Credit card processing: what’s right for your small business?

Let’s talk about something that touches every small business, whether you’re selling coffee, cutting hair, or running an online boutique. That’s right, it’s time to talk about credit card processing.

It’s one of those things that’s everywhere, but not always easy to wrap your head around.
And, to be honest, that’s fair. Between fees, hardware, contracts, and tons of different providers, it can feel a bit confusing, to say the least.

As of 2024, there were over 4.3 billion Visa cards in circulation around the world. Globally, digital payments account for trillions in sales every year. So you need to be familiar with and offer digital payments and credit card payments at your work. Regardless of whether you’re a one-person shop or scaling up fast, the way you accept payments plays a huge role in how smooth, secure, and profitable your business can be.

Now, the good news is you’ve got options. Modern payment solutions have come a long way. You’ve got systems that can handle tap, chip, swipe, and mobile wallets (even tips and loyalty rewards) all in one.

However, with so many choices, it can be hard to know what’s right for your business. Do you go flat rate or interchange plus? Do you need POS hardware or a virtual terminal? What's the deal with those monthly fees that feel like they speak a language of their own? That’s what we’re here to figure out.

Today we're going to walk you through the basics - how credit card processing works, what to look out for, and how to spot a good deal. Let’s get into it.

Understanding credit card processing for small business

So what is credit card processing, really? At its core, it’s just the system that lets you accept card payments from customers. Swipe, tap, chip, digital wallets like Apple Pay - it all runs through this behind-the-scenes network that moves money from your customer’s bank account into yours. Hopefully quickly.

What does credit card processing mean for small business owners?

The most important thing you, as a small business owner, should understand is that accepting card payments is now the norm and your customers expect you to do so. People expect to pay with plastic or their phones. Cash-only might work for a pop-up lemonade stand, but it’s 2025, and digital payments aren’t optional anymore.

If you’re not offering card payments, you’re potentially missing out on a lot of sales. And if you are offering them, but using an outdated or overpriced system? You’re probably giving away more of your hard-earned money than you need to.

How credit card transactions work: a small business perspective

We're not going to throw a whole lot of banking jargon at you. Here’s how it works, in plain English:

1. Your customer taps, swipes, or inserts their card at checkout.
2. That card info gets sent through a secure network to the payment processor.
3. The processor checks with the customer’s bank. Do they have enough funds? Is this legit?
4. If it’s all good, the transaction gets approved.
5. The money gets moved (eventually) from your customer’s account into your merchant account.

All of this happens in seconds. However the actual deposit into your account can take a day or two, depending on your provider.

Key terms small businesses should know: merchant account, POS, and more

Now, although we're keeping this guide super simple, let's just give you a few terms you’ll hear a lot in the credit card processing world, so you can smile and nod with confidence:

• Merchant account – This is where your money goes before it lands in your regular bank account. Think of it like a temporary pit stop for funds during the transaction process.
• POS system - Short for 'point-of-sale system,' this is your checkout setup. It could be a fancy touchscreen, cloud-based device, tablet, or even your smartphone. It’s the tech you use to take payments, track sales, and (in the very best cases) manage inventory. POS solutions can be customized with software, hardware, and pricing options to fit business needs.
• Payment gateway – If you sell online, this is the tool that handles secure card payments on your website.
• Processing fees – The small (sometimes not-so-small) fee you pay for every card transaction.
• Interchange rate – This is the fee set by the card networks (like Visa or Mastercard) that is passed onto you. You can’t really avoid it, but understanding it helps you know where your money’s going.

The more you understand these terms, the easier it becomes to make informed, cost-effective decisions whether you're taking in-person payments, selling products or services online or doing business to business credit card processing.

Why small businesses need to accept credit and debit card payments

We’re living in a tap-and-go world. Card payments keep you in the game. People expect speed, ease, and options. If your business doesn’t offer that then there’s a decent chance they’ll go somewhere that does.

Here in the US, digital wallets are predicted to account for almost half of in-store POS transaction value by 2027. When you factor in debit and credit cards that number jumps even higher.

Boosting cash flow and customer convenience

We know that money worries keep a lot of small business owners up at night for good reason. According to SCORE, a staggering 82% of small businesses fail in their first year because of cash flow problems.

When you accept credit and debit cards, you speed up the entire payment cycle. No waiting on cheques. No awkward “Do you have exact change?” moments. Just fast, clean transactions, and money in your account (usually) within 24–48 hours. Plus, electronic payment solutions should offer fast transfer times for funds to small business accounts.

A recent study showed that 70% of customers say that the payment options a business offers influences where they're going to shop. When people can tap, scan, or click to pay, they’re more likely to actually buy, and come back again.

Offering in-person, online, and contactless payments

We’ve moved way beyond the clunky card machine by the till. These days, your customers want to pay anywhere, anytime - on their phone, on your website, at a market stall, or at their front door.

Having the option to accept in-person, online, and contactless payments is a huge win.

It’s not just about being modern, it’s about meeting people where they are. And right now, the customer experience is all about flexibility and speed.

Staying competitive with flexible payment options

Here’s the reality: your competitors are already doing this. They’re offering tap-to-pay, Buy Now Pay Later, online checkout, split payments - the whole deal.

We're not just talking about the massive retailers and hospitality businesses here. We don't mean Walmart, or Wendy's. It’s your local florist. The salon around the corner. The dog groomer with 12K followers on Instagram and a booking link in their bio.

If you want to compete (and grow) you need to make paying as easy as possible, because if a customer’s experience ends with “Sorry, we don’t actually accept Amex” It might actually end there.

Types of credit card processing for small businesses

The setup you need to run a wine bar isn’t the same as what you’d use to run a food truck or an online candle shop, and that’s kind of the beauty of it. You’ve got options:

Retail credit card processing for small business

If you’ve got a physical shop, somewhere customers walk in, browse, and buy, you’ll want a retail setup.

This usually means a POS system with a card reader for credit card machine processing. It lets your customers tap, insert, or swipe.

Bonus: Some POS systems also track sales, stock, and staff hours. So yeah, they do more than just take payments, they help you run the whole show.

Online and mobile credit card payment solutions for small businesses

No storefront? No problem. If you sell online (or just like to take your business on the road) this one’s for you. You’ll want either an online payment gateway (for e-commerce sites) or a mobile card reader that connects to your phone or tablet. Think markets, home visits, delivery services, whatever fits your hustle.

B2B credit card processing for small business owners

Next up in our types of credit card processing for business owners is b2b. If your customers are other businesses, your needs are a little different.

B2B transactions are often bigger, sometimes recurring, and might involve invoices, purchase orders, or custom payment terms. So, you’ll need a trusted partner and a system that handles things like ACH transfers, virtual terminals, and even Level 2 or Level 3 processing (that just means extra data to help you get lower rates).

Multi-location and on-the-go small business processing solutions

Say you've got a store in New York, one in Maine, and one in sunny Los Angeles. You’ll want something a little more flexible in this case. Here's a payment processing solution that can help.

Look for providers that offer cloud-based systems. This means that your sales, reports, and payment tools will sync across devices and sites in real time.

Some systems also even let you assign staff to different locations, see who's selling what, and track performance across your whole setup.

Perfect for businesses that don’t like to sit still (or keep things small).

Choosing the best credit card processing systems for small business

You’re sold on accepting card payments (or at least considering it—progress!). Now comes the big question: what system should you actually use?

You don’t need a finance degree or a 12-tab spreadsheet to answer this. You just need to know what your business needs, and match that to the right tools. Tools like:

Card readers and payment terminals for small businesses

If you’re mostly taking in-person payments, you’ll want a card reader or a payment terminal.

Some are wired, some are wireless, and some connect via Bluetooth to your phone. If you’re at a counter all day, go for something sturdy and stationary. If you’re moving around a lot, pick something mobile, light, and easy to carry.

TIP: Choose one that supports contactless and mobile wallets like Apple Pay and Google Pay.

Point of sale (POS) systems designed for small business use

Think of a POS as the command center for your business. It lets you process payments, track inventory, manage staff, apply discounts, print receipts, and even pull up reports to see what’s selling best. Some POS systems offer features like invoicing, customer management, and analytics for business operations.

You don’t need a giant budget or a tech team to get one. There are POS systems, such as those offered by Epos Now, built specifically for small businesses - clean design, easy to use, and affordable. They can accept common payment types including credit or debit cards, Apple Pay, Google Wallet, and Samsung Pay.

Look for things like:

• Touchscreen interfaces
• Real-time sales tracking
• Simple inventory management
• Multi-user access (for when your team grows)
• Integration with your other systems - like online ordering or loyalty apps

Small business credit card processing fees and pricing models

Now onto the part nobody really wants to talk about… fees. Because yes, card payments are super convenient. But no, they’re not free. There’s always someone taking a little slice of the pie every time your customer taps a card. If you don’t understand how the fees work, you might be handing over way more than you need to.

Flat-rate vs tiered vs interchange-plus: what’s best for small business?

There are three main pricing models:

• Flat-rate: You pay the same percentage on every transaction. No surprises. No headaches. Great if you want simplicity over savings.
• Tiered: This one groups your transactions into categories, such as qualified, mid-qualified, and non-qualified. The rates change depending on which bracket your sale falls into.
• Interchange-plus: This one’s the most transparent. You pay the actual interchange fee (set by card networks like Visa and Mastercard) plus a small markup from your processor.

We have an entire blog just on credit card processing fees, so if you want more information than our little layman's terms section on them, look there!

Common hidden fees small businesses should avoid

Fees don’t just show up in percentages, sometimes they’re buried in the fine print. Look out for:

• Monthly minimum fees: you get charged if you don’t hit a sales target
• PCI compliance fees: for not filling out security paperwork
• Batch fees: just for closing your till at the end of the day
• Early termination fees: for leaving before your contract ends

If a provider can’t clearly explain every fee in plain English? Big red flag.

How processing fees impact your small business profit margins

Say your processing fee is 3% (just to note that credit card processing fees commonly average 1.5% to 3.5% of the transaction amount), and you make $10,000 in card sales in a month. That’s $300 gone. Poof. Every month. Just in fees.

Now imagine you’re on tight margins (and let’s face it—most small businesses are).
That $300 might be a chunk of your rent. Or your marketing budget. Or, you know… your Friday night wine fund.

That’s why it matters. Even a 0.5% difference in fees could save you hundreds over the year.
So yes, it's worth shopping around, comparing quotes, and asking dumb questions (spoiler alert: they’re not dumb). This is your money; we want more of it to stay in your pocket.

Features small businesses should look for in a credit card processor

We’ve talked about fees, systems, and payment types. But before you sign up with the first shiny offer from one of those credit card processing companies, hold up. Choosing the right credit card processor is not an easy feat for small businesses. There are a few features you need to look for:

Transparent pricing and same-day funding for better cash flow

If you’re offering a credit card payment for small business sales, you need that money to show up fast. Delayed payments are not helpful.

Look for a processor that offers same-day or next-day funding, because waiting three business days to get paid is not ideal. Your rent isn’t waiting. Neither is payroll.

For pricing, if it’s not clear, it’s not for you. The best small business merchant credit card processing options spell out every cost.

Credit card processors should offer transparent pricing to help avoid unexpected costs.

PCI compliance and security for small business payment processing

Fun fact (okay, not that fun): small businesses are three times more likely to be targeted by hackers than big companies.

That’s why your card processing services need to include PCI compliance. Translation: you’re handling payments safely and legally.

Dedicated support from a trusted merchant services partner

Things break. Wifi goes down. Card machines freeze mid-swipe. When that happens, you don’t want to be stuck waiting on hold listening to jazz from the ’80s.

The best credit card processing companies don’t just hand you a terminal and disappear. They act like a partner. Customer support is crucial for businesses when selecting a merchant service provider, as many offer 24/7 assistance. That means actual humans who answer the phone and help that doesn’t make you feel like you're the problem.

This matters even more if you’re managing small business credit card processing online. When customers are buying from their couch at 10PM, you need systems that work and support that’s awake when you are.

Small businesses also benefit from credit card processors that provide user-friendly platforms and tools.

How to evaluate small business merchant processing services

You’re looking for the best small business credit card processing service. However, many types of entities can serve as merchant services providers, including banks, independent sales organizations (ISOs), and fintech companies. With this in mind, how do you know which one’s the right fit?

Comparing merchant service providers for small business needs

Not all processors are built the same. Some are great for small business online credit card processing, while others are better suited for brick-and-mortar stores. When comparing credit card merchant services, the key here is to ask yourself:

• Do you need a physical terminal for in-person sales?
• Are you focused on online transactions?
• Do you need mobile payments for events or on-the-go sales?

Once you know your needs, start comparing the services. Look at:

• Pricing structures - we’ve already talked about flat-rate, tiered, and interchange-plus
• Support options - is it 24/7? Or just during business hours?
• Security features - PCI compliance, fraud protection
• Ease of integration - The integration of payment processing systems with accounting software is crucial for small businesses. Merchant services providers typically offer integrated systems that combine hardware, software, and payment processing services.

The more tailored the service to your business, the better it will work for you.

Understanding processing volume and sales volume for your business

This just means the total amount of sales you make that’ll be processed through credit cards.

If you’re running a small business your sales volume might be lower than that of a big online store or a national service provider.

You want to understand how the credit card processor you choose will handle your processing volume. Some processors are more cost-effective for smaller volumes (like for small business credit card processing), while others work best if you’re processing large sums regularly.

So, ask yourself:

• How much are you processing monthly?
• Do you expect growth (like a new e-commerce store or expanding your services)?

Your answer will help you find a provider that’s affordable now and capable of scaling with your business.

How small businesses can switch credit card processors smoothly

Let’s say you’ve made the decision to switch credit card processors. Here's what you do next:

Start by reviewing your current provider's contract. You want to look for things like:

• Termination fees (Flexible agreements with no early termination fees are preferred for credit card processing contracts.)
• Required notice periods
• Outstanding charges

Once you’re free to move, choose your new processor carefully. Make sure they offer:

• A smooth transition process (like data migration, and keeping payment details secure)
• Training for your staff on any new systems or features
• And technical support if things go wrong during the switch

Payment processing made easy with Epos Now Payments

So, here’s the thing. Credit card processing isn’t just about swiping plastic or tapping phones. It’s about building trust, keeping cash flowing, and giving your customers what they expect—speed, security, and flexibility.

As a small business owner, every transaction counts. You’ve got enough on your plate without chasing down payments or decoding fee structures that sound like ancient riddles. The right payment system saves you time. It keeps the money moving so you can keep your business growing.

If you're sitting there thinking, "Okay, but where do I even start?" - let us introduce you to Epos Now Payments. It’s built for small businesses like yours and lets you easily take in-person, online, or mobile payments. We’re talking flat-rate pricing, no hidden fees, same-day deposits, and full integration with your point of sale system.

Need to split payments, process refunds, or take tips? Done. Want a card reader that actually works at your market stall, your shop counter, and your second location? Sorted. Oh, and PCI compliance? Security? It’s all baked in.

So if you're ready to stop stressing about payment processing and start getting paid faster, smoother, and smarter, Epos Now Payments is your next best move.

Let’s make processing payments the easiest part of your day.