Credit Card Processing

How to Accept Credit Card Payments Without a Merchant Account

Read Time: 8 min

With over one billion credit cards in use in the United States, it’s safe to say that business owners who don’t accept card payments are missing out on revenue.[1]Bank Rate. “2022 first-time credit card statistics“. Accessed March 17, 2023. Nonetheless, obtaining a traditional merchant account can be challenging for businesses, especially if they’re deemed a high-risk liability by financial institutions. Fortunately, there are several payment processing alternatives out there, making it possible for all types of businesses to accept credit card payments.

However, merchants must be careful about choosing a processing partner off the beaten path, especially a payment aggregator. With these alternatives, there are usually massive disparities in payment processing fees, features, funding timeframes, and other essential factors.

This guide explores how to accept credit card payments without a merchant account, as well as how merchant accounts compare to payment aggregators. Continue reading if your business is in the market for a new payment processing solution!

What Is a Merchant Account?

A person online shopping and a merchant accepting online payments without a merchant account.

A merchant account is a bank account for the specific purpose of processing credit and debit cards. When a business obtains a merchant account for payment processing, the acquiring bank utilizes the merchant account to hold transaction funds during the process of payment settlement. Once payment is finalized, the money is transferred to the merchant’s business bank account.

Merchant accounts, which can be obtained through a merchant service provider, don’t function like traditional business bank accounts, as merchants can’t use them to make payments or withdraw cash. Their sole function is to keep the transaction settlement process streamlined.

How to Accept Payments Without a Merchant Account

Due to the difficulty associated with obtaining a merchant account, some businesses seek other payment alternatives, as merchant accounts can be challenging to obtain. For those having trouble securing a merchant account, below are a few alternative options:

An open laptop.


It’s pretty easy to accept payments online without a merchant account. Simply connect your eCommerce platform to a payment service provider (PSP). Integrating these providers with popular eCommerce platforms such as (Shopify, BigCommerce, etc.) is typically a straightforward process. Also called payment aggregators, these providers aggregate numerous merchants onto a single merchant account. This allows you to access merchant services without applying for a dedicated merchant account.

A retail store.


Many PSPs mentioned previously also provide face-to-face payment options. (PayPal recently acquired Zettle to enter the in-person payment market.[2]Reuters. “PayPal expands retail payments with $2.2 billion Zettle buy“. Accessed March 17, 2023.) Merchants also have the option to work directly with a point of sale (POS) provider. Many POS platforms are compatible with a wide range of payment processors, several of which even have in-house processing solutions.

Mobile payment without a merchant account on a smartphone.


Most PSPs have mobile payment options available to merchants. Usually, it’s possible to download an app on a smartphone or tablet and process payments using mobile card readers. Additionally, some payment processors also support QR code payments, allowing for simple and secure payments on the go.

Two people shaking hands.

For Personal Use

If you operate as a sole proprietor, using a PSP like PayPal can simplify sending invoices and accepting payments. Many PSPs allow for digital invoicing, including a link to a payment portal, making it simple for your customers to pay using a credit card, funds transfer, or a range of alternative payment methods.

Pros and Cons of a Third-Party Payment Processor

Let’s explore the advantages and disadvantages of third-party payment processors:


  • Quick Approval Timeframes: Third-party payment processors offer quick access to payment processing. While an account may face some initial volume restrictions, it’s likely a third-party payment processor will offer instant access to credit card payments if a merchant meets its baseline requirements.
  • Limited Requirements: Third-party payment processors have much lower requirements than merchant account providers. Some won’t even ask for evidence of a registered business, making this a good option for sole traders.
  • Easy-to-Understand Pricing: Many third-party payment processors offer flat-rate pricing, meaning you won’t pay different fees for different card brands. This pricing model makes it easy to predict processing fees and offers complete payment flexibility to customers.
  • Secure and Widely Recognized: Many third-party payment processors have brand recognition, making them popular among consumers. Additionally, these processors spend considerable money creating secure payment infrastructure to support both merchants and customers alike.


  • Slow Funding: As many third-party payment processors funnel multiple merchants onto a single merchant account, it can take a long time for funds to be transferred to a merchant’s business — creating cash flow issues down the line.
  • Unexplained Account Freezes & Closures: Many third-party payment processors are known for freezing merchant accounts without warning and even shutting them down. This makes it challenging to access cash or continue accepting payments from customers.[3]Bloomberg. “PayPal Sued for Freezing Customer Accounts Without Explanation“. Accessed March 17, 2023. Since PSPs don’t underwrite businesses upfront, they approve merchants with little-to-no prerequisites, only to terminate them after the final review is done. These scenarios can cause significant harm to your business if you don’t have payment alternatives in place.
  • Excessive Fees: While third-party payment processors typically provide flat-rate pricing, this pricing model hides large markups, which cost businesses significant money in the long run. Additionally, by implementing flat-rate pricing, you cannot take advantage of the competitive pricing offered by merchant account providers.
  • Poor Customer Service: Third-party payment processors are notorious for providing sub-par dedicated customer support. Their customer service is typically stretched thin across a broad range of clients, which can be frustrating if you require immediate help with an issue.
  • Low Tolerance for High-Risk or High-Volume Businesses: Third-party processors tend to air on the side of caution. If you process over a certain amount per month or you have a more risky business type, these providers are unlikely to do business with you for very long.

Pros and Cons of a Merchant Account

Let’s explore the advantages and disadvantages of merchant accounts:


  • Affordable Processing Fees: Merchant account providers offer affordable and transparent processing fees, called interchange fees. While these fees aren’t flat-rate like with third-party payment processors, it’s easier to see a full breakdown of what you’re paying to the processor and other transaction stakeholders.
  • Dedicated Support: With a merchant account, you’re the only merchant with access to your account. This means that you’ll receive dedicated, singular support regarding your account, ensuring you have immediate access to help when you need it.
  • Quicker Funding: As merchant accounts are dedicated to a single business, it won’t take long for funds to reach your business bank account. This helps ensure your cash flow doesn’t suffer due to slow funding timeframes.
  • Lower Chances of Account Freezes: Merchant account providers work closely with their merchants to navigate chargebacks and other account risks, reducing the likelihood of account freezes.
  • Integration Options: Many merchant accounts offer full integration with payment gateways and other payment technologies, making it simple to access online and over-the-phone payments.


  • Longer Underwriting Processes: Merchant accounts require additional due diligence, lengthening the underwriting process. It could take up to four weeks to access a new merchant account for the riskiest of business types.
  • Harder to Predict Average Processing Costs: As many merchant account providers often utilize “interchange plus” pricing and other non-flat-rate pricing models, it’s harder to predict their average processing costs. Prices vary depending on card brands and other factors, so it’s nearly impossible to know what their exact costs will be per transaction. With this being said, this pricing model is often cheaper for merchants in the long run because of how inexpensive some cards are.

Merchant Account vs. Payment Aggregator: Which Is Best for You?

Choosing the best payment option for your business can help you save time, money, and a lot of hassle. So, should your business choose a merchant account or a payment aggregator?

The answer depends on your business size, processing history, industry type, payment needs, and other important factors. If you are a new business requiring immediate access to payment processing, a payment aggregator may be a better choice in the short term, as payment aggregators offer almost-instant access to credit card processing.

However, while payment aggregators make it easy to sign up for an account, they also have high turnover rates. Frozen and suspended accounts are commonplace, leaving merchants in a bind without any clear payment options.

For more reliability, many businesses opt for merchant accounts. Businesses using merchant accounts benefit from lower transaction fees, more account stability, and dedicated support when they need it. While it can take a couple of weeks to gain approval for a merchant account, there are clear advantages to this payment processing option.

In addition to this, high-risk merchant accounts exist for businesses operating in more risky industries. Merchant accounts can offer higher chargeback thresholds, fraud prevention services, and additional security tools to help high-risk businesses access affordable card payments.

How PaymentCloud Can Help

At PaymentCloud, we provide reliable merchant accounts to businesses, including those operating in high-risk industries. If your business is struggling to obtain a merchant account from traditional financial institutions, you’re not limited to using a payment aggregator — we’ve got you covered!

Our merchant accounts are suitable for all payment types including online, in-person, mobile, and over-the-phone payments. Our solutions are also compatible with various third-party integrations, such as payment gateways and other cutting-edge payment software options. Choosing a provider who understands your business’s specific needs can help to streamline your credit card processing experience and boost your bottom line overall!

Be one step ahead. Open your doors without worrying about how you’ll accept payments!

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A cloud with credit cards on it to represent how to accept card payments without a merchant account.

Accepting Payments Online Without a Merchant Account: FAQs

What’s the cheapest way to accept credit card payments?

The cheapest way to accept credit card payments depends on many factors. While payment aggregators often charge flat-rate pricing to customers, this easy-to-understand pricing model can hide excessive fees.

On the other hand, merchant account providers, which often charge different fees depending on card brands and other factors, typically offer cheaper fees in the long run.

Do I have to have a merchant account to accept credit cards?

No, merchant accounts are not required to accept credit card payments. While merchant accounts provide a range of benefits — affordable fees, dedicated support, and quick funding timeframes, to name a few — merchants can also accept credit cards with a payment aggregator.

Payment aggregators use a single merchant account for several merchants, making the underwriting process quicker. However, payment aggregators are often more unpredictable and don’t always offer reliable support to merchants.

Do I need to have a registered business to take card payments?

No, you don’t need to officially register a business to begin accepting card payments. Payment service providers allow individuals to begin accepting credit card payments before they register as a business, making it a suitable option for sole proprietors. However, merchant account providers do require proof of a registered business and business bank account before you can begin accepting credit card payments.

Is getting a merchant account difficult?

The level of difficulty for obtaining a merchant account depends on your business, its sector, the account provider, and many other factors. For example, acquiring a merchant account from a traditional financial institution can be difficult if you operate in a high-risk industry or your business has a history of excessive chargebacks. However, specialized high-risk providers have the necessary resources and long-standing relationships with processing banks to help you get a merchant account.

How do small businesses accept credit cards?

Small businesses accept credit cards the same way normal-sized businesses do. After applying for a merchant account or applying for an account with a payment aggregator, business owners can start accepting payments once approved. Both options have their advantages and disadvantages, listed above.

Article Sources

  1. Bank Rate. “2022 first-time credit card statistics“. Accessed March 17, 2023.
  2. Reuters. “PayPal expands retail payments with $2.2 billion Zettle buy“. Accessed March 17, 2023.
  3. Bloomberg. “PayPal Sued for Freezing Customer Accounts Without Explanation“. Accessed March 17, 2023.

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