Learn the best ways for small businesses to accept credit cards, comparing tools, costs, and methods to improve sales and streamline payments.
For many small business owners, knowing the best way to accept credit cards for small business isn’t just a technical decision — it’s a revenue decision. Customers now expect the flexibility to pay with plastic, and in 2024 credit and debit cards together made up about 65 % of consumer payments, while cash fell below 14 %. That shift means choosing the right credit card acceptance method can make or break growth.
Across the market today, small businesses have multiple paths to accept credit cards: traditional swiped or chip terminals, POS systems, online gateways, virtual terminals, or smartphone-based solutions. Each method has trade-offs in cost, hardware, flexibility, and logistics.
One newer option is JIM, a no-hardware solution that uses just your smartphone to accept payments. This and other major ways to accept credit cards for small businesses are discussed below.
What is credit card processing?
Credit card processing is the technical system that enables a merchant services provider to accept payments by credit card: it handles data capture, authorization, clearing, settlement, and risk/fraud control in a secure, multilayered workflow.
When a customer pays by card, your point-of-sale terminal or online gateway captures card data (e.g., card number, expiration, CVV) and forwards it—encrypted—to your payment processor. That processor routes it via the card network (Visa, Mastercard, etc.) to the issuing bank, asking: “Is this valid? Is there enough credit? Does it pass fraud rules?” If approved, an authorization code comes back almost instantly. Next, your merchant account batches those authorizations and “settles” them: the funds (minus fees) transfer through the card network from the issuing bank to your acquiring (merchant) bank.
Behind the scenes, interchange fees (set by card networks and issuers), assessment fees, and processor markup are deducted. And throughout, tokenization, encryption, AVS/3-D Secure, and fraud scoring guard against abuse.
Key participants in the credit card processing
Below is a breakdown of each core participant, showing their role and how they interact in the payment flow.
- Cardholder: The customer who holds a credit card and pays for goods or services.
- Merchant: Your business accepts credit card payments.
- Issuing Bank (Issuer): The bank or financial institution that issues the credit card to the cardholder.
- Acquiring Bank (Acquirer / Merchant Bank): The bank that maintains your merchant account.
- Payment Processor: The service that routes and handles the transaction flow.
- Payment Gateway (for online / card-not-present): The software interface between merchant and processor.
- Card Network / Scheme: The card brand networks (Visa, Mastercard, etc.) that operate the clearing and rules infrastructure.
- Third-party Facilitators / ISOs / Payment Service Providers (PSPs / PayFacs): Entities that help onboard, bundle, or repackage payment processing services.
- Regulators / Compliance Bodies / Card Scheme Governance: Entities overseeing security, data standards, and financial regulation.
The main types of accepting credit card payments for small business
Choosing the best way to accept credit cards for small business isn’t about one tool or one provider — it’s about matching your payment acceptance method to your sales model, customer behavior, and cash-flow needs. Each channel comes with its own infrastructure requirements, transaction costs, and user experience implications.
Below, we’ll break down the main methods in detail.
Type 1: In-Person Payments
For brick-and-mortar stores, restaurants, or service providers, in-person card acceptance is still the most direct way to get paid. Transactions are authorized instantly, giving both the customer and the merchant peace of mind. To accept in-person transactions, you’ll need some type of hardware — from traditional card readers to modern mobile POS setups. Each option differs in cost, security standards, and customer experience.
Swipe Credit Card Machines
The traditional magnetic stripe reader is still in circulation, though gradually being phased out. To accept these payments, merchants need a card reader capable of reading the magnetic stripe and transmitting the data through a payment processor. While simple and fast, swiped payments are the least secure, since the data is static and easier to skim. Most banks and networks push merchants toward chip or contactless methods for better fraud protection.
Chip (EMV) Readers
EMV (Europay, Mastercard, Visa) technology requires a physical card to be inserted into a chip reader. The microchip creates a unique transaction code each time, significantly reducing fraud risk compared to magnetic stripes. Merchants need an EMV-enabled terminal, which often comes bundled with modern POS systems. Compliance with EMV standards is crucial, as liability for fraudulent transactions typically shifts to the merchant if chip technology is not supported.
Contactless & Digital Wallets
Contactless terminals allow customers to tap their card or use a digital wallet like Apple Pay, Google Pay, or Samsung Pay. To accept these payments, merchants need an NFC-enabled terminal or a smartphone app that supports tap-to-pay. The technology uses tokenization and encryption, adding a security layer while speeding up the checkout experience. For small businesses, this is increasingly important, as younger consumers expect mobile-first payment options.
Type 2: Online Payments
Online transactions are essential for e-commerce, SaaS, or service providers who need remote payment options. Merchants must integrate secure gateways, maintain PCI compliance, and provide user-friendly checkout flows.
E-Invoicing
Merchants send digital invoices with embedded “Pay Now” buttons. Customers enter card details on a secure portal, and funds flow through the gateway. This requires invoicing software or processor tools. Benefits include easy tracking and faster payment cycles, though fees are typically higher than in-person payments.
E-Commerce Platforms
Merchants selling through Shopify, WooCommerce, Magento, or custom websites need a payment gateway and merchant account. These systems connect directly with processors and support multiple card types. Setup requires SSL certificates, checkout integration, and compliance with PCI DSS standards. Optimizing checkout is critical to reduce cart abandonment.
Type 3: Over-the-Phone Payments
Also known as “card-not-present” transactions, phone-based payments are common for service businesses and orders without a physical interaction. While convenient, they carry higher fraud risk and interchange fees.
Virtual Terminals
Merchants use a processor-provided web dashboard to manually enter card details shared by the customer. No physical hardware is needed beyond a computer or smartphone. However, PCI rules prohibit storing credit card information, so staff must be trained in secure handling. This method is flexible but should be reserved for trusted customers due to fraud liability.
Call Center or Manual Entry Systems
For higher-volume businesses, call center solutions integrate with CRM and payment platforms. Agents securely input cardholder data in real time. These require strict compliance controls (like encryption and restricted access). Costs are higher, but they streamline operations for merchants processing large sales volumes by phone.
Type 4: Invoice-Based Payments
Invoicing is especially common in B2B transactions, consulting, and professional services. Credit card acceptance via invoice ensures customers can pay remotely and securely, while merchants maintain proper documentation.
Accounting & Bookkeeping Software
Platforms like QuickBooks, Xero, or FreshBooks let merchants send invoices with embedded payment links. Customers pay via a secure portal, and transactions are automatically reconciled in the books. Merchants need accounts with both the software and a processor. While convenient, settlement can take longer depending on the payment method used.
Standalone Invoicing Platforms
Some processors offer dedicated invoicing tools separate from accounting systems. Merchants generate invoices through the platform, send them via email, and accept payments online. This method is simple and scalable for freelancers or small service providers. Fees vary by provider, but the trade-off is streamlined billing and fewer missed payments.
The best way to accept credit card payments for your small business: 5 tools for all use cases
Credit card payment methods aren’t one-size-fits-all. The best way to accept credit card payments for your small business depends on your industry, customer preferences, and the types of transactions you process most often — whether that’s in-store, online, or remote. Below, we break down five essential tools that cover the core use cases and help you choose the right fit.
JIM: best for small businesses on tight budget who avoid hardware and installation hassle
JIM is designed for entrepreneurs who want the best way to accept credit card payments for small business without the hassle of purchasing hardware or installing complex systems. Instead of terminals or credit card readers, JIM turns any smartphone into a secure point-of-sale device. That makes it ideal for freelancers, mobile service providers, or local shops looking for low-cost simplicity with professional-grade payment acceptance.
Fees
- Flat rate: 1.99% per transaction, regardless of transaction size
Pros
- No hardware or installation required
- Works directly from your iPhone
- Transparent flat fee with no hidden costs
- Quick setup, ideal for new businesses
- Mobile and flexible for on-the-go payments
Cons
- Lacks advanced POS features like inventory tracking
- Requires stable internet connection
How to Use JIM?
- Download the JIM app.
- When making a sale, open JIM, tap the sales amount, and ask your buyer to tap to pay.
- Receive your funds in seconds onto your JIM Visa Prepaid Card paying only a 1.99% flat fee, regardless of the transaction amount.
Shopify: best for e-commerce and omnichannel sellers
Shopify offers one of the best ways to accept credit card payments for small business that operates online, in-store, or across multiple sales channels. Beyond payments, it provides a full e-commerce ecosystem — from website hosting and inventory management to marketing tools. This makes it especially valuable for merchants who want one unified platform to handle both storefront and checkout in a seamless flow.
Fees
- Online transactions: 2.9% + $0.30 per transaction (basic plan)
- In-person payments: 2.7% per transaction
- Lower fees available on higher-tier plans
Pros
- Fully integrated e-commerce and payment solution
- Omnichannel support (online store, POS, social selling)
- Reliable fraud analysis tools built in
- Scalable as business grows
- Wide range of third-party app integrations
Cons
- Higher fees unless on advanced plans
- Monthly subscription cost on top of transaction fees
- More complex setup compared to lightweight tools
- Can be overkill for service-based or offline-only businesses
Square: best for in-person and mobile sellers
Square provides one of the best ways to accept credit card payments for small business that runs on face-to-face sales. Its free POS app and low-cost hardware make it ideal for cafes, salons, retail shops, and mobile vendors. Square also includes extras like invoicing, reporting, and inventory tools without additional subscriptions.
Fees
- In-person: 2.6% + $0.15
- Online: 2.9% + $0.30 per transaction
- Invoices: 3.3% + $0.30 per transaction
Pros
- Free POS app with rich features
- Affordable, portable card readers
- No monthly fees
- Built-in analytics and inventory management
- Quick setup, beginner friendly
Cons
- Limited advanced e-commerce features
- Higher fees for keyed-in or invoice payments
- Account holds possible for unusual transactions
Stripe: best for online-first businesses and SaaS
Stripe is the go-to solution for digital-first companies. It’s one of the best ways to accept credit card payments for small business selling online, through apps, or via subscription models. Stripe provides APIs and developer tools that let merchants fully customize checkout, billing, and integrations with other platforms.
Fees
- Online: 2.9% + $0.30 per transaction
- International cards: +1.5% additional fee
- Optional add-ons (e.g., Billing, Radar) may carry extra costs
Pros
- Highly customizable for developers
- Supports recurring billing and subscriptions
- Strong fraud detection tools (Radar)
- Global support with 135+ currencies
- Scales with complex or high-volume businesses
Cons
- Requires developer skills for advanced setup
- Support may feel limited for small merchants
- Flat pricing less competitive for micro-transactions
PayPal: best for fast setup and customer trust
PayPal remains one of the best ways to accept credit card payments for small business, especially those needing quick implementation. Its brand recognition builds customer trust, and it offers multiple acceptance methods — PayPal wallet, credit/debit cards, PayPal Checkout, and even QR codes. Ideal for freelancers, small online shops, and side hustles.
Fees
- Online: 2.99% + $0.49 per transaction
- In-person (Zettle): , 2.29% + $0.09
- Additional fees for cross-border or currency conversions
Pros
- Fast and easy account setup
- Widely trusted by customers worldwide
- Supports multiple payment types (wallet, cards, QR)
- No monthly fees for standard accounts
- Works seamlessly with e-commerce platforms
Cons
- Higher fees than some competitors
- Account freezes can occur with unusual activity
- Limited customization compared to Stripe
Factors to consider when choosing a credit card processor
Selecting the right processor is about more than just taking payments—it directly impacts your costs, efficiency, and customer experience. Here are the key factors to weigh before making a choice.
Understand the monthly or annual fees
Credit card processing fees and setup fees vary between providers, often including transaction percentages, fixed per-swipe charges, and monthly service fees. Look beyond the headline rate to understand hidden costs like chargeback fees or cross-border surcharges.
Check hardware and software needs
Some processors require specific card readers, terminals, or POS integrations, while others provide flexible software-based solutions. The right fit depends on whether you sell in person, online, or both, and how easily the processor integrates with your existing systems.
Evaluate customer support
Payment disruptions can cost sales and hurt trust, so responsive customer service is critical. A processor that offers fast support—through phone, chat, or dedicated account managers—can make the difference when technical issues arise.
Benefits and possible pitfalls of accepting credit card payments
Accepting credit card payments has become standard for most businesses, but it’s not without its trade-offs. On the one hand, credit cards make transactions faster and more convenient for customers. On the other hand, they can introduce costs and risks that need careful management. Here’s a clear look at both sides.
Benefits
- Customer convenience: Credit cards are one of the most widely used payment methods. Offering them removes barriers to purchase and helps capture more sales from customers who prefer plastic over cash.
- Safety and speed: Unlike handling cash, credit card transactions are fast, secure, and less prone to theft or errors. Payments clear quickly, allowing you to serve customers efficiently.
- Accurate bookkeeping: Credit card processors provide digital records of every transaction. This simplifies reconciliation, reduces human error, and ensures your accounting is always up to date.
Risks
- Hidden fees: Credit card processing often comes with interchange fees, monthly charges, and penalties that can eat into margins if not tracked carefully.
- Security concerns: Storing or transmitting card data incorrectly can expose businesses to fraud or data breaches. Strict compliance with PCI standards is essential to avoid costly liabilities.
- Chargebacks: Customers can dispute transactions, leading to lost revenue and additional fees. Without clear policies and documentation, chargebacks can become an ongoing issue.
The easiest way to accepting credit card payments
When it comes to simplicity, cost, and speed, the easiest way to accept credit card payments for small business is JIM. With no hardware to buy, no complicated setup, and just a flat 1.99% fee, JIM turns your iPhone into a ready-to-go payment terminal. For owners who value efficiency and transparency, it’s the most straightforward path to getting paid.
