How to accept credit card payments

Your three options

A payment provider that signs you up instantly. Stripe, Square and PayPal work as payment facilitators: they hold the relationship with the bank, and your business processes under their account. Sign-up takes minutes and pricing is usually flat. The trade-off is that more of the checking happens after you start selling, and that's often when holds happen.

A merchant account. A bank, or a company that sells on a bank's behalf, reviews your business first and then gives it its own account with the card networks. It takes longer to open, often offers interchange-plus pricing, and tends to be steadier once open. What a merchant account is.

Your store platform's own payments. Shopify Payments, for example, is built into Shopify, and Shopify charges an extra fee when you use a different processor.

What you need before you apply

• Your business's legal name, registration and federal tax ID: usually an EIN, though some providers, Stripe among them, let sole proprietors use their Social Security number instead.
• A bank account for payouts. Most providers want it in the business's name.
• Details of each owner with 25% or more, with photo ID.
• A website that shows what you sell and what it costs, a refund and cancellation policy, terms of service, a privacy policy, shipping times if you ship goods, and a way to contact you.
• If you already take cards, your last 3 to 6 months of processing statements.
• For regulated products, the licenses or certificates that apply, such as lab certificates for CBD or LegitScript certification for telehealth.

How to set it up

1. Decide how customers will pay

   Online checkout, payment links, invoices, subscriptions, over the phone, or in person. Most online businesses need checkout and links; service businesses often need invoices.

2. Choose a provider and a pricing model

   Compare effective rates with your own numbers, plus monthly fees, dispute fees, payout timing, and reserve and hold terms. The comparison of 13 providers lists published rates.

3. Apply

   The provider checks the business, its owners and its website. Answer frankly, especially about past account closures. Providers usually find out anyway.

4. Connect your checkout

   Use a hosted payment page or embedded payment fields for a simpler, safer setup, a plugin for platforms like WooCommerce, or the API if you're building your own.

5. Turn on fraud tools

   Address and security-code checks, 3-D Secure for riskier payments, and limits on repeated attempts.

6. Set your billing name

   The name customers see on their card statement. Make it match your brand so customers recognize the charge and don't dispute it.

7. Complete your PCI questionnaire

   Every business that takes cards must follow the PCI Data Security Standard. If card details are entered only on your provider's hosted pages or fields, you'll usually fill in the shortest form, SAQ A.

8. Test, then go live

   Run test payments, then one small real payment and refund it, to check that money arrives and refunds work.

Accepting cards online without a website

Payment links and invoices let you get paid by email or text without a checkout page. You'll still need a web presence that describes your business for the provider's review, and the provider will want a refund policy that customers can see.

Taking cards over the phone

A virtual terminal lets you type a customer's card details into a secure page. Manually entered cards cost more on many plans (Stripe adds 0.5%, for example) and carry more fraud risk, so use them only when you must, and never write card numbers down or keep them in email.

Taking cards in person

You'll need a card reader or a point-of-sale system from a provider that supports in-person payments, such as Square, Helcim or Stax. In-person card payments usually cost less than online ones, because chip and contactless payments are lower-risk. Candor doesn't offer in-person payments yet.

What it costs

Flat-rate pricing for online cards is commonly 2.9% + 30¢, as at Stripe and on Square's paid plans. Interchange-plus pricing passes on each card's real cost, the interchange the networks publish plus network fees, and adds a markup. For a full breakdown, read credit card processing fees, explained, or try the fee calculator.

Mistakes that lead to holds and disputes

• No visible refund policy, or one that's hard to find.
• A billing name customers don't recognize.
• Free trials that turn into charges without a reminder, or cancellation that's hard to do.
• Shipping later than promised, without telling the customer.
• A sudden jump in sales or in average order size without telling your provider first.
• Ignoring disputes. An unanswered dispute is a lost dispute.

Sources