing business online, period.

By allowing people to pay by card, you’re ensuring payments are processed quickly and conveniently. An online service will keep track of purchases and payments, making dealing with any issues as easy as pie. If anything goes wrong, such as a mistaken order or a refund request, you will be able to take care of it in an efficient manner.

Setting up online payment processing doesn’t have to be complicated. There are easy options, particularly if you’re just starting out. Let us guide you through it.

How online payment processing works

So, how does the whole process of paying online work? Before we delve into it, here are some key terms you need to know that will come up time-and-time again throughout this article.

  • The Merchant

This is you, the person who is selling their goods online.

  • Merchant Account

This is an account which accepts money and processes payments on your behalf. It could be from your bank, or an online payment processor, such as PayPal.

  • The Customer

The person buying your goods or services.

  • The Issuing Bank

The bank that has issued your customer’s credit or debit card, providing them with the money to pay you (the merchant) with.

  • Payment Processor

The service that validates your customers’ credit or debit card details and authorizes a transaction.

  • Payment Gateway

The checkout page of your website will be linked to your payment processor via a payment gateway. Some payment processors come with a built-in payment gateway, while some are separate (we’ll talk more about that later).

  • Processing fees

How much your merchant account charges for each transaction. Some services will also add on monthly fees, setup fees, and other extras.

Here is a visual illustration of how paying for something online via debit or credit card typically works. It may look like quite a long, overly complicated process, but if you’ve ever made an online purchase, you’ll know that it takes just a few seconds.

Here is a more detailed description:

1.At the checkout page, your customer enters their information, either on a secure form on your site or the payment processor’s website.

2. This information goes through the payment gateway which encrypts the data to keep it safe.

3. This data is sent to the payment processor.

4. The customer’s issuing bank is then contacted to approve or deny the transaction (i.e. check if they have sufficient funds).

5. If the transaction is successful, the information is sent back through the payment gateway to your website.

6. Your merchant account is then deposited with the cash.

Options for accepting credit card payments online

Now that you have a basic idea of how the online payment process works, how do you go about setting it up? Typically, you will need an online store set up. Then you will need to think about what kind of processor you’d like to use. There’s a plethora of payment processing services out there and it’s understandable if you aren’t quite sure where to begin with choosing one.

Generally, the online payment processors can be split into two categories: all-in-one third-party payment processors and more traditional merchant account payment processors. The main difference between the two is that with a merchant account you have a direct agreement with the processing bank – which is seen as being more stable – while with a third-party processor you have an indirect agreement with the bank, with the processor acting as a middleman of sorts.

All-in-one third-party payment processors

The kind you choose will be highly dependent on the scale of your business. If you are a smaller business just starting out in the world of online sales, it’s highly recommended that you start out with an all-in-one payment processor. The most famous of these is PayPal, but we’ll be discussing the alternatives more in-depth below.

These kinds of services are typically the easiest to use and have a simple fee structure. They take a short amount of time to set up because instead of having your own personal account (like with traditional merchant accounts) the merchants using these processors all share one large merchant account. This makes an account easy to set up, but also means your activity is under added scrutiny, and out-of-the-blue account freezing and terminations are common with these kinds of processors.

All-in-one solutions are the best solution for small online businesses that make less than $30,000 per month. This is because these providers generally have a flat rate for fees, which end up being more expensive than traditional merchants once you take in over a certain amount. These providers tend to come with a payment gateway, online virtual terminals where you can set up invoicing and recurring billing, and effective fraud-prevention services, but the downside is if your customer has any issues, they will have to deal with your payment processor’s customer support team rather than with your business directly.

Traditional merchant accounts

The more traditional kinds of online merchant accounts, such as TSYS, Dharma, and Payline Data, are more suited to larger businesses with higher sales volumes. As a pro, they do tend to be more customizable and have specific plans depending on what your business is, so you have more control over how everything works. These accounts often take a little bit longer to set up, but are typically a bit more stable than the previously mentioned types as a full risk assessment of your business will be made.

However, there are likely to be added costs for essential elements like payment gateways and fraud prevention. Instead of having a built-in gateway, these companies tend to work with separate major payment processors, such as First Data or Total System Services, hence the added fees.

Traditional merchant accounts are really only an ideal option if you are a larger business making a large amount of money through card processing each month. If that is the case, the processing fees tend to work out lower with these kinds of merchants, though you will most likely have other monthly fees to consider. It’s recommended your making at least $10,000 in monthly card sales to justify the cost.

Comparison of all-in-one online payment options

As we stated earlier, if you’re a small business with low sales volumes or very sporadic sales, the following payment processing options would be ideal for your company.


Around since 1999, PayPal is the most common option for paying online. You probably recognize the logo from seeing it multiple times around the web, particularly if you’ve ever used eBay – the only way to pay on the famous auction site is through the merchant.

With PayPal, you can connect your personal bank account, debit or credit card, or store money in the account itself, using it as another kind of bank account. As a merchant, the money you earn from transactions is stored in your PayPal account until you transfer it to your regular bank.

You may have only ever used PayPal as a customer; so what’s it like a for a merchant? There are three directions you can go in with PayPal, each one dependent on the kind of business you’ll be doing. Paypal Checkout is the first and newest option, then there is PayPal Payments Standard and PayPal Payments Pro.

Each option comes with PayPal Marketing Solutions, a marketing and analytics tool designed to help you understand your customers.

PayPal Payments Standard

PayPal Payments Standard is probably one of the easiest payment gateways to set up if you’re using it on an already set-up e-commerce platform. When your customer hits pay, it will simply direct you to the PayPal payment page and it takes care of the rest. It accepts PayPal, PayPal Credit and all major credit and debit cards.


2.9% + $0.30 per US transaction. No setup fee or monthly fees.


Trusted name. Works for businesses located in over 200 countries.


Being taken away from the site is a turn-off for some people.

Paypal Checkout

The idea behind PayPal checkout is that once it's added to your site, your customers face fewer online forms, making the checkout process as swift as possible. They simply confirm their PayPal account details in a secure pop-up and they’re done. It’s a similar idea to PayPal Payments Standards but you are not taken away from the site. It comes with Smart Payment Buttons – including PayPal, Venmo, and PayPal Credit – so customers are immediately presented with familiar payment options, which could boost conversions.


2.9% + $0.30 per US transaction. No setup fee or monthly fees.


Trusted, well-known name, frictionless payment option for existing customers.


Requires developer skills to integrate with your store.

PayPal Payments Pro

Paypal Payments Pro takes the pros of the previous two options and takes them to the next level. When your customers pay, they’re not taken away from the site. There are more payment options and the Pro option also comes with a Virtual Terminal for even more payment options.


2.9% + $0.30 per US transaction. No setup fee. $30 per month.


The most customizable PayPal option; customers don’t have to leave your site; includes Virtual Terminal so payments can be taken over the phone.


Only available in the US, UK, and Canada.


While PayPal is considered an all-in-one payment solution because you don’t have to mess around with shopping carts and separate gateways, Square actually is an all-in-one solution because you can also create your store using its platform and an easy-to-use drag-and-drop store builder, offering a free personalized URL (though you will need to register the domain through a provider, such as Namecheap) and free hosting.


2.9% + $0.30 per transaction for invoices and e-commerce payments. No setup fees or monthly fees.


Accepts all credit cards; easy to set up; the number of point-of-sale (in-store sales) options, no coding required.


Unsuitable for large-volume merchants.

Amazon Payments

Launched in 2007, Amazon Payments is quickly growing in popularity. It’s a similar process to PayPal, wherein customers can pay on your site using their Amazon login information. Unlike some PayPal options, your customer can conveniently stay onsite while they input their account information. Well-known merchants that accept Amazon payments include Dyson, Monoprice, and Comixology.


The processing fee is 2.9% while the authorization fee is $.30, no setup or monthly fees, can vary by country.


Trusted name, easy to set up with many e-commerce stores.


Only available in the US, UK, and Germany.


Arguably the most well-known payment processor after PayPal, Stripe is used by many a big-name business, from Lyft to Pinterest. With a focus on functionality and flexible integrations that suit the particulars of your business model, Stripe comes with an array of tools for developers to play with, which may be intimidating for those without any know-how.


2.9% and $0.30 transaction fee, no monthly fees.


Great developer and marketplace tools, instant currency conversion.


Targeted at developers; more expensive to set up with separate e-commerce platforms.

E-commerce platforms

If you’re setting up an online store, particularly as a small business, you’re going to need an e-commerce platform. Some e-commerce store platforms provide everything you need to start an online store, while others you will need to use in conjunction with the previously mentioned payment processors.


One of the most well-known e-commerce platforms, Shopify runs over 500,000 online stores around the world. It has a built-in payment processor and payment gateway (powered by Stripe) so you won’t need to set up any separate applications for payments, although you can set up an external payment gateway if you prefer (at an extra cost). There are a number of different payment plans, depending on the size of your business.


For the Basic Shopify plan, aimed at those starting a new business, you pay $29 per month. Credit card fees are 2.9% and $0.30 per transaction.


Easy website builder, a plethora of tools and themes to choose from. Comes with everything you need to build an online store with ease.


Apps to further customize your store are not free, costs could add up.


Unlike Shopify which is its own platform in itself, WooCommerce is actually a free WordPress plug-in. Essentially it is a shopping cart you can add to your WordPress site. This is nothing to be sniffed at – currently it powers 28% of e-commerce stores on the web. It’s open source and completely customizable; you can do whatever you want with it with the aid of free and paid extensions and integrations. It supports the previously mentioned payment gateways (PayPal, Square, Stripe, and Amazon Pay) so you can choose what best suits your needs.


Easy-to-use (particularly if you’re familiar with Wordpress, great mobile-responsive themes, one-page checkout.


You have to pay for hosting and many of its extensions, more suited to smaller stores.


Another leading e-commerce platform, BigCommerce hosts 55,000 online stores worldwide. Coming with a plethora of built-in features, it’s considered one of the best options for starting a store online if you are a true web novice. The store is hosted on their servers, and you can easily move it to a subdomain of your current site if you wish.


The standard plan starts at $29.95 per month and 0% transaction fees.


Pre-integrated with the top payment solutions and gateways, including PayPal, Amazon Pay, Square, and Stripe.


Not as customizable as other options.

Traditional online merchant accounts comparison

The following online merchant accounts are ideal if you’re expecting a high volume in monthly card sales. Although they have monthly fees, card processing fees are ultimately lower, which balances things.

These merchant accounts tend to fall under two different fee structures: interchange-plus and tiered pricing.

Interchange-plus fees are the percentage of your card processing fees that go not to the merchant provider, but the credit card companies. Issuers such as Visa and Mastercard charge base rates to the payment processor each time one of their cards is used.

With tiered pricing plans, fees will vary depending on what kind of card you use, from credit and debit to corporate cards, and then some. It’s a complicated system and it can be confusing to figure out what kind of bill to expect each month. It isn’t recommended for smaller businesses.


TSYS has been around since 1998 and was originally known as Merchant Warehouse. Their main offering is an integrated, cloud-based platform called Genius, which supports online payments, mobile payments, and more through their payment gateway. Ideal for mid-sized businesses, it offers merchant accounts with First Data providing payment processing services.


Varies from business to business.


No early termination fee, no account setup or application fees, superior 24/7 customer support.


Too expensive for smaller businesses, lack of transparency when it comes to fees (doesn’t post them on their website).


Dharma Merchant Services was established in 2007 and is well known for its ethical practices, giving generous special rates and deals to non-profit companies. It provides MC Merchant with its accounts, account access and reporting system that includes a virtual terminal, a customer database, and more. When it comes to gateways, you can choose between its NWI gateway or an gateway.


For ecommerce merchants there is a $10 monthly fee, interchange + 0.35% + $0.15 per transaction, and a $20 monthly gateway fee.


Transparent and fair pricing, no annual or account setup fee, no early termination fee, good customer support.


Only good for high-volume, low-risk merchants in the US.

Payline Data

Payline Data was established in 2009. It has standardized packages which makes picking one for your specific business needs easy. Unlike the other merchant accounts mentioned, they provide accounts for high-risk businesses (a high-risk business is one that is seen as being particularly vulnerable to fraud; for instance, adult entertainment, gaming, and gambling would be seen as high risk) although processing rates will be higher. They also offer their own shopping cart which can be easily integrated with your website.


The Payline Connect plan for ecommerce-only merchants has no monthly fee, interchange + 0.5% + $0.10 per transaction, and $10 monthly gateway fee.


Easy-to-understand pricing system, no early termination fees.


Only available in the US.

Choosing the best online payment option for your business

Choosing an online payment processor that’s right for your business will take time and research. Don’t be afraid to take your time and to say no to pushy sales people. Be confident that the services provided are appropriate for your business in terms of what its aims are, its size and what it can afford. For in-depth reviews and comparisons, Merchant Maverick is a great resource


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Ruth G.

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