How To Accept Credit Card Payments Without A Merchant Account

Receipt Machine

Accepting credit cards is a great way to give your customers additional payment choices and improve convenience. But to offer this option, you need to follow a few steps, such as looking at the best card machines to take payments.

You also need a means to accept and process those payments. While many businesses use a merchant account, which is the easiest method, you can also use a payment service provider to accept card payments. This guide goes through each of these possibilities so you can select which is best for you.

Do You Need a Merchant Account To Accept Credit Cards?

A merchant account is a bank account that’s specifically used to enable your business to accept credit card payments. However, while it’s a good option for many businesses, you don’t actually need a merchant account to process credit cards. Payment service providers can facilitate these transactions instead.

However you will not be able to set up a CPA payment without a merchant account.

You’ll need to look at the advantages and disadvantages of both methods to decide which is best for your business, which we outline below.

Benefits of Accepting Credit Card Payments via a Merchant Account

Many companies opt for a merchant account to accept credit card payments because they have some notable advantages:

  • You get better control and customisation when it comes to branding, security, and more.
  • Merchant accounts often come with powerful software that includes reporting, inventory control, and other features.
  • Many merchant accounts are among the cheapest ways to take payments and normally offer custom pricing based on your unique business.
  • These accounts offer good scalability as the fees generally go down the more sales volume you have.
  • Because the application and underwriting process is rigorous, your provider has greater knowledge about your business and can offer more personalised support and assistance.

Benefits of Accepting Credit Card Payments Without a Merchant Account

Accepting credit card payments without a merchant account comes with its own advantages:

  • A faster and less complicated application and underwriting process as minimal documents are required to get started.
  • Quicker transfer of funds
  • While fees may not be as low, they’re less complicated and easier to predict going forward.
  • Payment service providers don’t generally have a monthly fee for you to worry about.

Ultimately, it’s up to you to decide whether your business benefits more from a merchant account or another payment processing option, as both are solid choices depending on your circumstances.

One way to do this is with PayPal. Read more in our article: Merchant Accounts vs PayPal.

Accepting Credit Card Payments Without a Merchant Account

Whether you’re accepting payments in-person or online, you’ll need to do two things: 1) choose a payment services provider to work with and 2) open a business bank account.
Payment services providers are third-party companies that facilitate and process card transactions for you. Some examples include Stripe, Square, and Zettle.

They essentially work like one large merchant account that provides services to hundreds or thousands of different businesses, which means you don’t need to open one yourself. It’s typically easy to get started online with a streamlined application and sign-up process.

There are numerous providers, each with different features and benefits, so you’ll need to research them carefully before deciding on one. Credit card processing fees vary from provider to provider, too, so make sure to choose one that fits your budget. They range from about 1% to 3% of the transaction, plus a small fee of around 10p to 30p per transaction.

To take in money, you’ll also need to open a business bank account. When setting one up for you, the bank will typically ask for details such as your business address, information about the owners, a business plan, details about the company, and business verification.

How To Take In-Person Credit Card Payments Without a Merchant Account

To process in-person card payments, you’ll need special hardware and software. In most cases, the payment services provider will offer point of sale systems that enable you to take payments from customers, track sales, and manage inventory. You can access this software on your phone, tablet, laptop, or other hardware equipped with a display.

You’ll also need a way to collect the card payments, such as a payment terminal, a cash register, or a card reader. In some cases, you may even be able to use your phone to scan or manually enter card details. Many providers offer their own hardware but many also work with hardware you purchase separately.

How To Take Online Credit Card Payments Without a Merchant Account

First, it’s a good idea to have a website or digital store to make it easy for customers to see your products and make a purchase. Some payment service providers will let you build an online store, but you can also make your own using a website builder like Shopify or Squarespace. You can also use WordPress or hire a developer to create your site.

Many of these site builders have built-in support and integration with popular payment service providers. If you want to use one provider in particular, make sure to do your homework and choose the right site builder, as they don’t all integrate with every provider.

If you decide to build a site on a platform that doesn’t integrate with your preferred provider, you’ll still generally be able to include a “Pay Now” button on the site to ensure customers can check out easily. Clicking on this button opens a new window and takes customers through the provider’s payment process. They can then check out that way instead of directly on your site.

Next Steps

Accepting credit cards is important to provide more options and better convenience for your customers. While a merchant account is a great choice to facilitate these transactions, it isn’t the only one. Plenty of businesses today opt for a payment service provider instead to streamline the process for both online and in-person credit card purchases.

There are benefits and drawbacks for both merchant accounts and payment service providers, so make sure to do your research and learn what makes the most sense for your company.

Frequently Asked Questions

How much does it cost to accept credit card payments without a merchant account?
The cost varies depending on the provider you choose, as well as the type of credit card purchase being made. For example, in-person transactions are often less expensive for a business than online purchases. Generally, payment service providers will charge a flat fee and/or a small percentage of each transaction.
What to look for in a payment service provider?
When evaluating payment service providers, you should consider the pricing, features, quality of the customer support, the payment methods and currency it supports, security, scalability, and more. If you don’t consider factors like these, you could end up with a service provider that doesn’t fit your needs.
Can I take credit card payments without a machine?
Yes, you can. There are payment processing apps and pieces of software that work like a card reader to accept credit card purchases. Instead of swiping a card or tapping it on a machine, you can scan a code or manually enter the card details. Some payment service providers may also offer a small card reader attachment that connects to your phone instead of a full-fledged machine.
Written by:
Kale has over five years of experience writing on a broad range of business-related topics, including business technology, software, automation, human resources, employee engagement, and finance. He also holds a BSc in Sociology with a Minor in E-commerce and a certificate in Business Administration. Kale's easy-to-digest, research-driven articles stem from his passion for sharing knowledge with readers, and his bylined work has been published on Yahoo, BestMoney and a selection of SaaS sites.