How to Start Accepting Credit Cards: Step-by-Step for a New Business
A seven-step path to accepting card payments, from choosing in-person, online or both to testing transactions and confirming your deposit schedule.
To start accepting credit cards you need three things: a business bank account that can receive deposits, an account with a payment processor or payment facilitator, and a way to take the payment such as a card reader, a point-of-sale app, a virtual terminal or an online checkout. For many small businesses this can be done within days. The steps below put the decisions in the order that avoids rework.
Step 1: Decide how customers will pay
List the places customers pay you now and where you want them to pay in the next year.
- In person: a countertop terminal, a mobile reader attached to a phone or tablet, or a full point-of-sale system.
- Online: a checkout page on your website, a hosted payment link or an invoice that customers pay by card.
- By phone or mail: a virtual terminal where you key card details yourself.
- Recurring: subscriptions or memberships that charge on a schedule.
- Marketplaces and apps: payments through a platform that already has its own processing.
The mix matters because card-present transactions typically cost less than keyed and online ones, and because some tools support only one channel.
Step 2: Choose the account type
Most new merchants choose between two structures.
| Feature | Payment facilitator (aggregator) | Traditional merchant account |
|---|---|---|
| Setup speed | Often fast, sometimes the same day to a few days | Longer, because of individual underwriting |
| Pricing | Usually flat-rate and standard | Often interchange-plus or negotiated |
| Contracts | Often month to month | Often fixed term |
| Stability | Funds can be held or accounts reviewed with limited notice | More predictable, with a dedicated underwriting relationship |
| Best for | Startups, side businesses, low or uncertain volume | Established, higher-volume or higher-ticket businesses |
You can start with a facilitator and move to a merchant account later as volume grows. Read choosing the right provider for the criteria.
Step 3: Gather your documents
Underwriters need to verify who you are and what you sell. Have your legal business name, entity type, tax ID, business address, bank account details and a description of your products ready. The requirements and documents guide lists the full set.
Step 4: Apply and complete underwriting
The application asks for ownership, expected monthly volume, average ticket, business model and sometimes processing history. Answer accurately. Underestimating volume can lead to holds or account review when real sales exceed what you stated, and overstating it can lead to a larger reserve. Underwriters may ask for extra documents such as a business license or recent statements.
Step 5: Set up your equipment or software
Choose the device that matches how you accept payments. Buying a terminal outright avoids lease obligations. If you lease, read the term and cancellation conditions carefully. Make sure the device can be used with another processor, or you will be locked in. See common mistakes for lease warnings.
Step 6: Configure the details that affect cost and risk
- Set automatic batch closing each day to avoid downgrades.
- Turn on address and security code checks for online and keyed sales.
- Set a clear business name that customers will recognize on their statement. A confusing descriptor is a leading cause of disputes.
- Enable tip adjustment and receipts as needed.
- Decide on refund and return policies and post them.
Step 7: Test and go live
Run a small real transaction, preferably with your own card, then refund it. Confirm that the receipt, the batch report and the deposit all match. Confirm the deposit schedule and check that the first deposit lands in the correct bank account and in the expected amount.
Worked example: a first-month budget
A new home-baking business expects $4,000 a month in card sales across 160 transactions. It chooses a flat-rate facilitator quoting 2.6% plus $0.10 and buys a $59 reader. These numbers are illustrative.
- Percentage fees: $4,000 x 2.6% = $104.
- Per-transaction fees: 160 x $0.10 = $16.
- Monthly fee: $0.
- Total monthly cost: $120, an effective rate of 3.0%.
- One-time reader cost: $59.
The business could compare this to a traditional account with monthly minimums, which at this size would likely cost more. The fee calculator can model your numbers. Revisit the decision when monthly volume grows.
Compliance basics from day one
Card data must be handled according to the Payment Card Industry Data Security Standard, which requires measures such as not storing sensitive authentication data and using validated payment devices or hosted fields. Using a processor's hosted checkout and certified terminals reduces your burden, but you still usually need to complete an annual self-assessment. See PCI compliance fees explained.
You should also set up bookkeeping so deposits, which are net of fees, reconcile with your sales. Record gross sales and fees separately because fees are a deductible expense, while sales are income. Ask your accountant how to track it.
Taxes and reporting
Payment processors and payment facilitators report payment-card and third-party network transactions to the IRS and to you on Form 1099-K when reporting thresholds are met. The federal threshold has changed several times in recent years, so check the IRS website for the current figure for the year in question. Report all income regardless of whether you receive a form.
When to get help
If you are opening a business in a regulated or higher-risk category, or if you need multiple locations, an accountant and possibly an attorney can help structure the entity and agreements before you apply.
Frequently asked questions
Do I need a separate business bank account?
Processors generally require a bank account in the business's name, or in your name for a sole proprietorship. A separate account makes bookkeeping and taxes simpler.
Can I accept cards without a monthly fee?
Many facilitators have no monthly fee, in exchange for flat-rate pricing. Check the all-in cost at your volume.
How long until I get paid?
Funding schedules vary. See the timeline guide.
Sources
- Internal Revenue Service — Form 1099-K and business income reporting
- PCI Security Standards Council — PCI DSS information
- U.S. Small Business Administration — starting a business resources
- Federal Trade Commission — small business guidance
