How to Accept Credit Card Payments without a Merchant Account


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Business owners know that cash is no longer a popular payment option among modern-day customers. Due to the disadvantages that come with carrying cash around, many customers are using contactless payment options such as mobile wallets and credit cards.

If you’re looking for a way to start accepting credit cards in your business, you must have heard about merchant accounts.

A merchant account is a special business bank account that allows your enterprise to accept and process credit and debit cards. Getting a merchant account isn’t difficult, but the process can take some time, especially if you’re running a business that is considered high-risk by most payment processors.

In our line of business, we get a lot of businesses that want to know how to accept credit cards without a merchant account. Others are looking at how to accept credit card payments for personal use.

Well, the good news is that there are ways to accept online payments without merchant account solutions.

For instance, businesses can accept payments online without a merchant account with the help of modern point-of-sale systems that offer credit card processing. A business can also accept credit card payment without machine POS with the help of a third-party payment processor such as PayPal and Swipe.

Still interested?

Let’s look at how these credit card processing solutions work, so you can make an informed choice.

What a Merchant Account Is and How It Works

how to accept credit card payments for personal use

A merchant account is a bank account that gives you access to funds that you receive through electronic payment options such as credit cards. The account acts as the link between the customer’s bank, card processor, and your business bank.

Wondering how a merchant account works?

Well, when the customer swipes their card, the card processor sends the customer’s information and transaction details to the merchant account. The merchant account vendor then confirms whether the cardholder’s bank account has enough funds to cover the transaction fees. In case the funds are enough, the transfer process from the customer’s bank to your bank starts.

If you need to open a merchant account, you must look for a merchant account provider and fill out an application form. The merchant account provider will consider various factors before approving the application, including the following:

  • Your type of business
  • The duration you’ve been in business
  • Your business history
  • Your business financial status
  • Your credit history

The merchant account application process can be long, especially if you’re looking for a high risk merchant account. Merchant accounts also come with several fees including setup, application, currency conversion, and transaction fees.

Besides, some processors require you to sign long-term contracts, which can disadvantage you in case your payment processing needs change. These are some of the reasons why some merchants prefer alternative payment processing options.

Can One Accept Credit Card Payments without a Merchant Account

Can One Accept Credit Card Payments without a Merchant Account

Yes, it is possible to accept credit card transactions without a merchant account.

By using a third-party processor or a modern POS, you’re able to do away with the extensive underwriting process that characterizes a merchant account application.

Also, some of these alternatives such as the use of third-party processors are cheaper, especially if you have low processing volumes. Not to mention that you won’t have to pay the monthly and annual merchant account fees with most of these alternatives.

Proven Ways to Accept Credit Card Payments without a Merchant Account

Let’s now look at the options you have if you want to accept credit cards without a merchant account.

  • Third-party payment service providers – Payment service providers such as Square, Venmo, PayPal, and Stripe are great alternatives to merchant accounts when it comes to accepting credit card payments. Most of these third-party processors use a simple flat rate fee payment model, making them a cheaper option for low-volume businesses.
  • Modern point of sale systems – If you want to start accepting in-store credit card payments, then you can opt for a modern POS from providers such as Square and Clover. Such a system comes with a POS, credit card reader, and contactless payment processor.
  • Mobile POS systems – If you run a mobile business, then a mobile POS system will enable you to accept card payments from your customers. Such systems accept payments through tap, swipe, or chip readers.
  • Mobile payment processing apps – If you don’t have a store and still want to accept credit card transactions for your small business, you can couple your smartphone with a credit card payment app. This option is particularly ideal for businesses that run their operations at home, on the road, and at events. With this solution, you don’t have to carry a bulky credit card machine or terminal.

How to Accept Alternative Payment Methods Without a Merchant Account

Traditional payment methods such as Visa, American Express and MasterCard payments rely on credit card network usage.

However, alternative payment methods such as bitcoin are often cardless.

Notably, popular alternative payment methods today include cryptocurrency and digital wallets such as Apple Pay, Google Pay, and Samsung Pay.

With the help of third-party providers of online payments such as PayPal, CoinBase Commerce, Skrill, and OneCard you can accept most of the available alternative payments.

What Is a Third Party Payment Processor

What Is a Third Party Payment Processor

Third-party payment processors also referred to as payment aggregators or payment service providers (PSPs) are payment providers that allow merchants to accept card and other cashless payments without opening a merchant account.

Instead of opening individual merchant accounts, businesses can work with third-party payment processors that have relationships with multiple merchant service providers. The third-party payment processor aggregates multiple businesses into a single merchant account, which helps reduce costs for the merchants.

Another reason why a business may prefer to use a payment service provider is that with this arrangement, a merchant doesn’t need to go through the long and tedious underwriting process that often characterizes merchant account application. This also means that once you sign up with a third-party processor, you can start accepting credit cards immediately.

A few examples of popular third-party payment processors include:

  • Square
  • PayPal
  • Amazon Pay
  • Stripe Payments
  • Venmo for business
  • QuickBooks Payments
  • Helcim
  • SumUp

How Does Third Party Processing Work

A third-party payment processor works very much like a traditional merchant account in that it allows your business to start accepting credit cards, e-checks, mobile payments and other forms of electronic payments.

The only difference between a merchant account and a third-party processor is how the two are managed.

With an aggregate processor, your payments are processed together with the payments of other clients using one merchant account. The processor aggregates multiple businesses’ payment needs into a single merchant account. 

On the other hand, if you open a merchant account, you get a stand-alone account that you use for your business payment needs.

Third-party payment providers are particularly a good choice for small businesses and startups, as they’re cheaper compared to getting a stand-alone merchant account.

Other advantages of third-party processors include:

  • No long-term contracts – With a third-party payment processor, you don’t have to enter into a long-term commitment that is a common characteristic of opening a merchant account.  Aggregate processors provide month-to-month billing, and if you want to close your account, you can do so without worrying about termination fees.
  • Free hardware – Most aggregate processors provide free or low-cost point-of-sale equipment and software that seamlessly connects to other apps you’re using in your store
  • Simplified approval process – Applying for a merchant account is often a long process. However, with a third-party processor, approval can take less than 24 hours
  • Cost transparency – With a third-party payment processor, all the processing fees are fully disclosed to you before you open an account. Besides, most providers use a predictable flat rate pricing model.

Despite these advantages, third-party processors also come with some disadvantages. The most obvious one is that they can be expensive for businesses with high transaction volumes. The flat rate pricing is more costly compared to the customized pricing plans that most merchant account providers offer.

Other notable disadvantages include:

  • Account security issues – The application approval for a merchant account can take weeks due to the thorough underwriting process. With third-party payment providers, the quick approval also means that your account may not be as secure.
  • Not specific on processing limits – A merchant account provider will let you know the maximum monthly processing limits you’re supposed to reach with your account. On the other hand, third-party payment processors don’t specify their processing limits, which may lead to account closure if you extend these limits.
  • Limited technology options – With a third-party processor, you’ll be limited to using the technology options the processor provides. For instance, you may find that the processors have their own POS or credit card reader and the device may not work with other brands’ software and hardware options.


As a business, you need a reliable means of processing credit card transactions. If you don’t want to open a merchant account, there are other options available. Hopefully, after reading this article, you’re now aware of these alternatives and can now make an informed choice when it comes to providing a reliable e-payment processing solution to your customers.