smartphone with credit card
small business tips

Taking credit cards 101

If you work at home or just own your own small business, you've probably cringed more than once when a client or customer asked, "do you take credit cards?" The reality is, you can't own a business today, especially if you work with clients across the nation or around the world, unless you can take a credit card. But it's important to understand the fee structures, available on-site and mobile technology and drawbacks to each system.


Probably the most well-known payment system is PayPal. Like many of the other solutions, it doesn't require any special equipment to use. It allows you to accept credit cards online (whether or not your customers have a PayPal account), accept payments directly through PayPal, and any kind of account can request a free card-swiper for an iPhone, iPad or Android device to take payments in person.

The base PayPal account is free and charges a fee of 2.9 percent plus 30 cents per transaction. There's no setup fee or cancellation fee. Even lower rates may be available if you have high-volume sales, smaller transactions or are a nonprofit. (As with almost all credit card processors, additional fees apply for international transactions.)

The big drawback to using PayPal is that the seller protection it offers isn't available to those of us who sell intangible goods, like digital items, or for transactions conducted on goods delivered in person. It only applies if you ship the item, which is a bit difficult if you're a web designer or writer or if you're selling at a craft fair. Basically, that means someone can claim they didn't purchase the item, even if they've already received it, and PayPal itself can't protect you.


Square is primarily for people who plan to take payments in person. There's no API (a fancy abbreviation for a computer protocol that allows two types of software to talk to each other) for taking online payments. You also can't take payments on your computer. Square only takes payments on mobile devices (like iPhones, iPads and Android smartphones).

While that may seem like a big drawback, if you don't plan to have an e-commerce environment on your site, it's not that big a deal. You can still take payments over the phone, using the keypad the Square app brings up, or swipe people's cards in person (on the free reader that comes with your account).

The main advantage to Square is that it's cheaper. It's only 2.75 percent per transaction or a flat rate of $275 per month (with no per-swipe fee).


If you already use QuickBooks, the company that created it, Intuit, can manage credit card payments online, on-site or in the field. It's a great way to save time and processing. If you don't already use QuickBooks (or even if you do), beware and do your homework. QuickBooks is great software, but their other services may not be right for you.

The rates for Intuit's services vary widely, and there's a monthly fee to use the credit card processing machines and online terminals, so in many cases, Intuit may turn out to be impractical for a freelancer and more expensive for small businesses. Also, Intuit offers so many services, it can be overwhelming to understand, at least at first.

If you're willing to put in the work it takes to understand and really get the best solution for your money (especially if you really need it to work with your QuickBooks, and you're willing to pay for it), Intuit probably has a solution for you.

But if you're looking for a quick, easy and inexpensive solution, you may want to try PayPal or Square until you have time to research Intuit properly. Also, if you're not the most computer-literate or bookkeeping-savvy person, the company doesn't have the best track-record of customer service and QuickBooks itself, while powerful, is daunting to learn.

Your bank

If you already have a small business account, check with your bank to find out what solutions they offer. Depending on the type of account you have and your business needs, they may be able to hook you up with exactly what you need with very little effort. Just don't take the bank associate's word for it. They are trying to sell you on using the bank and may not really be aware of other solutions that are available to you.

The bottom line

At the end of the day, research is the key. Most of these solutions have extensive information online. Do your homework and choose the solution that's right for you. Before you start, use this handy checklist to determine what your needs and wants are.

  • Do you need an e-commerce system? (Do you need to take payments online, through a shopping cart or via a link in an email?)
  • Do you need your solution to work with existing bookkeeping software? If so, how can that work?
  • Do you need to take payments on the spot (from clients sitting in front of you or on the phone)?
  • Is the monthly fee (if applicable) worth the reduction in the per-transaction charge?
  • Does your solution allow e-checks (if you need them)?
  • Is the solution something your customers would really be willing to use?

More on operating a small business

Starting a business: 6 Tips from a celebrity salon owner
Chasing the dream: Becoming a business owner
Parenting and running a home-based business


Recommended for you


Comments on "Easy payment solutions for small businesses and freelancers"

Lisa September 19, 2012 | 8:50 AM

My husband owns his own business but for now just accepts cash and checks. With ever growing and changing technology, I think he needs to consider taking some other forms of payment, as well. Thanks for this article, I'm going to show it to him as soon as he's home.

Shannon September 19, 2012 | 8:49 AM

Great recommendation! I'm thinking of opening up my own business and was researching methods of payment that I would need to take and how much it would be to invest in. Thanks for this!

+ Add Comment

(required - not published)