The three ways to take card payments online
You can accept credit card payments online through a payment processor (a company that handles the transaction), a payment gateway (software that connects your website to a processor), or a point-of-sale system (hardware and software combined). Most small businesses start with a payment processor because it requires no technical setup — you sign up, get a link or button, and start accepting cards the same day.
The processor collects the card information, verifies the funds, deposits money into your bank account, and handles disputes. You pay a fee per transaction, usually between 2.2% and 3.5% of the sale plus a flat fee of 20 to 30 cents. The exact rate depends on your industry, sales volume, and the card type (debit cards cost less than rewards credit cards).
A payment gateway is the middle layer — it encrypts card data and sends it to your processor. You use a gateway when you have your own website and want to embed a payment form directly into it, rather than sending customers to a separate checkout page. A point-of-sale system is what you use if you take payments in person or want a unified system for online and in-store sales.
Key Takeaways
- Payment processors like Stripe, Square, and PayPal let you start taking card payments within hours, with no upfront costs or contracts.
- Transaction fees typically run 2.2% to 3.5% plus 20 to 30 cents per sale, and the exact rate depends on your industry and card type.
- You need a business bank account to receive deposits, and the processor will verify your identity and business before you can process payments.
- PCI compliance — a security standard for handling card data — is built into most processors, so you do not have to manage it yourself.
- Monthly volume, customer location, and whether you sell physical goods or services all affect which processor offers the best rate for your situation.
Payment processors that work for different business types
Stripe is built for online businesses and software companies. It integrates directly into websites and apps, supports subscriptions and invoicing, and charges 2.9% plus 30 cents per transaction for card-not-present sales (online). Stripe requires a business bank account and verifies your identity before you go live, which usually takes one to three business days.
Square started with in-person payments but now handles online sales too. It charges 2.6% plus 10 cents for online card payments and offers a free point-of-sale app if you also take payments in person. Square deposits funds daily or next business day, faster than most competitors.
PayPal charges 3.49% plus 49 cents for online payments through its standard checkout. It has the lowest barrier to entry — you can start with just an email address — but the higher fee makes it more expensive for high-volume sellers. PayPal holds funds for 21 days on new accounts, then releases them faster once you build history.
Authorize.Net is older and more common in retail and restaurants. It charges a monthly gateway fee (around $25) plus per-transaction fees, so it makes sense only if you process hundreds of payments a month. It integrates with most point-of-sale systems and accounting software.
What you need before you can start
You need a business bank account in your business name. Processors verify this account and deposit your payments into it. If you are a sole proprietor, you can use a personal account with your business name on it, but most processors prefer a dedicated business account.
You also need a government-issued ID and your Social Security number or EIN (Employer Identification Number). Processors run a background check and verify your identity to comply with anti-money-laundering rules. This verification usually takes one to three business days, though some processors can approve you in minutes if you have an established business history.
If you sell physical goods, you may need to provide proof of inventory or a supplier agreement. If you operate in a high-risk industry (like travel, gambling, or adult services), processors may decline you or charge higher fees. Ask the processor upfront whether your industry is considered high-risk.
How to set up payments on your website
If you use a website builder like Shopify, Wix, or Squarespace, payment processing is built in — you connect your processor account to your site in the settings, and the checkout form appears automatically. This takes about 10 minutes and requires no coding.
If you have a custom website, you have two options. You can use a hosted payment page: the processor gives you a link, you put it on your site, and customers click it to pay. This is the simplest route and requires no technical work. Or you can embed a payment form directly into your site using the processor's API (a set of instructions for developers). This looks more professional but requires a developer or coding knowledge.
Most processors provide a dashboard where you can see all transactions, refund payments, download reports, and manage your account settings. You can also send payment links via email or text — customers click the link and pay without visiting your website.
Understanding fees and how they affect your pricing
Transaction fees are the main cost. A 2.9% plus 30-cent fee on a $100 sale costs you $3.20. On a $20 sale, it costs you $0.88. The percentage matters more on large sales; the flat fee matters more on small sales. If you sell many small items, look for a processor with a lower flat fee.
Some processors charge monthly fees ($10 to $50) whether you process payments or not. Others charge only per transaction. Monthly fees make sense if you process hundreds of transactions a month; per-transaction pricing is better if you are just starting out.
Chargeback fees (usually $15 to $100) apply when a customer disputes a charge with their bank. Refund fees are rare — most processors refund the transaction fee when you refund the sale. International card fees are higher than domestic cards, usually 3.9% plus 30 cents or more.
Factor fees into your pricing from the start. If your product costs $50 to make and you want a 50% margin, you need to charge at least $108 to account for the processor fee and still hit your margin.
Security and PCI compliance
PCI DSS (Payment Card Industry Data Security Standard) is a set of rules for handling credit card information. It exists to prevent theft and fraud. If you use a processor or payment gateway, the processor handles PCI compliance for you — you do not store card numbers on your own servers, so you do not have to meet the full standard yourself.
However, you are still responsible for keeping your website secure. Use HTTPS (the padlock icon in the browser), keep your software updated, use strong passwords, and never store card data in email or spreadsheets. If you do store customer data, encrypt it and limit who can access it.
Most processors offer fraud detection tools that flag suspicious transactions automatically. You can set rules — for example, decline any transaction over $1,000 or from a specific country — or let the processor's algorithm decide. Review flagged transactions before they settle so you can catch fraud early.
Comparing processors for your situation
The right processor depends on your sales volume, industry, and where your customers are located. If you process fewer than 100 transactions a month, avoid monthly fees — Stripe or Square are cheaper. If you process 500 or more transactions a month, a monthly fee might lower your total cost. If you sell internationally, check each processor's rates for your customer countries, as they vary widely.
| Processor | Online Card Rate | Monthly Fee | Best For |
|---|---|---|---|
| Stripe | 2.9% + $0.30 | None | Online businesses, subscriptions, developers |
| Square | 2.6% + $0.10 | None | Retail, restaurants, mixed online and in-person |
| PayPal | 3.49% + $0.49 | None | Sellers with low volume, existing PayPal users |
| Authorize.Net | 2.9% + $0.30 | $25 | High-volume sellers, custom integrations |
Square offers the lowest per-transaction cost for online payments and deposits funds faster than competitors. Stripe works best if you need subscriptions, invoicing, or custom integrations. PayPal is easiest to start with but most expensive at scale. Authorize.Net makes sense only if you process high volume and need advanced features.
Frequently Asked Questions
How long does it take to get paid after a customer buys something?
Most processors deposit funds within one to three business days. Square deposits daily. PayPal holds funds for 21 days on new accounts, then switches to next-business-day deposits. Check the processor's deposit schedule before you sign up if cash flow matters to your business.
What happens if a customer disputes a charge?
The customer's bank contacts your processor, who notifies you. You have a window (usually 7 to 10 days) to respond with proof the transaction was legitimate — an order confirmation, shipping receipt, or email from the customer. If you do not respond or lose the dispute, the processor refunds the customer and charges you a chargeback fee.
Can I accept payments without a business bank account?
Most processors require a business bank account. Some will accept a personal account with your business name on it, but this is less common. Opening a business account takes a few days and usually costs nothing if you maintain a minimum balance.
Do I need a website to take card payments online?
No. You can send payment links via email or text, or use a processor's invoice tool. Customers click the link and pay without visiting a website. This works well for service providers, freelancers, and small businesses that do not have a website.
What is the difference between a debit card and a credit card fee?
Debit card transactions cost less — usually 1.5% to 2% — because the bank's risk is lower. Credit card transactions cost more because the card issuer guarantees the payment and assumes the fraud risk. Most processors charge the same rate regardless of card type, but some offer lower rates for debit.