Here’s all you need to process credit cards

5 min read
Claudia Bouma

The success of your business depends largely on how quick and painless it is for customers to pay for your products or services. Credit and debit cards are obviously the way to go, but are you set up to accept them? In this post we’ll explain the three basic things you need in order to start processing credit card payments.

Your two options for credit card processing

You’ll need some help on this, so the first choice you’re faced with is whether to set up a merchant account or opt for an all-in-one Payment Service Provider (PSP). Let’s jump into the nitty gritty, including what types of businesses each is best suited for.

Merchant account

Put simply, a merchant account is a special type of bank account that enables you to securely accept credit and debit card payments. The merchant account is the account into which your client’s credit card payment is transferred before it’s deposited into your bank account.

It usually takes one to two business days to receive your money.

Graphic of Card Reader

There are choices galore when it comes to setting up a merchant account. The most obvious providers are banks such as NAB, ANZ and the Commonwealth Bank, but you can also sign up with an independent sales organisation or a payment processing company (e.g. Ezidebit).

If you go this route, you’ll have to talk to a sales representative about the different options to decide what’s best for your business.

Payment Service Provider

A PSP is an all-in-one payment processing system that ticks all the boxes for small business owners who don’t want to deal with setting up a merchant account. In some instances, PSPs offer other services apart from accepting credit and debit card payments.

You are spoiled for choice with PSPs, though the most popular ones are Stripe and PayPal. Other PSPs include:

  • GoCardless
  • Square
  • Pin Payments
  • Braintree
  • eWAY

Each PSP has its own fee structure, so you’ll want to check out the different platforms.

What else do you need to accept credit card payments?

Cashier Standing Beside Computer and Card Reader

What happens next depends on whether you sell online only, in a physical location or on-the-go.

Physical store

If you’re a brick-and-mortar business, a merchant account gives you access to a countertop credit card terminal or a point-of-sale (POS) system. Customers tap or insert their credit card into the terminal to make the payment. Fees apply for using this type of setup.

Online or eCommerce

If you run an online store, you don’t need a physical credit card machine.

Choose between a merchant account coupled with a payment gateway or a PSP, which has both.

Another alternative is to create a virtual terminal, which is a secure web page in your internet browser where you securely process credit card payments. It does the same job as a physical terminal, but uses software to transform your computer into a credit card machine.

This approach requires you to enter the client’s credit card details manually, making it more susceptible to mistakes, thus the fees tend to be higher.


Maybe you run a business that’s not tied to a set location, but you’d still like to give buyers the option of paying via credit or debit card.

Pastry Shop Glass Display with Various Desserts

This scenario applies to:

  • An artist who sells his work at art fairs
  • A hairdresser who travels to people’s homes
  • A chocolatier who sells her products at large events and food fairs

These entrepreneurs take their business with them wherever they go. In this case, a mobile card reader is the way to go, as it transforms your smartphone into a credit card payment processor.

Used with your smartphone or tablet, a mobile card reader is an affordable option and available from a variety of POS providers. Some popular mobile card readers in Australia are Square, Shopify and PayPal Here.

The lowdown on fees

Fees are inevitable but it’s worth the effort to look closely as this can make a substantial difference in the long term. In this case, it pays to read the fine print to avoid surprises.

Merchant account

It’s important to do your homework when applying for a merchant account as fees vary. Merchant account fees are generally high and only worth considering when you run a larger business with a considerable number of credit card transactions.

Payment Service Provider

Generally speaking, PSP fees are lower and charged per transaction, making it more appealing for small ventures with a low transaction volume. Fees will differ depending on whether it’s a domestic or international payment.

Other factors to take into consideration when choosing a credit card payment tool include:

  • The nature of your business
  • Software integration
  • Benefit-cost ratio

Keep in mind that your needs may change over time. You might start out with a PSP, then switch to a merchant account once your credit card transaction numbers increase.

Grow your sales with payment processing

The first step to deciding how to process credit cards is to choose between a merchant account and PSP. Once you’ve got this worked out, determine whether you need an actual credit card terminal or an online option is sufficient. Finally, read the fine print to be clear on the fees.

Once you’re ready to go, you’ll never look back — and your customers will enjoy the ease of paying for products or services any way they like.