How to Accept Credit Card Payments Without A Merchant Account

By Steve McFarlane

If you want to accept credit card payments for your business you have a few options to consider. The first, and most expensive option (in terms of setup costs) is to get a merchant account; you also have the option of using third party merchant services such a PayPal; and thirdly, there is a mobile option that we’ll discuss later.

Merchant accounts are great because they offer lower transaction fees and are therefore ideal for businesses that handle a large number of transactions. However, the setup costs can be high, though there are some merchant services that have a low to nil setup cost.

Option 1 – Third Part Merchant Services

There are third party merchant services that typically don’t charge upfront fees, but instead charge relatively high per transaction fees. For example, PayPal and Google Checkout charge from 1.9% to well over 3.9% per transaction, depending on transaction volumes and other transaction details. There are other third party credit card processors such as CCNow, CCBill, Kagi, ProPay and RegNOw,but there fees can be as high as 7%.

Option 2 – Square: Mobile Credit Card Solution offers a cell phone credit card processing service that merchants can use to accept credit card payments with Android as well as the iPhone devices.

How it WorksSquareup - Mobile Credit Card Solution

Once the user has downloaded and installed the free iPhone or Android app; secured a free Square user account; and has received the free credit card reader from Square they can start receiving credit payments. The card reader plugs directly into the mobile device’s 3.5” headphone jack. If all goes well the phone should recognize the reader and ready itself to accept payments.

Accepting a Payment Mobile Payment

  • Launch the Square app
  • Insert the reader into the headphone jack
  • Enter the charge amount (minimum of $1 for credit card transactions). You can also enter a description and a photo (from the Square - Accept Credit Card Payments Without a Merchant Accountmedia library or take a photo.
  • Press ‘Charge’
  • Select ‘Cash’ or ‘Card’
  • Swipe the credit card, if you are not accepting cash
  • Ask the customer to sign (right on the phone) and enter their email address if they want a receipt.

That’s it!

Because anyone can use the service to accept to credit card payments without as much as signing a contract, the service is perfect for businesses and organizations that don’t have the volume of transactions to justify the expense of setting up and maintaining a merchant account.  Therefore this solution is an ideal for accepting payments at one-off fund raising events, or situations in which a merchant just wants to test the waters with a new business venture.

So what’s the catch? Square’s transactions processing fees are higher than what you would pay for a standard merchant account. Fees are deducted as each transaction occurs and are charges on the following scale:

  • 2.75% + 15¢ for swiped transactions
  • 3.5% + 15¢ for keyed-in transactions

As we said earlier, the service is not for everyone, but when you consider the fact that there are no activation, gateway, monthly, early termination, or hidden costs, using Square isn’t that bad. Furthermore, because there is no contract to sign, and Square only charges per transaction, there is no cost to the merchant if the service is not used.

You should be able to see why some called this an almost free credit card processing service. The service isn’t ideally suited to every business, but it is a mobile credit card payment solution that small operations will do well to consider.

Update: There is a similar service being offered by ROAMpay, there app costs $2.99 though.

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2 Responses to “How to Accept Credit Card Payments Without A Merchant Account”


Cool! That’s a clever way of lonokig at it!


how/where do you get the card reader from?

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