How can i accept credit card payments without a machine

If you are running a small business in 2022, it isn’t a matter of whether you should accept credit card payments—it’s a matter of how. While businesses can accept credit card payments online without any monthly or startup fees using services like Square and PayPal, there is no escaping transaction fees (which average about 3%). That’s because card-issuing banks and credit card associations charge a fee whenever a credit or debit card is used as payment.

• You can’t accept credit cards online for free. Learn more about why there’s no such thing as free credit card processing.
• However, shopping around for the cheapest credit card processing fees can cut costs.
• Other payment methods, including ACH payments, have lower transaction fees.
• Credit card surcharging (or, passing transaction fees on to customers) is an increasingly popular option in some US states.

Square is one of the easiest and more affordable solutions for accepting payments online. It’s free to set up and comes with an online store, invoicing capabilities, a virtual terminal, and a point-of-sale (POS) app. There’s no application process or monthly minimums—anyone can sign up and start accepting payments online for a standard 2.9% + 30-cent transaction fee. Create your free account today.

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Most Affordable Ways To Accept Payments Online

Online ACH & E-check Payments

Although not a credit card transaction, ACH (automated clearing house) transfers are usually the most affordable way to accept payments online. If you have ever received a direct deposit paycheck from your employer or paid bills online using your bank account, those are examples of ACH payments. Popular social payment apps like Venmo also use ACH payments to transfer money for free.

For businesses, ACH payments often have significantly lower transaction fees than credit or debit card payments. It’s a popular option for companies that bill via invoice or have recurring payments, such as freelance creatives and law firms.

The downside to using ACH payments is they don’t provide instant approval or denial like a card payment would and can take longer to process. They also require the customer to enter their bank account and routing numbers, so it’s not ideal for retailers or other online businesses that have shopping cart functions.

Some of the best ways to accept ACH payments online include:

• Chase Payments: Accepts online ACH payments with no minimum and no cap, offered at 25 cents per transaction
• Stripe: Free invoicing solution for online businesses with low-cost ACH processing and competitive credit card payment processing
• Helcim: Free merchant account with low-cost ACH processing for large-volume businesses
• QuickBooks Payments: Low-cost ACH processing for individuals and small businesses charging customers via invoice
• Square Invoices: Free invoicing software with ACH payments offered at 1% per transaction with a $1 minimum

Online Credit & Debit Card Payments

Retailers and most other online businesses need to be able to accept traditional credit card payments, as shoppers aren’t likely to go through the hassle of providing their banking information for a one-time transaction.

Although there’s no way to accept credit card payments for free, choosing a processor with low, competitive fees can still save your business a lot of money. The cheapest credit card processor for your business depends on what and how much you are selling.

Ecommerce Platforms

If you’re a retail business needing to accept credit cards online to sell products, the most straightforward and economical option may be to use an ecommerce platform or website builder with built-in payment processing. Opting for an ecommerce store with integrated payments simplifies the process of setting up and managing your store. It also allows you to collect and act on more detailed information about your customers.

The most affordable online store solutions with built-in payment processing include:

• Square: Free online store with low-cost transaction fees, best for brick-and-mortar businesses wanting to accept payments online. Online transaction fees are 2.9% plus 30 cents.
• Shopify: Affordable small-business solution with ecommerce plans starting at $9 per month, best for new ecommerce businesses. Online transaction fees range from 2.4% + 30 cents to 2.9% + 30 cents, depending on your plan.

Both Square and Shopify also have native tools to set up recurring billing or subscriptions. Learn more in our comparison of Shopify vs Square.

Square’s free online store comes with built-in features to accept all credit and debit card payments and options to accept PayPal.

Traditional Merchant Accounts

If you have an established or high-volume business (consistently processing over $20,000 per month), accepting credit cards through a traditional merchant account could be the least expensive option for your business. A merchant account is a type of bank account—so it’s a more formal setup than something like Square or PayPal because it usually requires an application and approval process.

However, higher-volume businesses could receive more competitive rates from a merchant account provider than an all-in-one ecommerce platform that has set flat fees. Existing brick-and-mortar businesses could negotiate competitive online processing fees with their current payment processor.

If you’re using a merchant account provider to accept credit cards online, you may also need a payment gateway to connect your merchant account with your online store. There’s no one-size-fits-all instruction for this option. Some merchant account providers, like Stax by Fattmerchant and Payment Depot, come with built-in gateways at no extra cost, while others, like Authorize.net, require you to pay an additional monthly fee or to use a separate gateway.

The most affordable merchant services for online payments include:

• Helcim: Best option for low-cost interchange-plus processing with no monthly fee. It also has automated volume discounts that make it competitively priced for established online, in-person, and multichannel payments of all sizes.
• Payment Depot: Affordable option for businesses processing over $10,000 in sales per month through any combination of online and offline channels.
• Stax by Fattmerchant: Affordable option for online-only companies processing over $20,000 per month.

“Zero Cost” Credit Card Processing

In some US states, it’s legal for merchants to pass on their credit card processing fees to customers. Depending on where a business is located, the following methods are available for those who accept credit cards online:

• Convenience Fee: Fixed amount added as a fee at checkout
• Credit Surcharging: Credit card processing fees are added to the product price

However, this doesn’t let businesses avoid other merchant processing fees, such as merchant account costs and PCI compliance fees. Additionally, merchants should make sure that their website has a system in place to verify that customers are located in states that allow both methods.

There are a number of payment processing providers that offer this service, but merchants should be aware of key factors that make a reliable zero cost credit card payment processor.

• Stax: For growing businesses looking for secure online credit surcharging
• Payment Cloud: For high-risk merchants that want both traditional and credit surcharging payments
• AND Processing: For midsize brick-and-mortar businesses

Recurring Payments

Businesses that offer memberships, subscriptions, and professional services require the ability to repeatedly collect the same fees from customers on a regular basis. Recurring payment processors typically have tools for quotes, billing, and invoicing to help you bill, track, and accept payments from customers. It also needs a way to ask customers to sign a one-time authorization form, which should then be safely stored according to PCI compliance regulations.

There are a number of reliable all-in-one payment processor that supports recurring payments:

• Helcim: For high-volume merchants that will benefit from automatic volume discounts
• Square: Ideal for small businesses or startups that also need a free POS system
• PayPal: For seasonal businesses that accept PayPal payments
• Stripe: Best for B2B businesses accepting international sales
• Stax: Traditional merchant account provider with full recurring payment services

Buy Now, Pay Later (BNPL) Customer Financing

In 2021, more than half of consumers took advantage of BNPL (see more BNPL statistics here). This short-term customer financing program gave customers the opportunity to pay for their purchases in installments with minimum interest while merchants still received the proceeds of the sale in full. BNPL apps can be integrated into most popular online payment processors, while some, like PayPal and Square, provide this as a built-in service.

Some of the best BNPL apps include:

• Klarna: Offers multiple pay back options with zero-interest fees
• Affirm: Ideal for businesses with high-ticket sales
• PayPal Later: For businesses accepting PayPal payments
• Afterpay: For retailers using Square point-of-sale system

Costs of Accepting Payments Online

While there’s no way for businesses to accept credit card payments online for free, the exact prices will vary depending on the type of payments you are receiving and the provider you choose. Typically, if you select a provider with no monthly fees, you can expect to pay around 3% in transaction fees.

For example, Square charges the following fees:

• Ecommerce payments: 2.9% plus 30 cents per transaction
• Invoice payments: 2.9% plus 30 cents per transaction
• ACH deposits: 1% per transaction

If you’re a brick-and-mortar business, it’s important to note that online processing fees are usually higher than fees to accept credit cards in-store. For example, Square’s transaction fees for swiped or contactless payments start at only 2.6% plus 10 cents per transaction.

There’s no way to accept credit cards online for free because credit card issuers like Visa and Mastercard charge a non-negotiable processing fee for every transaction. This fee is called an interchange fee. Your merchant account provider or payment processor pays this fee, then passes it along to you with their markup, which can take the form of a transaction fee or a monthly fee.

Learn more about how credit card processing fees work.

Because of these unavoidable interchange fees set by credit card associations, direct bank payments and ACH or e-check payments are the most affordable way to accept payments online.

How To Choose a Payment Processing Solution

Now that you know the different kinds of payment options available to you, when choosing a payment processing solution, consider the following:

• Transaction fees: For new and small businesses, solutions like Square and PayPal with flat fees and no monthly minimums are usually the most affordable. As your business grows, solutions with interchange-plus or membership pricing such as Payment Depot and Stax by Fattmerchant, can offer the lowest rates.
• Tiered pricing: Tiered pricing models (where the processor charges different rates and fees depending on the card type) are typically the priciest and least transparent option. Avoid these pricing models.
• Monthly fees: Some solutions offer low transaction rates but have high monthly fees.
• Startup fees and applications: Traditional merchant services accounts typically have longer setup processes than third-party credit card processing solutions because there is an approval process.
• Contracts and requirements: Some solutions require you to sign up for a year or more; others require your business to meet monthly transaction minimums.
• Compatibility with your website: Make sure the service you choose integrates well with your website hosting service.

How To Lower Your Credit Card Processing Fees

While free credit card processing may not exist for businesses in 2022, there are many ways you can reduce the fees you pay. Here are just a few:

• Offer cash discounts: In many places, it’s illegal to pass payment processing fees onto the customer, but you can offer incentives for cash payment.
• Set a minimum: You can require a minimum purchase amount for credit card payments. This can also help increase average order value (AOV).
• Negotiate new rates: It doesn’t hurt to ask your processor if it can accommodate more affordable rates. If you have a longstanding history with its platform, then remind your provider of that—the bigger and more established your business, the more leverage you have with negotiating. You can also choose a processor that automatically discounts your rates as your business grows, such as Helcim.
• Eliminate extra services: If your payment processor includes additional services, features, or tools, make sure you’re not paying for them—especially if you don’t use them.
• Fight fraud: Merchants facing credit card fraud lose a lot of time and money to fraudsters and in managing these instances. Use chargeback prevention tools and take other steps to reduce chargebacks and fraud in your business.

Bottom Line

Although there’s no way to accept credit card payments online for free, it’s possible to find an affordable solution. Minimize costs and streamline the entire process by choosing an all-in-one solution that will host your website and offer competitive payment processing.

Square is one of the most affordable and easiest-to-use solutions that offers everything you need to accept payments online, including a free payment processing account and a free website. Plus, you can add extra features as you grow and use its marketing solutions to help scale your business. Visit Square to create your free account.

You May Also Like…

• Learn more about accepting credit cards online
• Customer financing options such as buy now, pay later are becoming more popular.
• The right online payment processor that offers most of these payment methods can greatly reduce the amount you pay.
• Square, PayPal, and Stripe are three of the most popular online payment processors for small businesses.

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