Accept Credit Card Payments Without a Merchant Account

someone making an online purchase using a credit card.

Accepting Credit Card Payments Without a Merchant Account

Accepting credit cards has become a norm, needless to say, a requirement by most customers. A report by Statista shows that credit cards were the most prevalent form of payment in 2020 in the United States. It was followed closely by debit cards. Going by these statistics, you may want to add credit and debit cards as alternative payment methods in your business.

Can You Accept Credit Card Payments Without a Merchant Account?

Do you need to open a merchant account to accept credit cards? Is there a way to use this payment method without a merchant account? The short answer is yes. There is a way. This article will discuss a few ways to accept credit cards without a merchant account. We will also highlight the advantages and disadvantages of merchant account alternatives.

a credit card chip.The Advantages of Using a Merchant Account Alternative

Accepting credit card payments through a merchant account alternative may offer a host of benefits for your business. Let’s look at the top four advantages of merchant account alternatives:

  • Simple Fee Structures

Merchant account alternatives have a straightforward fee model. Most usually charge a transaction fee that may vary with the type of transaction. There are no multiple fees, for example, setup fee, payment gateway fee, PCI compliance fee, and minimum monthly service charge. You can easily calculate the fee payable per transaction.

  • No Long-Term Contracts

Another benefit of using a merchant account alternative is most service providers don’t require you to enter into a long-term contract. For some, you simply need to sign up or create an account. Others may request that you sign a contract. Although, in most cases, the contract is not long-term. You have the freedom and flexibility to terminate the service at any time.

As for a merchant account, you may have to sign a long-term binding contract. The contract may expire in three years, and it might come with an automatic renewal clause. This clause automatically extends the contract unless one party gives a termination notice before the renewal date. You might also be subject to paying termination fees if you terminate early.

  • Easy to Get Started

The process of signing up for a merchant account alternative is straightforward. Most service providers don’t require you to submit documents such as financial statements, business licenses, PCI compliance, and your federal EIN. You just need to create an account and begin using the payment service right away.

  • Easy to Make Payments

Some merchant account alternatives utilize technology that eases the process of making transactions. For example, with Google Wallet or Apple Pay, you don’t need to carry your cards with you when going to the store. All you need to do is connect them to your digital wallet.

The process of making transactions is also seamless. When a customer pays in-person through Google Wallet, they tap or wave their phone at the NFC terminal in the store. They can then authorize the transaction with their PIN and make the payment within minutes.

Disadvantages of Using a Merchant Account Alternative

Let’s look at a few cons that may come with a merchant account alternative:

  • Expensive Pricing 

The pricing model for a merchant account alternative is not flexible. Since most service providers charge a transaction fee, you may end up paying more than a merchant account.

Merchant account alternatives may not be ideal for a business that accepts a large volume of credit cards as it might lose a lot of money to transaction fees.

  • Customer Support Issues

Since most merchant account alternatives are large companies, they may not be available 24/7 to assist you with pressing problems. Most offer customer support through an online help desk, phone, or email. The company’s customer support team may take a day, if not more, to get back to you.

Merchant account service providers tend to have better customer care. They can address your issues quickly and timely.

  • Service Cancellations or Intrusions

The services offered by merchant account alternatives may not always be as smooth as with a regular merchant account. Since there is no contract, some service providers may cancel your account if they consider it a fraud or high risk.

There may also be transaction interruptions. For example, PayPal holds specific transactions for some time if they consider it a fraud risk. Some merchant account alternatives reserve the right to deny you their service or close your account if they think you are high risk.

Online Payment Providers for Small Businesses

someone browsing an eCommerce site on a phone.
We’ve now established that it is possible to accept credit card payments without a merchant account. But how do you do it? Well, you need to work with a third-party payment provider, also known as a payment aggregator or payment service provider.

Payment aggregators accept and process credit card payments on your behalf. They then remit the funds to your account. Some work like a merchant account where they receive funds from a customer and hold them for you.

Let’s explore a few online payment service providers that allow you to accept credit cards without a merchant account:


PayPal is one of the largest and most widely used payment service providers around the globe. This company is arguably one of the first to allow businesses to accept payments online without a merchant account.

PayPal has no setup, annual or monthly fees. Signing up is free. The only charges you’ll pay are transaction fees depending on your location and types of transaction.

For example, PayPal charges a 3.49% transaction charge plus a $0.49 fixed charge for digital payments. The cost drops to 2.99% plus a 0.49 fixed fee for standard credit and debit card payments.

Let’s explore how a transaction gets processed on PayPal:

  1. The customer wants to buy a product or service they like from your website (the merchant).
  2. The customer heads to the checkout page and taps the Pay Now button. They will then be redirected to pay via PayPal, depending on your preferred PayPal payment option. If you select PayPal Payments Standard, the customer will get redirected to the PayPal site to finish the transaction. If you choose PayPal Payments Pro or PayPal Checkout, the customer does not leave your site. They make the payment via PayPal while still on your site.
  3. The customer keys in their username and password to make the transaction. They can either pay using the funds available on their PayPal account or with a linked credit or debit card.
  4. If the customer chooses to pay with a credit or debit card, they authorize the payment, and their card information is encrypted and sent to PayPal. PayPal contacts the customer’s issuing bank to authorize the transaction.
  5. The customer’s issuing bank authorizes the transaction. The funds get wired from the customer to you, the merchant.
  6. The funds get deposited into your PayPal account after deducting the transaction fees. You can then leave the funds in your account or withdraw them to your bank account.


Square is another payment processor that allows you to accept credit card payments without a merchant account. This company targets its payment services to small businesses, side hustles, and startups. Everything is simple, from the sign-up to the equipment used and the fee structure.

Square offers different solutions and equipment geared to allowing you to accept credit cards. You can use the Square Virtual Terminal for online payments or point of sale machines for in-person transactions.

Square essentially acts like one giant merchant account that processes all its customer transactions. Their account gets funds from different customers, and the money is then redirected to your account.

One disadvantage of using Square is possible transaction delays. Your funds can also get frozen if considered fraud or high risk.


The great thing about Stripe is you can use it to accept many forms of payment, from digital wallets to credit cards to buy-now, pay-later services. This payment processor works best for online payments. But you can use this service for in-person payments too. All you need to do is purchase the company’s point of sale system, the Stripe Terminal. You don’t need a Stripe Terminal for online payments.

Like PayPal, Stripe charges no monthly or setup fees. There are also no hidden costs. You only have to pay a standard transaction fee.

The process of setting up a Stripe account is seamless. You can sign up with an email address and username, then provide a few details about your business. Next up, you’ll need to link a bank account for receiving funds remitted from Stripe.

Here’s a look into how a transaction gets processed using Stripe:

  1. a man holding a credit card and a phone.The customer gives their card information in person or online.
  2. The customer’s card details go to Stripe’s payment gateway.
  3. Stripe sends the customer’s card details to the acquiring bank. An acquiring bank is a bank that processes the transaction on the merchant’s behalf. In this case, Stripe works with its own acquiring bank, and thus the merchant does not need to set up a merchant account with an acquiring bank.
  4. The transaction goes through the credit card network to the issuing bank. An issuing bank is a bank that issues branded credit cards on the credit card network’s behalf. To illustrate better, the bank that issued you a credit card is the issuing bank.
  5. The issuing bank accepts or rejects the transaction. It then sends the funds to the card network and Stripe’s acquiring bank.
  6. Afterward, you can transfer the funds from your Stripe account to your bank account.

How to Accept In-store Payments Without a Merchant Account

To accept in-store payments without a merchant account, you may need to choose a payment aggregator that offers a terminal or a point-of-sale system. These systems work in a card-present environment where the customer swipes, taps, or waves their phone through contactless payments.

The customer then authorizes the transaction by entering their PIN (Personal Identification Number) or using Face ID or Touch ID.

Payment processors that allow you to accept in-store payments without a merchant account include:

How to Accept Online Payments Without a Merchant Account

The easiest way to accept online payments without a merchant account is via a payment service provider. This form of payment is known as a card not present environment, and it doesn’t require you have a point of sale system or terminal for swiping cards. The customer provides their payment information online.

You may, however, need to build or integrate a payment processing service into your website or app. You can work with payment processors like Stripe, Square, or PayPal.

Tips for Choosing the Best Payment Aggregator

When selecting a payment aggregator, you should take the following factors into account:

  • Security 

Payment and personal information security should always be a priority when dealing with a payment aggregator or processor. Go for a service provider that takes initiative measures to prevent fraud and data loss or theft.

PayPal, for instance, encrypts the customer’s card information when processing a transaction. Doing this prevents hackers from accessing your financial information.

Google Wallet, for example, ensures customer security by encrypting your personal information during a transaction. The customer should also instantly authorize the transaction with a PIN.

  • Payment Environment 

Go for a payment processor that specializes in your business’s payment environment. If you work in a card-present environment, select a payment aggregator that provides point-of-sale systems and terminals to read cards and accept in-person payments.

  • Cost 

You may also want to consider the costs associated with the payment aggregator. Service providers, in most cases, charge a standard transaction fee. There may be others that charge additional fees, for example, monthly fees and interchange fees.

The company you choose should have a flexible fee structure that factors in the volume of your online and credit card transactions.


Credit card payments are gradually becoming the dominant payment method in the United States. The great thing about this payment method is you can accept credit and debit cards without a merchant account.

If your small business or startup does not qualify for a merchant account, you can work with a payment aggregator like PayPal, Stripe, or Square. Most payment aggregators have a simple fee structure. They typically charge a transaction or processing fee. The sign-up process is also quick and seamless. You don’t need to submit multiple documents and meet specific requirements as you would have with a merchant account.

The downside, however, is that payment aggregators can be more costly than a merchant account. They are not suitable for a business that handles large transaction volumes. When selecting a payment aggregator, the three factors to consider include cost, payment environment, and the system’s security.

Resource Section

Below are a few resources you can use for more information related to online credit card processors.
credit cards on a laptop keyboard.

Online Credit Card Processors Search

The link below takes you to the latest Google search results related to online credit card processors. I like linking to google because you’ll get the latest most popular results. Information is always changing, and by clicking a link leading to a search result, you will always get the latest information. Have a look at the latest search results for Online Credit Card Processors.


Books are another great way to broaden your knowledge of virtually any topic. The one thing I like about nonfiction books as you don’t have to read a book from cover to cover to get the information you’re looking for. Instead, you can flip through the table of contents and go directly to the chapter you’re interested in. View the most recent Google search results for books related to credit card processing.


The news is another great way to see what’s related to online credit card processors in the media. Using a side like Google News allows you to see the latest and archived news stories related to online credit card processors.


YouTube is an excellent source of information for thousands of topics. I like YouTube because you type in your keyword and get a list of relevant videos. In addition, you’ll also get a list of related topics, and some of those topics are ones you may not have considered. So YouTube search usually results in a broader understanding of the topic you search for. See the most recent videos related to online credit card processors.

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