Saving On Credit Card Processing Without Switching Providers
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Best Ways To Accept Credit Card Payments Without A Merchant Account
Need to accept credit card payments without a merchant account? Learn what third-party payment processing is and the pros & cons of our top vendors.
Frank has been writing about payment processing and business services since 2015. He is a retired Air Force officer and a former practicing attorney. He has a Bachelor of Science degree in Psychology from The Pennsylvania State University and a Juris Doctorate degree from the Ventura College of Law.
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Frank KehlFrank has been writing about payment processing and business services since 2015. He is a retired Air Force officer and a former practicing attorney. He has a Bachelor of Science degree in Psychology from The Pennsylvania State University and a Juris Doctorate degree from the Ventura College of Law.
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Chris has been writing about small business topics since 2003. He has been featured in Fox Business, ABC News, Yahoo Finance, GoBankingRates, Newsweek, BizJournals, and other publications. He has a Bachelor’s of Arts in English Writing Arts from SUNY Oswego, and a Masters of Science in Interactive Media from the University of Central Florida.
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Chris MotolaChris has been writing about small business topics since 2003. He has been featured in Fox Business, ABC News, Yahoo Finance, GoBankingRates, Newsweek, BizJournals, and other publications. He has a Bachelor’s of Arts in English Writing Arts from SUNY Oswego, and a Masters of Science in Interactive Media from the University of Central Florida.
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Traditional merchant accounts can be expensive and time-consuming to set up, but there are ways to accept credit cards without setting one up. Popular payment service providers (also called third-party payment processors) like Square and PayPal make it cheap and easy to start accepting payments with a simple signup process and standardized per-transaction payment processing fees.
Keep reading to learn how to accept credit cards without a merchant account, the best payment service providers for taking credit cards, and when it makes more sense to get a merchant account for your business.
5 Best Options To Accept Credit Card Payments Without A Merchant Account
Your best options to accept credit cards without a merchant account are payment service providers, which offer short-term contracts, low monthly fees, and transparent payment processing fees.
Our choices for the best payment service providers include:
Get a free card swiper from Square at no cost when you create a free account. Claim your card reader.
Pros
Month-to-month billing
Predictable flat-rate pricing
Affordable card readers and terminals
Cost-effective for small and seasonal businesses
Cons
Account stability issues
Not available to most high-risk industries
Can be expensive at high processing volumes
Why We Chose Square
We believe that Square is the most affordable and feature-rich mobile payment processing solution, especially for businesses that require POS terminals. The company offers industry-specific POS systems for retail, restaurant, and service-based businesses, along with flat-rate payment processing.
Square has both free and paid plans that include advanced features for an additional monthly subscription fee. The advanced features are very cost-effective when compared to other payment processors that come with POS software.
2.5-2.6% + $0.10-$0.15 for swiped/dipped/tapped transactions
2.9% + $0.30 for online transactions
3.5% + $0.15 for keyed-in transactions
No monthly minimum
No PCI compliance fees
$0-$165/month (based on your POS software plan)
Note: Square’s flat-rate pricing works best for relatively low-volume businesses, but can be more expensive than a merchant account at higher payment processing volumes. If your business grows above approximately $5,000/month in credit and debit card sales, you should consider transitioning to a full-service merchant account.
Square Features
Square was one of the first third-party payment processors to offer a way to accept credit card payments in person. The original mobile processing system has evolved into a fully-featured platform for POS, payments, and more products by Square for small businesses.
Major features include:
EMV and NFC-compatible mobile card readers
Square Terminal for in-person sales
Square Stand iPad-based POS system
Free Square Online Store for all Square users
Virtual terminal for keyed-in or in-person transactions
Related: Check out our Square For Retail review for more information on retail inventory management and online sales and our guide to Square hardware for more details on Square’s hardware offering.
Choose Square If...
You want payment processing, POS, and other great features for free
You want industry-specific features for an affordable price
Shopify provides an excellent out-of-the-box eCommerce platform for entrepreneurs who want to start an online business but don't want to spend too much time or effort on technical details. Setting up Shopify Payments is easy to do. The payment processor comes with all Shopify accounts, and all you have to do is activate it.
Shopify's easy-to-use interface helps merchants build a professional-looking website, with or without a coding professional. It also connects to Shopify POS software, which is built specifically for omnichannel retail businesses.
Related: Read our Shopify review for more information on Shopify's eCommerce store builder features.
Shopify Payments Pricing
Shopify charges the following prices to use Shopify Payments:
2.4%-5% + $0.00-$0.10 /card-present transaction
2.5-5% + $0.30/online transaction
$5-$2,500/month subscription plans
Additional fees apply for optional services
Note: The higher-level plans offer substantially lower payment processing rates and better retail inventory and shipping management features.
Shopify Payments Features
Key features include the following:
Omnichannel payments platform with online store, social media, and online marketplace sales
Several easy-to-install software apps available
Integrated security and PCI compliance services
Affordable EMV and NFC-compatible card readers available
Shopify POS software available to offer in-store shopping and online shopping with in-store pickup
Strong international website building and shipping features
Compatibility with PayPal Express without having to pay extra transaction fees
Compatibility with the Shop Pay app, which allows customers to save payment information for later, track packages in real time, and pay for items in installments
Extensive developer tools
Related: Read our Shopify POS review for more information on how you can use this retail POS system to create a hybrid shopping experience for your customers.
Choose Shopify Payments If...
You want a plug-and-play eCommerce solution
You want an omnichannel platform that’s easy to use
Extensive developer tools and customization options
Predictable flat-rate pricing
Low-code features available
Excellent international sales features
Cons
Needs technical skills to implement in most cases
Account stability issues
Not available to high-risk businesses
Why We Chose Stripe
For eCommerce or omnichannel merchants, Stripe offers the most sophisticated platform you can find. However, you'll most likely need either a developer or coding skills to take full advantage of all the capabilities it offers, such as branding your checkout flow or setting up a unique payments platform for B2B customers.
Stripe is one of the few providers we've found that combines transparent, small-business-friendly pricing with the kinds of advanced features you'd normally only find with a full-service merchant account.
It's a great choice for almost any online business, regardless of size or processing volume. It's also perfect for international businesses, as it's available in most major countries around the world, supports a variety of local payment methods, and can process multicurrency transactions.
Stripe Pricing
Stripe pricing is as follows:
2.9% + $0.30 (2.2% + $0.30 for nonprofits) per online transaction
2.7% + $0.05 per in-person transaction
+0.8% per transaction ($5 cap) per international transaction
+1% per currency conversion (if needed)
ACH: 0.8% per transaction ($5 cap)
No monthly fee
$15/incident chargeback fee
Additional fees for some optional services
Customized pricing available
Read our Stripe pricing guide for more information on customized pricing and paid Stripe add-ons.
Stripe Features
Here are the primary features Stripe offers:
Integrated payments platform with customizable checkout interface
Extensive online shopping cart compatibility
135+ payment methods available including digital wallets and local currency options available for 195 countries
Invoice, recurring billing, and one-click checkout flows
Advanced analytics and reporting tools
Strong set of developer tools for site customization
Stripe Radar anti-fraud detection service
Support for in-person payments via Stripe Terminal
Connections to the most popular POS systems and eCommerce platforms
Lower in-person payment processing rates than competitors
No card reader required
No business bank account or EIN required
Easy to use
Cons
Customers must have Venmo accounts for lower payment processing fees
Merchant is responsible for tax reporting
Very limited business management features
Why We Chose Venmo
Venmo (which is owned by PayPal) is a widely recognized peer-to-peer payment app with low in-person payment processing fees that make it easy for individuals to take occasional card payments on the go. Venmo offers business accounts, but it's not technically a third-party payment processor. All you need is U.S. residency status and a personal Venmo account, so most individuals can sign up for a business account. There are no business bank account or EIN (employer identification number) requirements.
Because Venmo has minimal inventory management, customer management, financial reporting, and software integration capabilities, we only recommend Venmo for individuals and very small businesses charging for services or singular items.
Note: To take online transactions, you need to sign up for either a PayPal Business account or use Braintree, which is a payment system owned by PayPal.
Venmo Pricing
Venmo’s pricing is as follows:
1.9% + $0.10 for QR code payments; 2.29% + $0.09 for Tap to Pay
3.49% + $0.49 to accept Venmo payments on your website
Purchases limited to $2,999.99/transaction
Total purchases limited to $24,999.99/week (or $2,499.99 without identity verification)
Transfers to your bank account limited to $49,999.99/week (or $999.99 without identity verification)
Transfers to your bank account limited to $50,000/transaction for instant transfers
Related: Read our Braintree review to decide whether this online payment system is suited for your small business.
Venmo Features
Venmo For Business accounts allow individuals and very small businesses to accept payments through Venmo’s peer-to-peer payments network, and includes the following features:
In-person payments using QR codes and the Venmo mobile app
Online payments using PayPal Checkout or the Braintree payment gateway
QR code kit available (includes printed QR codes in multiple sizes)
Venmo charity profile for nonprofits
Social sharing of purchases so your customers can show their friends what they’re buying
PayPal accounts don't come with long-term contracts or early termination penalties, and even the company's free service tier offers all the basic features an online business will need. Because of the pay-as-you-go nature of PayPal's fee structure, many merchants use it as a backup payment acceptance method in addition to their primary provider.
However, if you're thinking of using PayPal as your sole means of accepting credit and debit card payments, we strongly encourage you to take a careful look at the company's latest pricing structure. While some of the processing fees are competitive with what other third-party processors charge, others are above industry averages and could cost you a lot of money if they apply to the types of transactions that you accept most frequently.
PayPal Pricing
Here’s an overview of the primary rates and fees you should know:
2.29% + $0.09 for card-present transactions
2.99% + $0.49 for standard credit & debit transactions; 3.49% + $0.49 for PayPal & Venmo payments
3.49% + $0.09 for keyed-in mobile & in-store transactions; 3.09% + $0.49 for virtual terminal transactions
+1.5% cross-border fee
$0/month for PayPal Checkout
$5/month for PayPal Payments Advanced
$30/month for PayPal Payments Pro
For a more detailed breakdown of PayPal’s pricing, please see our complete guide to PayPal’s merchant fees.
PayPal Features
Highlights of the company’s services include the following:
Credit and debit card payment processing
Support for localized payment methods
Contextual checkout buttons
Hosted checkout page
Virtual terminal available (additional fee applies)
Recurring billing available (additional fee applies)
Merchant Maverick has been researching the payment processing industry since 2009. Our writers have reviewed hundreds of credit card processors, merchant account services, and mobile payment apps, evaluating each provider carefully on several different metrics.
Weighted Rating Breakdown
Fees & Rates 35%
Contract 20%
Products & Services 15%
Sales & Advertising Transparency 15%
Customer Service 10%
User Reviews 5%
When comparing different payment processing companies and applications to one another, we consider numerous data points. Our experts start by comparing credit card processing rates, the presence of additional fees, contract length, sales practices, and the presence or absence of additional features and services, like point of sale software. Each provider is judged on its own merits and how well it stacks up to industry standards; then it is weighed against the other providers on the list.
We spend an average of 10-15 hours researching and updating each one of our lists, making sure every company or application included meets our internal standards for quality and reputation. Any list of recommended payment processors on our site might contain a mix of standard merchant accounts, third-party payment processors, mobile payment devices, and high-risk payment processors, depending on what our expert feels is the best fit for certain scenarios or business types.
For additional details about Merchant Maverick’s review and rating processes, please refer to any or all of the following methodology pages:
A merchant account is a special bank account that temporarily holds money from credit and debit card transactions. Once transaction processing is complete and your provider has taken out its fees, the remaining funds are transferred to your business bank account.
This approach comes with several advantages and disadvantages:
Pros
Unique Merchant Identification Number (MID) for each merchant
Lower risk of sudden account holds, freezes, or terminations
Can be less expensive overall at higher processing volumes than third-party processors
Cons
Extensive underwriting process is required before approval
Often includes numerous additional monthly and annual fees
Usually more expensive than payment service providers for low-volume businesses
How To Accept Credit Card Payments Without A Merchant Account
To accept credit card payments without a merchant account, you can use a payment service provider such as PayPal or Stripe. Payment service providers, also called third-party payment processors, combine all their merchants into a single large merchant account, eliminating the need for a time-consuming and paperwork-intensive underwriting process before your account can be approved. This approach also cuts down your provider’s account maintenance costs significantly, allowing it to pass some of the savings onto you.
Note: With a payment service provider, you won’t have your own separate merchant account with a unique Merchant ID Number.
Signing up with a third-party processor has its pros and cons, including:
Pros
No extensive underwriting process is required before approval
Usually includes no additional monthly or annual fees
Usually less expensive than traditional merchant accounts for low-volume businesses
Cons
Higher risk of sudden account holds, freezes, or terminations
It can be more expensive overall at higher processing volumes than a traditional merchant account
May lack advanced features or customization options available with a merchant account
How To Accept Credit Cards For Personal Use
In addition to payment service providers, peer-to-peer money transfer apps have made it easier than ever to send or receive a payment for personal or business transactions. Remember that all income must be reported to the IRS, even if you do not receive an IRS Form 1099-K. Here’s how the most popular services handle this issue:
Zelle
While Zelle is perhaps the easiest to use and most accessible peer-to-peer service available, it won’t be very helpful at tax time. Because it does not settle funds, Zelle maintains that it’s exempt from IRS income reporting laws.
Although you can set up a Zelle profile for your business, you won’t receive an IRS Form 1099-K for any transactions, regardless of the amount. You should also be aware that not all banks that use Zelle offer it for business purposes, and those that do may or may not charge fees for business-related transfers.
Square Cash App
Even if you’re not using Square as your third-party processor of choice, the Square Cash App can be a handy way to accept payments.
Square also offers a Cash App Business Account for individuals looking to keep business and personal transactions separate. Like other peer-to-peer services, Square Cash App issues 1099-Ks for qualifying transactions.
Personal PayPal Account
While you can use your personal PayPal account for the occasional business transaction, you’d be solely responsible for accurately reporting your income to the IRS for tax purposes. You’d also miss out on all the additional features and services that PayPal offers to merchants.
Personal Venmo Account
Venmo offers peer-to-peer money transfers for both personal use and business use. However, Venmo only offers tax form management on Venmo For Business profiles.
What To Look For If You Want To Accept Payments Without A Merchant Account
Here’s a brief overview of the major features you should evaluate before selecting a third-party processor for your business:
In-Person Payments Features
To accept credit cards in person, you should get a credit card reader or terminal to swipe, dip, or tap the customer’s card. All the payment processors on this list offer credit card readers, while companies like Square and Shopify offer full POS register setups.
If you want to accept credit card payments without a credit card machine, use a QR code payment method from a provider like PayPal or use Square’s tap-to-pay feature available on iPhones.
Note: Taking payments with a card reader will always cost less than QR code or online payments. This is because the card itself is present and that makes the payment more secure.
Online Payment Support
You’ll need a payment gateway or virtual terminal to take payments online. A payment gateway is a service that connects your online store to your provider’s processing network. A virtual terminal is software that runs on your computer or mobile device, allowing you to manually enter credit card payment information or function as a terminal in conjunction with a compatible card reader.
Most major payment gateways today include a built-in virtual terminal feature. Most third-party processors provide a free virtual terminal as part of your account (with the notable exception of PayPal, which inexplicably charges $30/month for this rather basic feature).
Third-party payment processors have responded to this demand by offering increased support for popular alternative payment methods. Identify which alternative payment methods are relevant for your business before choosing your payment processor.
Strong Customer Support
Customer support is an important factor in choosing your payment processor because you want to be able to contact someone if your account freezes or you run into trouble when you integrate your payment processor with third-party software. Look for payment processors with several modes of support (phone, email, live chat, etc.)
Also, look for a provider with good self-help articles so you can troubleshoot issues on your own before contacting customer support.
Should My Business Accept Payments Without A Merchant Account?
If you process below $5,000/month, we generally recommend that you accept credit card payments without a merchant account. Above that amount, we generally recommend a full-service merchant account as a more stable and less expensive option. However, the monthly processing volume requirement isn’t set in stone. You should also consider factors such as average ticket size, specific POS hardware or software needs, and whether your business is seasonal.
If you decide to use a payment service provider instead of a merchant account, we recommend the following best practices:
Do look for a provider that offers month-to-month billing with no long-term contracts
Frank has been writing about payment processing and business services since 2015. He is a retired Air Force officer and a former practicing attorney. He has a Bachelor of Science degree in Psychology from The Pennsylvania State University and a Juris Doctorate degree from the Ventura College of Law.
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The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation.
Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.
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