How to Accept Credit Card Payments Without a Merchant Account

Credit Card Payments

Businesses and entrepreneurs with a poor credit history have traditionally struggled when it comes to accepting credit card payments. Many credit card merchant account providers will either deny their request for an account outright or apply such exorbitant fees to the service, they may as well have done. Fortunately, there are now several options open to business owners that allow them to accept credit card payments easily and without paying a fortune in fees. If you’ve been deemed a ‘credit risk’, here’s what you need to know about how to accept credit card payments without a merchant account.

How to Accept Credit Card Payments Without a Merchant Account

As notes, many businesses who aren’t able to open a merchant account get around the problem by using a third-party processor. We’ll touch on some of the more popular processors shortly. Although many of the benefits of working with a merchant account provider are lost by going this route, it’s an easy, affordable means by which businesses without recourse can accept credit card payments.

The Pros and Cons of Using a Third-Party Merchant

Working with a third party processor is a great option for businesses who aren’t able to use a merchant account. However, as notes, it’s important to be aware of the pros and cons of using a third-party merchant.

The Pros

For businesses that aren’t able to use a merchant account, third-party merchants offer a viable way to accept credit card payments both online and in-person. It also sidesteps the prohibitively high fees that some merchant account providers apply to businesses deemed high risk. For companies that process less than $1000 a month and who have a less than stellar credit history, using a third party merchant makes sense. Most third party merchants don’t run credit checks and the application process is usually very straightforward and quick.

The Cons

Unfortunately, the option isn’t entirely without its downsides. For a start, third party merchants will typically retain a higher percentage of a payment as a processing fee than merchant account providers do. It’s also worth remembering that using a third-party provider doesn’t come with many of the benefits offered by merchant account providers. While a merchant account provider will usually offer a personalized service (something that applies to pricing plans and scalability as much as it does to general customer service), third party processors don’t. Regardless of different needs, their plans and options are standardized, with no room for negotiation or personalization. A merchant account provider won’t arbitrarily close or freeze your account without warning. The same rule doesn’t apply to third party processors. Providers like PayPal have become somewhat notorious at suddenly restricting access to accounts, even if a large amount of money is being held. While most disputes can be resolved, users have complained that the process sometimes feels longer and more complicated than necessary. It’s also worth bearing in mind that some third-party processors will apply limits and restrictions on processing volume or transaction amounts. If you don’t anticipate receiving a high volume of credit card payments on a regular basis, this isn’t necessarily a problem. However, for businesses that anticipate processing total payments in excess of $1000 per month, it’s a consideration worth noting.

Is it Worth Using a Third Party Processor?

As we’ve seen, using a third-party processor means losing out on many of the benefits of using a merchant account. Ultimately, it will be down to you to decide on whether a third party service provider will fulfill your business needs. However, it’s also worth noting that choosing to work with a payment service provider now doesn’t mean you’ll be obliged to do so for ever. For new companies that are just starting out, a third-party merchant can act as a convenient stepping stone. Once the business is established and no longer considered a ‘risk,’ you can begin exploring the option of opening a merchant account. Until then, a third party processor will at least allow you to continue accepting credit card payments.

Third-Party Processors to Consider

If you decide to use a third-party processor to accept credit card payments, you’ve got several options to choose between. Some of the most established and reputable providers include:


Signing up to Stripe is free. Once registered, you can accept payments in person via the Stripe terminal, online with an embedded checkout, or via the payment page on your website. Stripe charges a fixed fee of 2.9% plus $0.30 on all transactions, but there are no monthly maintenance fees, refund fees, or set up fees to consider.


Square is one of the best-known payment service providers on the market. It’s an attractive proposition for many businesses, offering various software and hardware options, a virtual terminal, an online payments platform, and several other appealing benefits. Registration is free. Once you’ve signed up, you can start accepting payments straight away. In comparison to many other similar providers, the range of customer-friendly benefits is excellent. In addition to customer support, users also benefit from PCI compliance, security and fraud monitoring, and a free magstripe reader for in-person credit card payments.


PayPal is one of the most well-known payment processing providers in the world, offering a good selection of business solutions that make it a popular choice with many small or new businesses. Sign up can be completed online via a simple application process. No setup fees, termination, or monthly fees are charged. A fee of 2.7% for in-person payments and 2.9% plus $0.30 for online payments is applicable to all transactions. Customer benefits extent to fraud protection, customer support, and various integrated options.

Summing Up

Third-party payment processing providers aren’t for everyone. They lack the personalized service of merchant accounts and come with various disadvantages that need to be evaluated carefully. However, for businesses struggling to accept credit card payments via a merchant account, they offer a very beneficial service. Depending on your business needs, any one of the third party payment processors we’ve mentioned above could prove immensely beneficial. As each provider varies in both service and scope, remember to research the pros and cons of each before deciding on a particular one. Some may prove more beneficial to businesses that anticipate a greater proportion of in-person credit card payments to online payments. Others work the opposite way. And remember, regardless of which provider you ultimately choose, you’re not committed to the method for eternity. Once the business is established, you can look to re-open the conversation about setting up a merchant account. Until then, providers like Paypal, Stripe, et all, could prove very handy.

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