Find out what third-party payment processing is and its benefits if you need to take credit card payments without having a merchant account. Advertiser Disclosure: We receive funding in part for our objective assessments and content from
Many small businesses want to accept credit cards without having to set up traditional merchant accounts, which can be costly and time-consuming. With a comparatively easy signup process and standardized per-transaction payment processing fees, well-known payment service providers (also known as third-party payment processors) like Square and PayPal make it affordable and simple to start accepting payments.
Discover how to take credit cards without a merchant account, which are the top payment processors, and whether opening a merchant account is the better course of action for your company. Continue reading to find out more.
How Does a Merchant Account Work?
Previously, in order for a business to accept credit card payments from clients, it had to open a merchant account. Your funds are held in a merchant account, a unique type of bank account, following a credit card transaction and while the credit card network processes the transaction. The funds are then transferred into your company’s bank account.
In the old model, opening a merchant account and negotiating a contract to pay monthly fees required working with a merchant services provider or directly with a bank. These negotiations would typically take years. After that, you would either set up the software required to process payments online or obtain the hardware required to process payments in-store.
Since all of this seems extremely complicated and costly, most new companies choose to forego this step and work with an all-in-one payment service provider instead.
How To Accept Credit Card Payments Without a Merchant Account
You can take payments with credit cards without a merchant account by using a payment service provider, as many contemporary businesses do.
This process is now much simpler and, in many cases, less expensive than it was in the past thanks to payment service providers (PSPs) like PayPal, Square, Stripe, and others.
Because PSPs accept and hold your money from credit card transactions, they function similarly to merchant accounts, but you can register and manage the account completely online. They also usually don’t charge monthly fees for opening an account, and they handle transactions in addition to storing your funds.
Accepting In-Store Payments Without a Merchant Account
Current point-of-sale (POS) systems, such as Square and Clover, are simple to set up and include all the hardware and software required to handle both cash and credit card transactions.
As an in-person retailer, all of your needs are met by a straightforward system like this: point of sale (i e. , your capacity to verify clients), a credit card payment processor and a card reader It is also possible to get mobile point-of-sale (POS) systems, which can be highly useful for mobile vendors.
Typically, they allow customers to authorize a transaction by entering a personal identification number (PIN) or signing onscreen; they accept credit cards via swipe, chip reader, or mobile payment reader (tap); and they provide the option to print or email a receipt.
Accepting Online Payments Without a Merchant Account
A payment service provider like PayPal, Stripe, Square, or Shopify is the easiest way for any retailer to take payments for an online business. You must integrate payment processing into your website since you lack a terminal where clients can swipe their cards. Payment service providers are the easiest way to do that.
The majority of contemporary website builders, such as Squarespace, Kajabi, and Shopify, come with integrated payment service provider integrations. Some builders may have limited integrations, so before you get started on your site, consider your options in case you want to use a particular provider.
By connecting to your payment account, you can still take payments from your online storefront even if your website’s integration with payment service providers isn’t the best. You can offer a fairly seamless shopping experience by adding a “pay now” button to your website, which most payment providers allow you to do. However, keeping track of your inventory and orders may require more work on your part.
In-Person Mobile Payment Processing
You can still simply accept credit cards if you don’t have a storefront or a cash register, such as if you sell goods at an art fair or farmers market.
You can enter a customer’s credit card information using just your phone and a mobile payment processing app, or you can attach a tiny card reader that allows customers to swipe their cards for your phone to read.
As the first mobile payment processor, Square establishes the benchmark for a simple, light-weight interface. Its card reader is an add-on that fits over a Scrabble tile and attaches to your smartphone’s headphone jack or Lightning connector to function as a portable point of sale device.
Frequently Asked Questions (FAQs)
No. It is not necessary to open an expensive separate merchant account in order to accept credit card payments. You can get all the services you need to process credit card payments in one location by opening an account with a payment service provider, such as PayPal, Stripe, Square, Shopify, or Clover.
How do I accept credit card payments without a reader?
Users do not require any specialized devices in order to accept online card payments through well-known services like PayPal, Venmo, and others. Having said that, depending on your service package, companies like Square provide mobile card readers for a very low price or even free.
Can I accept credit card payments without a business?
You don’t need to be a legitimate business entity to open an account with a payment service provider like PayPal or Stripe. With those accounts, you can take credit card payments from friends, family, clients, and customers. By providing the payer with your email address or a link to make a payment, you can use them to take credit card payments online or through their mobile apps. Payment for goods or services (as opposed to cash from friends or family) requires you to pay a processing fee, which is typically a tiny portion of the total transaction.
What is the cheapest way to receive credit card payments?
The type of business you run and how your clients pay will determine the least expensive method for your organization to accept credit card payments. Payment processing companies use various pricing structures for their services. In most cases, a payment service provider is the easiest and least expensive choice for small businesses. Although there will be a small transaction fee, you won’t have to deal with multiple service providers or subscription fees. Larger companies will most likely gain from a more sophisticated payment processing system.
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Since 2011, Dana Miranda, a certified educator in personal finance (CEPF), has written and edited articles about careers, digital media, and personal finance. She has contributed financial and professional pieces to the New York Times, CNBC, The Motley Fool, The Penny Hoarder, and Inc. and more. Through Utah Valley University, Queens University at Kingston, ACES: The Society for Editors, and the National Association for Independent Writers, Dana has instructed journalists, writers, and editors on how to write for the web. Find her at danasitar. com.
Rob Watts, who has over ten years of editorial experience, simplifies difficult subjects for small companies looking to expand and prosper. His work has appeared in publications including PCMag, FitSmallBusiness, and Keypoint Intelligence. lorem Is it really your intention to put your decisions on hold? The Forbes Advisor editorial staff is impartial and independent. We receive compensation from the businesses that advertise on the Forbes Advisor website in order to support our reporting efforts and keep this content available to readers for free. This compensation comes from two main sources.
FAQ
Can you accept credit cards without a merchant account?
An aggregated merchant account provider known as a payment facilitator enables businesses to take credit cards without the need for separate merchant accounts. Several merchants are served by a payment facilitator provider by having them all integrated into a single master merchant account.
How do I accept credit card payments as an individual?
Payment service providers like Square, PayPal, and Stripe let you take online credit card payments. Just create an account with one of these companies and provide your clients with a payment link.
How can I accept a credit card payment without POS?
But if you’d like, you can still take payments in person without a card reader. To accept card payments, some PSPs provide a smartphone app for payment processing. To enable quick and secure payments in person, users can either manually enter a customer’s card information or scan a QR code.
How can I accept payment online without a merchant account?
Businesses can use a range of e-commerce solutions to conduct credit card transactions without requiring a merchant account. Paypal and Square are the most well-known of these options, but there are a number of other excellent options as well.
Read More :
https://www.forbes.com/advisor/business/software/accept-online-payments-without-merchant-account/
5 Best Ways To Accept Credit Card Payments Without A Merchant Account (2024)