How Can I Take Payment by Credit Card? [in 2023]

In today's fast-paced world, accepting credit card payments has become essential for businesses of all sizes.

Whether you run a small online store or a brick-and-mortar establishment, offering credit card payment options can significantly boost your sales and customer satisfaction. But if you are new to this process, you might be wondering how to get started and what steps you need to take.

In this article, we'll guide you through the process of taking payments by credit card, ensuring a smooth and secure transaction experience for both you and your customers.

Understanding Credit Card Transactions

Credit card transactions may seem complicated, but the process is quite structured. First, it's important to understand the key players involved in a credit card transaction. These include the cardholder (the individual using the credit card), the merchant (the business accepting the credit card payment), the acquiring bank (the merchant's bank), the issuing bank (the cardholder's bank), and the card network (Visa, MasterCard etc.).

Role of Credit Card Issuer

The credit card issuer is typically a bank or financial institution that provides the cardholder with the credit card. For example, if you have an American Express card, American Express is your card issuer. The card issuer is responsible for sending payments to the merchant's bank on behalf of the cardholder.

When a cardholder makes a purchase, the transaction details are sent to the card issuer for approval. The issuer checks the cardholder's available credit and verifies the transaction. If approved, the issuer then temporarily covers the cost of the transaction.

Transaction Networks

Card transaction networks like Visa or MasterCard act as intermediaries between the card issuer and the acquiring bank. These networks process credit card transactions and facilitate the exchange of information and money between the card issuer and the merchant. They ensure that funds are transferred from the right cardholder's account to the right merchant's account.

Movement of Funds

When a cardholder makes a purchase, the merchant sends the transaction to their acquiring bank, which forwards it to the card network. The transaction is then sent to the cardholder's issuing bank for approval.

Once the transaction is approved, the cardholder's issuing bank transfers the funds through the card network to the acquiring bank, which then deposits the payment into the merchant's account. Though the entire process occurs electronically and quickly, settlement—that is, the actual transfer of funds—can take a couple of business days.

Understanding fees

Both the acquiring bank and the card network charge the merchant a fee for the transaction. This is known as the interchange fee and is typically a small percentage of the transaction amount. The details of these fees can vary by bank and network, but they typically include a flat fee plus a percentage of the transaction.

By understanding these different components and how they work together, it's easier to see how credit card transactions work and how the payments are made. It is important for any merchant or cardholder participating in these transactions to understand the flow of information and funds in order to effectively manage and troubleshoot any issues that may arise.

Choosing a Credit Card Processor

Choosing a Credit Card Processor: A Consideration of Fees and Services

In order to take payments via credit card, it's essential to choose a reliable credit card processor. The ideal choice will depend largely on your specific needs and preferences, including the volume of transactions your business typically processes, the risk associated with your business and many other factors. Most importantly, the fees and services offered by different processors differ wildly, so it's important to compare these specifics before making a decision.

Understanding The Fee Structure

First, understanding the fee structure of different processors is key. These fees include interchange fees, assessment fees, and processor’s markup. The interchange fee is determined by the credit card brand (Visa, MasterCard, etc) and is non-negotiable. Assessment fees are also determined by the card brand and involve costs for processing transactions. The processor's markup is where there can be variability. This fee is how the processor makes their profit. Some processors charge a flat rate while others have a variable rate based on transaction volume or value. Make sure to understand these fees when choosing a processor.

Stripe: Comprehensive Services for Digital Businesses

Among popular options, Stripe is a comprehensive credit card processor that primarily serves online businesses. Key benefits include its clean, developer-friendly API, and the ability to customize your payment processing setup in a way that suits your specific business. It has a simple and straightforward pricing structure, charging 2.9% + $0.30 per transaction. Stripe also offers additional services like fraud prevention, invoicing, and platform building tools. Stripe's extensive list of services makes it well-suited for ecommerce companies and other businesses with a strong online component.

Square: Easy Setup and Useful Features for Small Businesses

Square is a prominent player in the credit card processing space, particularly among small businesses. It's known for its easy setup and wide range of useful features, such as mobile payment processing and point-of-sale software. Square's fees are competitive, charging 2.6% + $0.10 per swipe or 3.5% + $0.15 for keyed-in transactions. It also has hardware options for in-person credit card payment, which can be useful for businesses with physical storefronts.

PayPal: Optimal Choice for International Transactions

PayPal is a well-known option that excels in international transactions, making it a viable choice for businesses with an international clientele. PayPal's payment processing fees start at 2.9% + $0.30 per transaction for online sales within the U.S., and 4.4% transaction fee plus a fixed fee based on the currency received for international sales. It also offers flexibility with its options for mobile payments and integrations with various ecommerce platforms.

By carefully reviewing the fees and services provided by these and other credit card processors, you can make an informed decision that paves the way for smoother, more efficient, and more profitable credit card payment processes.

Setting Up the Payment System

Choosing Your Credit Card Processor

Before you can accept credit card payments, you'll need to select a credit card processor. This could be your bank, an online payment processing service like Square or PayPal, or a merchant services provider. You'll want to compare rates and terms carefully, as they can vary significantly. In general, look for a provider with low transaction fees, no long-term contracts, and excellent customer service.

Setting Up Your Payment Terminal

If you are operating a brick and mortar store, you will need a physical terminal to accept credit cards. Some credit card processors will provide you with a terminal when you sign up for their services. To set it up, you'll connect it to your point of sale (POS) system, following the instructions provided by the processor. Remember to test the terminal with a variety of cards to ensure it's working correctly.

Establishing an Online Payment System

If your business operates online or you want to offer online payments for customers, you'll need to set up an online payment gateway. This involves creating an account with your chosen payment processor (if you haven't already), and then integrating their system with your e-commerce platform. Many e-commerce platforms have built-in integrations for this purpose - you just need to select your processor and follow the provided setup instructions.

Securely Storing Customer Data

Whether you are processing payments in store or online, it is crucial to ensure your customers' data is secure. This requires setting up a secure network and implementing data security best practices. For instance, never write down or store card information unless it is absolutely necessary.

Integrating Payments with Business Operations

Integration is about making sure your payment system communicates with your other business systems. This can help streamline your operations and reduce errors. For physical stores, your POS system should be able to record sales information whenever a payment is processed. For online stores, your e-commerce platform should update your inventory whenever a product is sold.

Furthermore, both physical and online stores should set up their accounting software to automatically record all sales and payment data. This will simplify your financial management and make preparing your taxes easier.

Complying with Legal Regulations

In addition to setting up a secure network, businesses that accept credit cards must comply with the Payment Card Industry Data Security Standard (PCI DSS). This is a set of regulations that govern how businesses must secure customer payment information. Your credit card processor can guide you on how to become compliant.

Security and Compliance

Understanding PCI Compliance

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to ensure that all companies that accept, process, store or transmit credit card information maintain a secure environment. Therefore, to take payment by credit card, you must become familiar with PCI compliance. It includes creating and maintaining a secure network, protecting cardholder data, maintaining a vulnerability management program, implementing strong access control measures, regularly monitoring and testing networks, and maintaining an information security policy.

Preventing Credit Card Fraud

In order to prevent credit card fraud, you need to take several preventative measures. These measures include, but are not limited to:

  1. Verifying the customer's information. Ask for identification, check signatures, and ensure the card matches the customer.
  2. Using secure network systems to process transactions. Make sure that your payment gateway or processor is PCI compliant and uses encryption to thwart hackers.
  3. Regularly updating your payment systems. Keeping your system up-to-date can help fortify your defenses against fraudsters who exploit outdated systems.
  4. Implementing an Address Verification System (AVS). This system confirms that the cardholder’s address matches with the one on file at the bank.
  5. Utilizing a CVV verification. This three-digit code on the back of the credit card can help verify that the real card is in the buyer’s possession.

Maintaining Compliance

Becoming PCI compliant is not a one-time effort but requires maintenance. You're expected to consistently audit your compliance levels to ensure ongoing adherence to security protocols.

Regular audits can help identify potential vulnerabilities in your card data environment and allow you to address them before they become potential points of exploitation. In addition, maintaining a record of your compliance efforts can be helpful in the event of a dispute or fraud incident.

If you deal with large volumes of transactions, it may be necessary to hire a Qualified Security Assessor (QSA) or use Approved Scanning Vendor (ASV) software to run regular vulnerability scans and achieve and maintain compliance.

Remember, the goal of these security standards and regulations is to protect the cardholder's data and prevent unauthorized access to this sensitive information. Being diligent and proactive in your security practices not only protects your customers, but it also safeguards your business from the considerable financial and reputation damage caused by data breaches and fraud.


Taking payment by credit card is no longer just an option; it is a necessity for businesses to thrive in today's competitive landscape.

By understanding the importance of credit card payments, choosing the right payment gateway, securing your website, streamlining the checkout process, and educating your customers, you can provide a seamless and secure payment experience that will undoubtedly set your business apart.

Remember, transparency, security, and customer convenience are the pillars of a successful credit card payment system. Embrace these principles, and you will witness a significant boost in customer satisfaction and business growth.

From a seamless customer payment experience to a secure and efficient flow of funds, the importance of understanding and implementing this system cannot be overstated.


  1. Q: What fees can I expect to pay when accepting credit card payments? A: The fees associated with credit card payments vary depending on the payment processor and your business's transaction volume. Common fees include transaction fees, processing fees, and chargeback fees.

  2. Q: Can I accept international credit cards? A: Yes, with the right payment processor and merchant account, you can accept payments from customers worldwide.

  3. Q: Are there any alternatives to credit card payments? A: Yes, you can consider other payment methods such as debit cards, mobile wallets, or online payment platforms like PayPal.

  4. Q: How long does it take for funds to reach my bank account? A: The time it takes for funds to reach your bank account can vary depending on your payment processor. Some may offer next-day deposits, while others may take a few business days.

  5. Q: What should I do if a customer disputes a credit card charge? A: If a customer disputes a credit card charge, you should be prepared to provide evidence of the transaction and any relevant communication to your payment processor to resolve the issue.

Author: Drasko Georgijev

I'm a financial technology professional with 15+ years of experience in payment cards, eCommerce, transaction processing, and switching.
From time to time, I'm sharing some helpful tips, tactics, and news about Digital Commerce and Fintech.
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