What you need before you start

Setting up online payment means choosing a processor, connecting it to your bank account, and configuring it to accept the payment methods your customers use. You will need a business bank account (not personal), your federal Employer Identification Number (EIN) or Social Security Number, and a way to verify your identity—usually a government-issued ID and recent business documentation like a lease or utility bill in your business name.

The processor will ask for your business structure (sole proprietorship, LLC, corporation), your monthly revenue estimate, and the types of transactions you expect. Have this information ready before you apply. The whole setup typically takes three to seven business days from approval to your first transaction, though some processors are faster.

You will also need to decide where payments will land: a dedicated business checking account is standard and keeps your personal and business money separate for tax purposes. If you use a personal account, the processor will still accept it, but your accountant will have a harder time tracking business income at tax time.

Key Takeaways

  • You need a business bank account, your EIN or SSN, and a government ID to open a merchant account with any processor.
  • Payment processors charge a percentage per transaction (typically 2.2% to 3.5%) plus a per-transaction fee (usually $0.30), and some add monthly minimums or statement fees.
  • Square, Stripe, PayPal, and Shopify Payments are common for small businesses; each has different fee structures and works better for different sales channels.
  • Your processor connects to your bank account via ACH, which means funds typically arrive in one to three business days after a customer pays.
  • PCI compliance (Payment Card Industry Data Security Standard) is required by law if you accept cards; most processors handle this for you, but you must use their payment form or app, not store card numbers yourself.

Choosing between payment processors

The major processors for small business differ mainly in how they charge and what sales channels they support. Square charges 2.6% plus $0.40 per card transaction and works well if you sell in person (with their card reader), online, or both. Stripe charges 2.9% plus $0.30 per online transaction and is built for websites and apps; it does not have a strong in-person option without buying their hardware. PayPal charges 2.99% plus $0.30 per transaction and lets customers pay with PayPal balance, debit, or credit card. Shopify Payments charges 2.9% plus $0.30 per transaction and integrates directly into Shopify stores with no separate account setup.

If you sell only online through a website, Stripe or Shopify Payments are usually cheaper because they do not charge for hardware. If you sell in person, at markets, or from a physical location, Square is often simpler because the card reader is included and the per-transaction fee is transparent. If your customers already use PayPal or you want to accept PayPal balance as a payment method, PayPal's processor works, though the fees are identical to their competitors.

All of these processors also accept ACH transfers (bank-to-bank payments), which typically cost less or nothing, but require your customer to enter their bank account number—most online customers will not do this. Some processors also accept digital wallets like Apple Pay, Google Pay, and Venmo, which count as card transactions and carry the same fees.

How to connect your bank account and verify your identity

After you choose a processor and create an account, you will enter your business bank account number and routing number. The processor will make two small deposits (usually under $1 each) to your account within one to two business days. You then log back in and confirm the exact amounts of those deposits—this proves you own the account and prevents fraud.

At the same time, the processor will ask you to verify your identity. This usually means uploading a photo of your driver's license or passport and sometimes a recent business document like a lease, utility bill, or business license. Some processors use automated verification (instant or within hours); others review documents manually (one to three business days). If the processor flags your documents as unclear, they will ask you to resubmit.

Once both steps are complete—the micro-deposits are confirmed and your identity is verified—your account is live. You can then create a payment link, embed a payment form on your website, or activate your card reader if you are selling in person.

Understanding fees and how money reaches your account

Every processor charges a percentage of the transaction plus a flat fee per transaction. The percentage typically ranges from 2.2% to 3.5% depending on the processor and the payment method (card-present transactions—swiped or tapped in person—are often cheaper than online). The flat fee is usually $0.25 to $0.40. Some processors also charge a monthly statement fee ($5 to $15) or a monthly minimum ($20 to $50), though many waive these if you process a certain volume.

When a customer pays, the processor holds the money for a settlement period (usually one to three business days) before depositing it into your bank account via ACH. During this time, the processor deducts their fees and deposits the remainder. For example, if a customer pays $100 by card and your processor charges 2.9% plus $0.30, you receive $96.70 after one to three business days. Some processors offer faster payouts (same-day or next-day) for an additional fee.

International transactions and certain card types (corporate cards, international cards) may carry higher fees or longer settlement times. If you plan to accept these, ask your processor upfront what the fees are.

Setting up payment forms and links for your website

If you sell online, your processor will give you a few options: a payment link you can email or text to customers, a payment form you can embed on your website, or an API (a code connection) if you have a developer building a custom checkout.

A payment link is the simplest: you create it in your processor's dashboard, set the amount, and share it via email, text, or social media. The customer clicks the link, enters their payment details, and completes the transaction. No website required. This works well for invoices, donations, or one-off sales.

A payment form embedded on your website looks like a checkout box on your site itself. Customers never leave your page to pay. Most processors provide code you can copy and paste into your website builder (Wix, Squarespace, WordPress, etc.), or they have built-in integrations so you just flip a switch. This is more professional than a link and keeps customers on your site.

An API is for custom builds: your developer writes code that connects your website directly to the processor's system. This is the most flexible but requires technical skill and is usually only necessary for high-volume or complex businesses.

PCI compliance and keeping customer data safe

PCI compliance is a set of security rules required by law if you accept credit or debit cards. The core rule is simple: never store or handle card numbers yourself. Always use your processor's payment form, link, or app to collect payment details. If you store card numbers on your own server or in a spreadsheet, you are breaking the law and exposing yourself to fraud liability and fines.

Most small businesses meet PCI compliance automatically by using their processor's tools. If you use Square's card reader, Stripe's payment form, or PayPal's checkout, you are compliant. If you build a custom website and want to accept cards, you must use the processor's API or hosted payment page—never write code that touches the card number directly.

If a customer's card is compromised after paying you, the processor and the card issuer handle the dispute, not you. Your processor will notify you if a chargeback occurs (the customer disputes the charge with their bank), and you will have a chance to provide evidence that the transaction was legitimate. Keep records of orders, receipts, and customer communication for at least 90 days in case you need to defend a chargeback.

What to do if a payment fails or a customer disputes a charge

If a customer's card is declined, your processor will tell you why: insufficient funds, card expired, address mismatch, or the card issuer blocked it for fraud prevention. You can ask the customer to try a different card or payment method. Some processors let you retry a failed payment automatically after a few days, which helps if the issue was temporary.

If a customer disputes a charge (a chargeback), the processor will notify you and deduct the amount from your account while they investigate. You then have a window (usually 7 to 10 days) to submit evidence that the transaction was legitimate: an order confirmation, shipping receipt, email communication with the customer, or a signed contract. If you provide strong evidence, the processor will often rule in your favor and return the money. If you do not respond or your evidence is weak, you lose the money and may be charged a chargeback fee ($15 to $100).

To reduce chargebacks, send order confirmations immediately, include clear refund and return policies on your website, and ship items with tracking so you can prove delivery. If a customer contacts you about a problem before disputing the charge, resolve it directly—a refund is cheaper than a chargeback fee.

Frequently Asked Questions

How long does it take to get paid after a customer pays me?

Most processors deposit money into your bank account one to three business days after the transaction. Some offer faster payouts (same-day or next-day) for an extra fee. Weekends and holidays do not count as business days, so a Friday payment might not arrive until Tuesday.

Can I accept payments without a business bank account?

Technically yes—most processors will accept a personal account—but it is not recommended. Mixing personal and business money makes taxes harder and can complicate liability if you are sued. A business checking account costs little to open and keeps your finances clean.

What payment methods should I accept?

Credit and debit cards are essential; most customers expect them. Digital wallets (Apple Pay, Google Pay, Venmo) are increasingly common, especially for younger customers. ACH transfers and bank-to-bank payments are cheaper for you but require customers to enter their bank account number, which most will not do online. Offer cards as your main option and add others if your customers ask.

Do I need a separate account for each payment processor?

No. You can use multiple processors at once if you want—for example, Square for in-person sales and Stripe for your website. They all deposit into the same business bank account. However, managing multiple accounts means multiple logins and separate fee tracking, so most small businesses stick with one unless they have a specific reason to split.

What happens if my processor goes out of business?

Your money in your bank account is yours and is not affected. If the processor holds funds (in a reserve or pending settlement), those funds are typically returned to your account or transferred to a backup processor. The major processors (Square, Stripe, PayPal, Shopify) are large and stable, so this is rare, but it is another reason to keep your money in your own bank account rather than leaving it with the processor.