About 526 million credit card accounts were open across the United States as of late 2022, and cash use has dropped sharply in recent years. Roughly 41% of Americans rarely use cash for any purchase, according to research from the Pew Research Center. For small business owners, skipping card acceptance means turning away a growing share of potential customers.
Accepting card payments is simpler than many owners assume. The process breaks into three steps: opening a merchant account, choosing a processor, and getting your hardware in place.
Key facts
- Cash transactions have become less common over the past decade
- About 526 million credit card accounts were open nationwide as of Q3 2022
- 41% of Americans rarely use cash for any purchase
- Setting up card acceptance requires a merchant account and a payment processor
- Fees vary depending on how customers pay—online payments cost more than in-person transactions
Our Analysis: When Does It Make Financial Sense?
Some small businesses resist card processing because of the fees. A percentage charge on each sale means a portion goes to the processor. But customers paying by card often spend more than those paying cash—and your time handling checks or counting bills has real value too. Online businesses have no real choice: cash simply isn't an option when customers never set foot in a store.
The processor you pick matters almost as much as whether you accept cards at all. Aggregators let you start quickly with minimal paperwork. Dedicated merchant accounts cost more upfront but often reward higher transaction volumes with lower per-sale fees. If your monthly card volume grows substantially, comparing dedicated accounts against aggregator pricing becomes worth the effort.
Who Should Care
- Retail shops and food businesses with physical locations that want to serve customers who prefer not to use cash
- Mobile service providers who collect payment on-site after completing work
- E-commerce sellers operating websites or taking orders through online systems
- Freelancers and consultants billing clients by invoice who want faster payment
- Any business whose customers increasingly expect tap-to-pay or contactless options
Practical Example: Mobile Service Setup
Say you run a pet grooming business. Most jobs fall in a moderate price range, and clients pay after each session. You need a mobile card reader that pairs with your phone—a payment aggregator works well here. Download the app, link your bank account, and you're ready to swipe, tap, or dip. Funds typically arrive within a couple of business days minus a small per-transaction fee. No separate merchant account needed when you're starting out.
What to Watch Next
Processing fees vary more than many owners realize. Watch for monthly minimums, equipment lease costs, and contract terms that lock you in. PCI compliance is mandatory regardless of which route you choose—your processor will walk you through the requirements. Businesses with growing card volume should review their fees periodically to make sure they're still on the best plan for their size.
Key takeaways
- Aggregators work well for startups and low-volume businesses; dedicated accounts often pay off at higher volumes
- Online businesses need payment gateways; in-person businesses need card readers or POS terminals
- Factor processing fees into your pricing, but remember that card-paying customers often spend more
- Review monthly minimums and contract terms before signing up with any processor
- PCI compliance is required for all businesses accepting cards
Frequently asked questions
What is a merchant account?
A merchant account is a special bank account that fronts funds from card transactions, letting businesses access customer payments without waiting for checks to clear.
How much does credit card processing typically cost small businesses?
Fees generally vary per transaction, with online payments costing more than in-person swipes due to higher fraud risk. Rates differ between processors and depend on transaction volume.
Can I accept card payments without a dedicated merchant account?
Yes. Payment aggregators let businesses start accepting cards using their personal accounts, though per-transaction fees tend to be slightly higher than with dedicated accounts.
What equipment do I need to accept in-person card payments?
Most businesses need a card reader or point-of-sale terminal. Many modern processors offer tap-to-pay readers that work with phones or tablets.
Are online card payments riskier than in-person transactions?
Online payments carry more fraud risk because card numbers are entered manually rather than presented physically. This is why processors charge higher fees for card-not-present transactions.