Getting Started with Credit Card Payments: Beyond Traditional Merchant Accounts

Nowadays, taking credit card payments is not just a nice-to-have—it’s essential for staying competitive. Yet many business owners assume they need to jump through hoops like setting up a formal merchant account. The reality? There are simpler, more affordable ways to process credit card payments without getting locked into those outdated arrangements.

The Traditional Merchant Account: Why Most Businesses Skip It

Historically, any company wanting to accept credit cards had to establish a merchant account—essentially a specialized banking arrangement that held funds during transaction processing before funneling them to your business account. This required partnering with a merchant services provider or a bank, signing multi-year contracts, paying recurring monthly fees, and purchasing or leasing payment hardware or software infrastructure.

It’s as burdensome as it sounds. That’s exactly why today’s business landscape has shifted. Most entrepreneurs and growing companies now bypass this path entirely, opting instead for modern payment solutions that eliminate the complexity and cost.

The Modern Alternative: Payment Service Providers

The game-changer is the payment service provider (PSP)—companies like Stripe, PayPal, Square, and Shopify that handle everything in one place. While PSPs function similarly to merchant accounts by collecting and temporarily holding your transaction funds, they’ve eliminated the friction. You sign up online, manage everything from a dashboard, skip the monthly account fees, and get payment processing bundled into the service.

Processing Online Payments

For e-commerce businesses, the PSP route is straightforward. Most website builders—Squarespace, Shopify, Kajabi—have native integrations with major payment processors, so you can embed payment functionality directly into your site. If your platform lacks these integrations, you can still route customers through a “pay now” button that connects to your PSP account, though this requires more manual management of orders and inventory.

Online retailers using PayPal, Stripe, or similar services avoid infrastructure headaches and get peace of mind that customer payment data is handled securely.

In-Store and Point-of-Sale Solutions

Running a brick-and-mortar business doesn’t mean you need expensive legacy systems. Modern POS platforms like Square and Clover bundle everything: checkout capabilities, card readers that accept swipes and chip payments, mobile payment options (tap-to-pay), PIN entry or signature verification, and digital or printed receipts.

These systems work with all transaction types—cash, credit cards, digital wallets—in one unified platform. Setup takes minutes, and you’re immediately ready to process payments.

Mobile and On-the-Go Payment Processing

Selling at farmers markets, pop-ups, or trade shows? You don’t need a fixed location to accept cards. Download a mobile payment app on your smartphone, manually enter card details or attach a small card reader (Square’s original design connects via your headphone jack or Lightning port), and you’ve transformed your phone into a portable checkout system.

This approach works for any merchant without a physical storefront, bringing the ability to accept credit cards anywhere you can do business.

Cost and Payment Processing Fees

The cheapest way to take credit card payments depends on your business model. Transaction-based PSPs typically charge a small percentage per payment (often 2-3%) plus a per-transaction fee. You won’t face mandatory monthly costs or multi-year contracts—just a fee when money actually changes hands.

For high-volume operations, more sophisticated payment systems may offer economies of scale. But for most small to mid-sized businesses, a PSP’s transparent, pay-as-you-go model beats traditional merchant account pricing every time.

Can Anyone Accept Credit Card Payments?

You don’t need to be a registered business entity to set up a PSP account. Individuals can use PayPal, Stripe, or similar platforms to collect payments from customers, clients, or even friends and family. However, if you’re receiving payment for goods or services (not just personal transfers), processing fees apply—that’s how these platforms sustain their service.

Key Takeaways

Accepting credit card payments has never been more accessible. You no longer need to negotiate years-long contracts, pay subscription fees just to have an account, or deal with complicated hardware installations. A payment service provider handles all of it—processing, holding your money temporarily, and depositing funds into your business account. Whether you operate online, in a physical store, or on the move, there’s a straightforward solution to take credit cards without the traditional merchant account burden.