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

Wondering how to accept credit card payments without a merchant account? Learn what third-party payment processing is and the pros & cons of our top 5 vendors.

    Frank Kehl
  • UPDATED

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.

Being able to accept credit cards without a merchant account has become a far more realistic idea in recent years, as low-cost providers like Square and PayPal have lowered the barriers to entry into accepting credit cards in your business. While traditional merchant accounts are still the predominant choice for established businesses, they’re no longer the only game in town. Third-party payment processors (also known as payment service providers) make it easy for a small, newly-established business to start accepting credit and debit card transactions quickly, and without the time, paperwork, and expense typically required to establish a merchant account.

This article will explain how third-party processors work, review several of the top choices that we recommend, and explain how you can tell if a third-party processor is the right choice for your business.

Learn More About Our Top Picks

CompanyBest ForNext StepsBest For
Square

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Best for taking in-person credit card payments.
Best for taking in-person credit card payments.

Visit Site

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Shopify Payments

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Best for having the benefits of Stripe without the need for technical know-how.
Best for having the benefits of Stripe without the need for technical know-how.

Visit Site

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Stripe Payments

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Best for international merchants who are tech-savvy or can hire a developer.
Best for international merchants who are tech-savvy or can hire a developer.

Visit Site

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Venmo

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Best for small businesses that only occasionally accept a credit or debit card payment.
Best for small businesses that only occasionally accept a credit or debit card payment.

Visit Site

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PayPal

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Best for low-volume merchants.
Best for low-volume merchants.

Visit Site

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Read more below to learn why we chose these options.

Can I Really Accept Credit Card Payments Without A Merchant Account?

Yes, you can accept payments online and in person without a merchant account. To do so, you’ll use a third-party processor, which is an easier alternative to traditional merchant account providers. Note that you’ll often see third-party processors referred to as payment service providers (PSPs), payment aggregators, or payment facilitators.

How A Merchant Account Works

A merchant account is nothing more than 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 processor

Cons

  • Extensive underwriting process required prior to approval
  • Often includes numerous additional monthly and annual fees
  • Usually more expensive than third-party processors for low-volume businesses

The Alternative: Third-Party Payment Processing

With a third-party payment processor, you won’t have your own separate merchant account with a unique Merchant ID Number.

Instead, your business will be aggregated with other users into a single, large merchant account. This approach cuts down your provider’s account maintenance costs significantly, allowing it to pass some of the savings onto you. Like a traditional merchant account, signing up with a third-party processor has its plusses and minuses:

Pros

  • No extensive underwriting process required prior to approval
  • Usually includes no additional monthly or annual fees
  • Usually less expensive than traditional merchant account for low-volume businesses

Cons

  • Higher risk of sudden account holds, freezes, or terminations
  • Can be more expensive overall at higher processing volumes than traditional merchant account
  • May lack advanced features or customization options available with merchant account

How To Accept Credit Cards Without A Merchant Account: Your 5 Best Options

When it comes to accepting credit card payments without a merchant account, there are only a relatively small number of third-party processors that dominate this sector of the payments industry. Each provider offers some unique strengths (and a few shortcomings) and will be a great option for certain business types.

Our choices for the best third-party processors include the following providers:

  • Square
  • Shopify Payments
  • Stripe Payments
  • Venmo 
  • PayPal 

1. Square

Square



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Pros

  • True month-to-month billing
  • Predictable flat-rate pricing
  • Very affordable card readers & terminals
  • Very cost-effective for small & seasonal businesses

Cons

  • Account stability issues
  • Not available to most high-risk industries

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.

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2. Shopify Payments

Shopify Payments



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Pros

  • Predictable flat-rate pricing
  • All-in-one payments platform
  • Robust customization options
  • Multicurrency payments supported

Cons

  • Account stability issues
  • Add-ons often necessary

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.

Get Started with Shopify Payments

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3. Stripe Payments

Stripe Payments



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Pros

  • Extensive developer tools & customization options
  • Predictable flat-rate pricing
  • Multicurrency payments supported
  • Ideal for international merchants

Cons

  • Needs technical skills to implement
  • Account stability issues
  • Not available to high-risk businesses

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.

Get Started with Stripe Payments

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4. Venmo For Business

Venmo



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Pros

  • No dedicated processing hardware required
  • Predictable flat-rate pricing
  • Pay-as-you-go billing
  • Contactless payments

Cons

  • Customers must have Venmo accounts
  • Merchant is responsible for tax reporting
  • Transfer limits may be problematic for high-volume businesses

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).

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5. PayPal

PayPal



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Pros

  • Trusted by consumers
  • Predictable flat-rate pricing
  • Extensive integrations
  • All-in-one payments system

Cons

  • Account stability issues
  • Inconsistent customer support
  • Does not accept high-risk merchants

As of August 2, 2021, PayPal has changed its pricing for online payment processing, affecting new and existing merchants. The new rates are complicated and not easy to summarize, so we recommend reading our article on PayPal's pricing to understand how the new prices will affect your business.

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.

Read our in-depth review

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How To Accept Credit Cards For Personal Use

Peer-to-peer (P2P) money transfer apps have made it easier than ever to make a payment to someone, and can even be used to handle 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 P2P services handle this issue:

Zelle

While Zelle is perhaps the easiest to use and most accessible P2P service available, it won’t be very helpful at tax time. Because it does not actually settle funds, Zelle maintains that it’s exempt from IRS income reporting laws. Although you can set up a Zelle For Business profile, 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.

Venmo

Like Zelle, Venmo offers P2P transfers for both personal use and business use through a Venmo For Business profile. Beginning with the 2022 tax year, Venmo will issue an IRS Form 1099-K for all transactions that exceed $600 and were processed through your Venmo business profile. Note that this includes multiple transactions from the same source that total over $600 over the course of the calendar year. As we’ve noted above, Venmo doesn’t offer a credit card reader but instead relies on QR codes to facilitate payments.

Square Cash App

Even if you’re not using Square as your third-party processor of choice, the Square Cash App can be a very handy way for some businesses to accept payments. While you can download the app and set up an account for free, be aware that any payments you accept that are funded with a credit card will incur a 2.75% processing fee. You’ll also pay a 3% fee if you want to add money to your Square Cash account using a credit card. You can also set up a Cash App Business Account to keep your business and personal transactions separate. Like other P2P services, Square Cash App is now issuing 1099-Ks for qualifying transactions, beginning with the 2022 tax year.

PayPal

PayPal has had a long head start over other money transfer services in terms of features and tax reporting. While you could 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. With the standard, no-frills PayPal Business accounts available with no monthly fees and no long-term commitment, you can easily keep your personal and business transactions separate by setting up a second PayPal account linked to your business banking account.

For more in-depth information on the tax implications of using peer-to-peer transfer services for business purposes, please refer to our article which explains the PayPal, Zelle, & Venmo taxes.

What To Look For If You Want To Accept Payments Without A Merchant Account

Like any other major buying decision, you’ll want to shop around before selecting a third-party payment processor for your business. All of the providers we’ve profiled above offer different products and services, so you’ll want to select a provider that best fits the needs of your particular business.

One thing these companies generally do not compete on is pricing. Almost all third-party processors offer true pay-as-you-go billing, with no long-term contracts or monthly fees for basic services. They also offer remarkably similar flat-rate processing rate plans. If you want to accept payments online without a merchant account, you can expect to pay the same 2.9% + $0.30 per transaction with any major third-party processor.

Here’s a brief overview of the major features you should evaluate before selecting a third-party processor for your business:

Processing Hardware

To accept in-person payments, you’ll need a credit card reader or terminal to swipe, dip, or tap the customer’s card. Third-party processors initially only supported mobile payments that required a smartphone and a very basic card reader. Square stands out here for its variety of low-cost, feature-packed card readers, terminals, and POS systems. At the same time, other providers can offer you a universal card reader or terminal that can be reprogrammed if you later decide to switch to a different processor.

Online Payment Support

To take payments online, you’ll need a payment gateway or virtual terminal. A payment gateway is a program that connects your online store to your provider’s processing network. A virtual terminal is a program 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. Note that 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).

Alternative Payment Methods

Between the COVID-19 pandemic and recent increases in interchange fees, there is renewed interest in alternative payment methods that offer a contactless way to interact with customers and, more importantly, avoid paying costly credit card processing fees. Third-party processors have responded to this demand by offering increased support for popular alternative payment methods, including QR code payments, payment links, online invoicing, and eCheck & ACH transfer processing.

Customer Support

Often overlooked because it’s so subjective, customer support after you’ve signed up for an account is one of the most important criteria in selecting a top-notch provider. Third-party processors have had a bad reputation in this area for years, with many of them not even offering telephone support until fairly recently. Square and other providers have made significant improvements in this area in the last few years, but you should still be prepared to make maximum use of self-help resources (usually published on the provider’s website) before reaching out to customer service for help with a problem.

Should My Business Accept Payments Without A Merchant Account?

We generally recommend full-service merchant accounts for businesses that reliably process over $5,000/month, although this figure isn’t set in stone. Other factors, including your average ticket size, specific hardware or software needs, and whether your business is seasonal will all play into this determination.

For merchants that have concluded that a third-party processor is their best choice, we recommend the following best practices:

  • Do look for a provider that offers month-to-month billing with no long-term contracts
  • Do purchase your processing hardware (if any) outright rather than leasing a credit card machine
  • Do read all of your contract documents thoroughly before you sign up


  • Don’t choose a provider just because it promises the lowest rates
  • Don’t lie or misrepresent the nature of your business when applying for an account
  • Don’t  forget to review your monthly processing statements to see how much you’re actually paying for your account

In addition to the providers we’ve reviewed above, check out our list of the best small business credit card processors to explore your other options, most of which are full-service providers that offer cost-effective merchant accounts to small business owners.

Let us know about your experiences by leaving us a comment below.

In Summary: How To Accept Credit Cards Without A Merchant Account: Your 5 Best Options

  1. Square: Best for taking in-person credit card payments.
  2. Shopify Payments: Best for having the benefits of Stripe without the need for technical know-how.
  3. Stripe Payments: Best for international merchants who are tech-savvy or can hire a developer.
  4. Venmo: Best for small businesses that only occasionally accept a credit or debit card payment.
  5. PayPal: Best for low-volume merchants.
Frank Kehl

Frank Kehl

Expert Analyst & Reviewer at Merchant Maverick
Frank Kehl has been researching and analyzing merchant services, payment gateways, and international money transfer services since 2015. He has a Bachelor of Science degree from Penn State and a Juris Doctorate from the Ventura College of Law.
Frank Kehl
View Frank Kehl's professional experience on LinkedIn.

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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.

Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.

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