How to Accept Credit Card Payments Without a Merchant Account

Processing a credit card with a mobile phone

With more people than ever using plastic to make purchases, it is important for businesses to have a way to accept credit cards. However, obtaining a merchant account is expensive and can be a challenge for many independent contractors, service providers, and other small businesses. Fortunately, a merchant account, i.e. a credit card processing account through a bank, is no longer the only game in town. Third party payment gateways now offer payment processing services for small businesses and individuals that don't have merchant accounts.


PayPal is one of the most well-known third party payment processors and offers three ways to process credit cards. Processing fees (click "See Pricing") depend on the level of service you select, and run $0.30 per transaction and up, plus 1.9 to 2.9 percent of the transaction amount. Sales volume also affects what you pay.

1. Standard Level

The standard level is popular among eBay and other auction sellers, as well as people who sell products and services from their own websites. There are no monthly or set-up fees, so you only pay when you process charges. The service allows you to:

  • Offer your customers and clients the ability to pay online with a credit card, even if they do not have a PayPal account
  • Receive a card swiper, and process payments through your iPhone, iPad, or Android
  • Use multiple currency settings to sell all over the world
  • Enjoy security features and fraud-protection

2. Advanced Level

For an additional $5 per month your customers can enjoy all the features of the Standard level without leaving your website. This provides definite advantages to website owners, such as:

  • Retain control over the user experience, because the customer is not diverted to other sites.
  • The longer users remain on your website, the better your site will rank in search engine ratings.

3. Pro Level

A monthly fee of $30 buys additional advantages:

  • PayPal's Virtual Terminal allows you to accept credit card payments over the phone, as well as by mail or fax.
  • Design your customer's online experience by creating your own checkout process.

What Consumers Are Saying

In a blog post where he contrasts his PayPal experience with applying for a traditional merchant account, the owner of Software by Rob writes, "I have never been so happy to give PayPal $30/month." contains reviews from more than 1,400 PayPal users, both buyers and sellers. Their overall rating is three stars out of five, though individual comment vary broadly.


2Checkout has an A+ rating with the Better Business Bureau (BBB), and customer comments are generally positive. Signing up for an account is easy and free. Other advantages include:

  • 2Checkout helps build brand loyalty, by featuring your brand throughout the checkout process, rather than their own.
  • 2Checkout offers 25 currency payment options to your customers, allowing you to sell globally.
  • Recurring billing allows you to auto-bill your customers for subscriptions or ongoing services.
  • Flat-rate pricing is simple and easy to understand.

What Consumers Are Saying

One customer wrote on Merchant Account Reviews, "...their fraud detection system is great (verification of each transaction by IP address and by phone); thanks to it we've got to that perfect credit history we could only dream about."


ProPay is a popular choice among businesses that have conducted thorough research and are looking for a highly rated payment gateway. ProPay has an A+ rating from the BBB, and is certified by TRUSTe. Its features include:

  • Online sign-up is easy.
  • The fee for swiped card transactions is 2.6 percent, and the fee for transactions where a credit card number is keyed in is 3.4 percent.
  • Process transactions on mobile devices using the JAK card reader.
  • Customers can also pay using a touch-tone phone to enter their credit card numbers.
  • Save credit card information for recurring billings on subscriptions and other ongoing services.

What Consumers Are Saying

Phillip Parker, founder of and author of the book Fee Sweep writes a detailed review of ProPay's payment processing services, in which he gives the company an A rating. One consumer wrote, "I wouldn't say the company is perfect but it is more than adequate for my needs."

GoPayment from Intuit

GoPayment is a favorite among business owners who work tradeshows, sell from mall kiosks, or need to process swiped transactions wherever the customer and her credit card are present. Here's how it works:

  • Check to make sure you have a compatible mobile device (most are).
  • Download the free app, and receive your free card reader.
  • Upload your logo and contact information to the app.
  • Plug the reader into your headphone jack, and you are good to go.

You also have the option to sync the payments to your QuickBooks account, so payments show up on your books automatically. You may also choose from two fee structures.

What Consumers Are Saying

The consensus among consumers seems to be that the software and hardware work well, but their dealings with Intuit are sometimes frustrating.

A consumer on Digital Trends writes, "Gets it on the first try," and "Intuit's iPhone software seemed really, uh, intuitive to me."

Leveling the Playing Field

Though feedback about third party merchants is varied, small business owners continue to utilize their services. For all their pros and cons, these payment gateways help to level the playing field, allowing smaller businesses and individual contractors to compete in a marketplace where plastic is king.

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How to Accept Credit Card Payments Without a Merchant Account