The three ways to take payments online
You can accept payments online through a payment processor (like Stripe or Square), a shopping cart platform (like Shopify or WooCommerce), or a point-of-sale system (like Toast or Clover). Payment processors handle the transaction itself. Shopping cart platforms let you build a storefront and process payments through an integrated processor. Point-of-sale systems work for in-person and online sales together. Which one you need depends on whether you have a website already, how many products you sell, and whether you take payments in a physical location too.
All three routes require you to connect a business bank account, verify your identity, and agree to fraud prevention rules. The money lands in your account within one to three business days, though some systems hold a small percentage as a reserve for the first few months. Fees vary widely—payment processors typically charge 2.2% to 3.5% per transaction plus a small flat fee, while shopping cart platforms add a monthly subscription on top.
Key Takeaways
- Payment processors like Stripe and Square charge per transaction but have no monthly fee, making them cheapest for low-volume sellers.
- Shopping cart platforms like Shopify include payment processing but charge a monthly subscription, so they make sense only if you need a full storefront.
- Point-of-sale systems work for both online and in-person payments, but cost more and are built for businesses with physical locations.
- All providers require a business bank account, tax ID, and identity verification before you can start taking payments.
- Fees, settlement timing, and fraud protection vary significantly between providers, so comparing your actual transaction volume against monthly costs matters.
Payment processors: lowest cost for straightforward setups
A payment processor is the simplest route if you already have a website or send invoices to customers. Stripe, Square, PayPal, and Authorize.net all work this way. You create an account, connect your bank details, and get a code or link you can embed on your site or send to customers. When someone pays, the processor handles the card details securely and deposits the money into your account.
Fees run 2.2% to 3.5% of each transaction plus $0.30 to $0.50 per transaction. So a $100 sale costs you $2.50 to $3.80. There is no monthly fee if you do not process any payments that month. This makes processors the cheapest option for businesses that sell sporadically or have very few transactions per month. If you process $500 a month, you pay roughly $12 to $20. If you process $5,000 a month, you pay $120 to $200.
The tradeoff is that you have to build or maintain your own website. Processors give you a payment button or form to drop into your site, but they do not provide the storefront itself. You also get minimal reporting—most processors show you transaction history and basic analytics, but not detailed sales reports or inventory tracking.
Shopping cart platforms: built-in storefront and payment processing
If you do not have a website yet and want to sell multiple products with descriptions, photos, and inventory tracking, a shopping cart platform like Shopify, WooCommerce, or BigCommerce is faster than building from scratch. These platforms let you create a storefront, list products, and process payments all in one place. Payment processing is built in—you do not have to integrate a separate processor.
The cost structure is different. You pay a monthly subscription ($29 to $299 depending on features) plus transaction fees (2% to 3% per sale). So if you sell $2,000 a month on Shopify's basic plan, you pay $29 for the platform plus roughly $40 to $60 in transaction fees—total $69 to $89. A payment processor alone would cost you $44 to $70 for the same volume, so the platform adds $25 to $45 per month for the storefront features.
Shopping cart platforms make sense if you have more than 10 to 15 products, need inventory management, or plan to run sales and discounts regularly. They also include basic marketing tools like email capture and abandoned cart recovery. If you sell only one or two items or take payments rarely, the monthly fee is not worth it.
Point-of-sale systems: for businesses with physical and online sales
A point-of-sale system like Square, Toast, or Clover combines online payments, in-person card readers, and inventory management in one platform. You can take payments at a physical counter, through a website, and through invoices sent to customers—all reporting to the same dashboard. This is useful if you run a restaurant, retail shop, or service business that takes both walk-in and online orders.
Point-of-sale systems cost more than payment processors alone. Square charges 2.6% plus $0.40 per online transaction, plus $2.50 per month for the basic plan. Toast charges 2.7% plus $0.30 per transaction, plus $99 to $299 per month depending on features. Clover charges 2.7% plus $0.30 per transaction, plus $50 to $150 per month. For a business processing $5,000 a month across all channels, expect to pay $150 to $400 per month total.
The advantage is that you get one system for everything—no separate processor for online, separate card reader for in-person, and separate inventory system. The disadvantage is that you are locked into one provider's ecosystem. If you want to switch later, moving your data and customer history is difficult.
What you need before you can start
Every payment processor, shopping cart platform, and point-of-sale system requires the same foundational setup. You need a business bank account in your business name (not personal), a tax ID or EIN (Employer Identification Number), and a government-issued ID to verify your identity. Some providers also ask for your Social Security Number or business license.
The verification process usually takes 24 to 48 hours, though some providers hold your account in a limited state for the first 30 days while they monitor for fraud. During that time you can process payments, but the money may be held in a reserve account rather than deposited when ready. After 30 days of clean transactions, the reserve is released and deposits move to your account on the normal schedule (usually one to three business days).
If you do not have a business bank account yet, open one before you sign up for a payment processor. Banks require your EIN or Social Security Number, a business license (if your state requires one), and proof of address. This takes three to five business days. If you do not have an EIN, you can get one free from the IRS website in about 15 minutes.
Fees, fraud protection, and what happens when something goes wrong
Beyond transaction fees, understand what happens if a customer disputes a charge or a card is fraudulent. All processors offer chargeback protection—if a customer claims they did not make a purchase, the processor investigates. If the customer wins, the money comes out of your account and you pay a chargeback fee (usually $15 to $100). If you win, you keep the money but you still pay the chargeback fee.
Processors also flag suspicious transactions automatically. If a card is used in two countries within an hour, or if the billing address does not match the shipping address, the processor may decline the transaction or ask for extra verification. This protects you from fraud, but it can also block legitimate sales. Most processors let you adjust these rules, though stricter settings mean fewer false declines but more fraud risk.
Some processors offer fraud insurance or seller protection as an add-on. Stripe offers Stripe Radar (free basic version, paid advanced version). Square offers Square Fraud Prevention (included). PayPal offers Seller Protection (included for may be able to access transactions). Read the fine print—most protection requires you to follow specific steps, like confirming the customer's address or using a signature on delivery.
Comparing costs for your actual sales volume
The cheapest option depends entirely on how much you sell. Here is how to think about it:
| Monthly Sales Volume | Payment Processor Cost | Shopping Cart Platform Cost | Best Option |
|---|---|---|---|
| $500 | $12–$20 | $29–$60 | Payment processor |
| $2,000 | $44–$70 | $69–$120 | Payment processor (if you have a website) |
| $5,000 | $110–$175 | $129–$229 | Shopping cart platform (if you need inventory) |
| $10,000 | $220–$350 | $229–$429 | Shopping cart platform or custom setup |
If you sell less than $1,000 a month and already have a website, a payment processor is almost always cheaper. If you sell $2,000 to $5,000 a month and need a storefront, a shopping cart platform starts to make sense. If you sell more than $10,000 a month, you may want to talk to a payment processor about custom pricing or consider a point-of-sale system if you also take in-person payments.
Frequently Asked Questions
How long does it take money to show up in my bank account?
Most processors deposit money one to three business days after a transaction. Some hold the first deposit for 7 to 30 days as a fraud check. Weekends and holidays do not count as business days, so a Friday sale may not land until Tuesday. Check your processor's settlement schedule before you sign up if timing matters for your cash flow.
What if a customer says they did not make a purchase?
The processor investigates the dispute. If the customer provides evidence (like a statement showing they were out of the country), they usually win and you lose the money plus a chargeback fee. If you can show proof of delivery or a signed receipt, you usually win. Keep records of all orders, emails, and delivery confirmations for at least 90 days.
Can I use a personal bank account instead of a business account?
Most processors require a business bank account, though some will accept a personal account if you are a sole proprietor. Using a personal account makes tax reporting harder and offers less legal protection if something goes wrong. Open a business account—it is free and takes a few days.
Do I need a website to accept payments online?
No. You can send a payment link via email, text, or invoice using a payment processor. Customers click the link and enter their card details. You do not need a website, though having one makes you look more professional and lets customers find you.
Which processor is best for a small business?
Stripe and Square are the most common for small businesses because they have low fees, no monthly minimums, and straightforward setup. PayPal is good if your customers already use PayPal. Authorize.net is cheaper for very high-volume businesses. Try the one that matches your sales channel—if you sell in person, Square's card reader is convenient; if you sell online only, Stripe or PayPal work fine.