Accepting Credit Card Payments Without A Merchant Account: 5 Best Options For Small Businesses

Square Features

Square was one of the first third-party processors to offer a way to accept credit card payments in-person. Today, its original bare-bones mobile processing system has evolved into a fully-featured payments ecosystem for both online and retail businesses.

Major features include:

• EMV & NFC-compatible mobile card readers
• Square Terminal for in-person sales
• Square Stand iPad-based POS system
• Square Online Store for eCommerce businesses
• Virtual terminal for keyed-in or in-person transactions
• Numerous ancillary services (invoicing, inventory management, etc.)

Square Pricing

• 2.6% + $0.10 for swiped/dipped/tapped transactions
• 2.9% + $0.30 for online transactions
• 3.5% + $0.15 for keyed-in transactions
• No monthly or annual fees
• No monthly minimum
• No PCI compliance fees

Where Square Really Shines

Square is the most feature-rich and advanced mobile processing (mPOS) solution you can find without a monthly fee.

Square’s simple flat-rate pricing makes it easy to predict your monthly processing costs once you’ve reached a stable processing volume. The company continues to expand its lineup of products and services, and now offers business sector-specific features, such as Square For Restaurants and Square For Retail. While many of these advanced features require an additional monthly subscription fee, they’re still usually much more affordable than comparable offerings available from competing providers.

Our one caveat regarding Square is that its flat-rate pricing works best for relatively low-volume businesses, but can actually be more expensive than a merchant account at higher processing volumes. If your business grows above approximately $5,000/month in credit & debit card sales, you should start looking to transition to a full-service merchant account.

Shopify Payments Features

Shopify is a very popular eCommerce platform that includes all the features you’ll need to set up an online business and start selling from your website. While you can use Shopify with just about any merchant services provider, Shopify Payments integrates directly with the Shopify platform and is very well-suited to fledgling eCommerce businesses. Key features include the following:

• Omnichannel payments platform
• Extensive developer tools
• Integrated security & PCI compliance services
• EMV & NFC-compatible card readers available
• Shopify POS software available

Shopify Payments Pricing

Note: The following pricing information is for the standard, middle-tier Shopify plan. Other options are available.

• 2.5%/transaction (in-person)
• 2.6% + $0.30/transaction (online)
• $79/month subscription fee
• Shopify Tap & Chip Reader – $49/unit
• Additional fees apply for optional services

Where Shopify Payments Really Shines

Shopify has built an enviable reputation for providing an out-of-the-box eCommerce platform for entrepreneurs who want to start an online business but don’t want to get bogged down in technical details.

Shopify’s easy-to-use interface helps merchants build a professional-looking website, with or without a coding professional.

Shopify currently offers four tiers of service (including the bare-bones Shopify Lite plan). Monthly fees range from $9 to $299, with the more expensive plans including many additional features and services. All plans use flat-rate pricing, although the more expensive options have correspondingly lower per-transaction rates.

It’s also possible to use the Shopify platform with your existing payment processor, but you’ll have to pay an additional fee to Shopify for each transaction. Overall, Shopify Payments is an excellent option if you’re launching a new eCommerce business or adding an online sales channel to your existing retail business.

Stripe Features

Stripe offers the most advanced and customizable online payments platform in the industry but has also recently begun to expand into the retail sector as well. Here are the primary features it offers:

• Integrated payments platform
• Extensive online shopping cart compatibility
• Advanced analytics & reporting tools
• Robust set of developer tools for site customization
• Stripe Radar anti-fraud detection service available
• Support for in-person payments via Stripe Terminal
• Numerous ancillary services available

Stripe Pricing

• 2.9% +$0.30/transaction (online)
• 2.7% + $0.05/transaction (in-person)
• +1% for international transactions
• +1% for currency conversion (if needed)
• 0.8%/ACH transfer (maximum of $5.00)
• No monthly fee
• $15/incident chargeback fee
• Additional fees for some optional services
• Customized pricing available

Where Stripe Really Shines

For eCommerce or omnichannel merchants, Stripe offers the most sophisticated platform you can find, but you’ll most likely need either a developer or your own coding skills to take full advantage of all the capabilities it offers.

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.

Venmo Features

While Venmo is best known as a peer-to-peer (P2P) money transfer service, it’s also become a popular way for merchants to accept payments outside of traditional merchant accounts. Venmo For Business is designed to allow businesses to accept payments using Venmo’s P2P network, and offers 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 Kit available (includes printed QR codes in multiple sizes for in-store use)

Venmo Pricing

• 1.9% + $0.10/transaction for purchases made using the Venmo app & a QR code
• 3.49% + $0.49/transaction for purchases made online or in-app using the Braintree gateway or PayPal Checkout
• 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
• Venmo QR Kit – $14.99 each

Where Venmo Really Shines

Unlike our other third-party payment processors, Venmo won’t replace a merchant account, nor is it designed to. Venmo works best as an additional payment method you can offer customers that will save you money on credit card processing fees. For very small businesses or those that only take an occasional credit or debit card payment, it might be all you need.

If you’ve been relying on cash and paper checks to get paid, adding Venmo For Business gives you a way to accept payments without signing up for a third-party processor or a merchant account. The tradeoff for this simplicity, of course, is that you won’t get the kind of additional features that even a basic third-party processor can offer you, such as support for ACH payments or analytical data. You can use Venmo for online transactions, but you’ll have to sign up for either PayPal or Braintree to do so (note that Venmo and Braintree are both owned by PayPal).

PayPal Features

An early eCommerce pioneer, PayPal enjoys near-universal name recognition and offers a complete payments ecosystem for just about any type of business. Highlights of the company’s services include the following:

• Credit & 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)

PayPal Pricing

PayPal has recently revamped its pricing structure, and it’s now much more complex than it used to be. Here’s a brief overview of the primary rates and fees you should know:

• 2.29% + $0.09 for mobile and in-person transactions
• 2.99% + $0.49 for online sales (standard plan)
• 3.49% + $0.09 for keyed-in transactions
• 3.09% + $0.49 for virtual terminal transactions
• + 1.5%/international transaction
• $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 fees, rates, and pricing. 

Where PayPal Really Shines

Despite its recent price increases, PayPal can still be a good option for many small businesses.

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 new pricing structure. While some of the processing fees are competitive with what other third-party processors charge, many 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.