How a small business can accept credit cards

Accepting credit cards makes life easier for your business and your consumers. Read to learn how your small business can accept credit cards.

Can I take debit cards and credit cards?

Not only can you accept both credit and debit cards, but doing so lets you serve consumers with a wide variety of payment preferences. You can accept card payments in person via a card reader or a more fully-featured point-of-sale (POS) system. The POS system would need to be able to process both credit and debit cards (like Square or Shopify). You can also accept cards online or via phone.

The transaction fees you'll pay to card issuers, card networks or POS system providers may differ for each payment scenario. These fees generally range from 1 to 3.5 percent per transaction. Phone and online card transactions can cost merchants more than in-person transactions.

Also, fees for credit card transactions can cost more than debit card transactions. Fees for swipe transactions versus keyed-in card transactions can also vary.

How do I accept payments online?

The easiest way to enable your small business to accept credit cards online is to create an online store. Some card processing services include a free store. The store should be linked to your card processor of choice through a secure payment gateway. Card processors like Square include a built-in payment gateway. If your card processor doesn't have a gateway, you'll need to set one up. During the checkout process, card information will flow through to the payment gateway so that the payment can be accepted.

Can a business refuse to take a credit card?

As a merchant, you dictate the terms of payment and are not legally obligated to offer a credit card payment option. If you accept credit cards, it's a good practice to accept the credit cards of all customers who comply with requirements for credit card payments.

If customers don't adhere to these requirements, you can refuse to accept their credit cards. For example, let's say your business requires a simple ID verification with credit card payments. If a customer does not supply the necessary identification, you are not obligated to accept his card.

Similarly, if a customer doesn't meet the minimum purchase threshold for using credit cards at your store, you can refuse his credit card.

Why should I take credit cards vs. cash?

The fees that come with accepting credit cards can make any business owner question whether a cash-only payment model is superior. But consider that roughly 88 percent of U.S. customers prefer credit cards over cash.

This is in large part due to the convenience and security that comes with carrying today's chip cards over a wad of cash. Credit cards also afford you the merchant the peace of mind that comes with not having to transport and guard large cash reserves.

So, you could be inconveniencing both yourself and a sizable chunk of your consumer base by not accepting credit cards. The sales you could garner through those customers could easily pay for the associated credit card fees many times over. For some small business owners, imposing a minimum purchase threshold on credit card payments is a better way to combat card transaction fees than not accepting cards at all.