What are some alternative ways to accept credit cards?

In this 5-minute read:

  • PayPal
  • Etsy and eBay
  • Cash advances
  • Alternatives to traditional credit card processing
  • Why you should consider talking to a merchant services provider

If you are looking for alternative ways for people to pay you with credit cards, we are going to assume you are either not interested or not able at this time to get set up with a traditional payments processor or payments services provider, which are usually far more useful options for businesses.

But for independent contractors, sole proprietors, or small business owners just starting out, getting set up with a credit card processor can seem like a daunting proposition. It’s really a good idea to do so, but if you’re not there yet, let’s go over a few options on how you can get paid using a credit card.

PLEASE NOTE: You are responsible for adhering to all state and federal laws regarding proper business practices, reporting, taxes, and credit card use. This article is provided for informational purposes only.

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PayPal is the big dog in the “alternative payments” world. They revolutionized payments starting in about 2000 by making it simple and easy for one person to pay another online (popularized on eBay) without mailing a check, cash, money order, or fooling around with bank transfers.

Today, anyone can pay you with a credit card if you have a PayPal account, for a fee of 2.9%+$.30 per transaction. Believe it or not, this is a fairly competitive rate. You can get lower rates from a traditional processor using interchange plus pricing; but if you just need to accept the occasional credit card payment, signing up for a basic online PayPal account can be a useful alternative. 

You’ll need to go through the process (very simple) of getting your bank account linked to PayPal so you can move the funds from PayPal into your bank account, or you can choose to just use your PayPal balance like a bank, and leave the funds there until you use the balance to pay someone else using PayPal.

If the person paying you has a PayPal account with linked bank account, they can pay you with no fee if they are sending money to friends and family, as well. For businesses selling goods or services, it’s a good idea to ask customers to use a credit card because it provides more protection for both buyer and seller in case of any dispute. Be sure you conform with all of PayPal’s terms of service.

If you choose, PayPal has released their own free card reader (similar to Square’s), if you decide you want to move into a more dedicated processing relationship with them and get lower fees.

Set up a store on Etsy or sell on eBay

There are other alternatives (such as eBay and Amazon) where small businesses can sell goods (and some services; see below), but Etsy is one of the most popular for small, “niche” businesses to sell new, tangible goods.

Depending on what you’re trying to get paid for, you may or may not be able to have the credit card transaction facilitated via Etsy or eBay, after you set up an account and list the item or service for sale there, and have your buyer complete the purchase. 

Etsy, for example, generally doesn’t allow the sale of services that don’t result in new, tangible goods. So before you try to sell a service there, be sure to read their rules and list of allowed and prohibited services here.

If your goods or services are permitted for sale on Etsy, they charge 5% of the total sale amount (including any shipping charges), plus 3% + $0.25 payment processing fee for credit card payments. This is pretty steep if all you want is a way to accept a credit card, but it is indeed an alternative way you can accept card payments.

eBay does allow the sale of many services, but some are prohibited. See a list here. eBay’s fee structure is pretty complicated and too much to go into in this article, so if you decide to try it, be sure to read up on the different types and categories of fees eBay charges here.

The additional fees associated with these sites may not be worth it if you’re just trying to get paid using a credit card. However, both companies offer huge visibility, purchase protection, marketing tools, and other benefits for businesses that utilize them regularly and well. So it’s something to consider.

If you sell goods and services online, you might also consider getting set up with a shopping cart/store on Shopify.

Credit card cash advances

If all you’re doing is looking for a way for someone to pay you using their credit card as a funding source, but you don’t mind accepting hard currency, this can be an option.

Most credit cards allow cardholders to withdraw cash advances against their card balance, at ATMs, similar to a debit or bank card. They will charge the user a fee for this service, which can vary depending on the agreement and which ATM they use to access their funds.

The advantage to you is the customer pays this fee in this case, rather than having it deducted from your profit by a processor or payments services provider.

However, If you’re running a small business and you don’t yet have a POS (point of sale) system set up to accept on-site card payments, you can ask if your customers would prefer to pay you using their credit cards as a source of a cash advance.

Disruptors/alternatives to traditional credit card processing

If you’re reluctant to sign up with a traditional credit card processor but you need the ability to accept regular credit card payments for your business, you might be considering one of the new payments services providers like Square, Stripe, Clover, Toast, etc. 

Square has been hugely influential and gained widespread use among small, local businesses due to the simple fee structure and nearly instant setup of their POS (point of sale) hardware, which they pioneered, turning any mobile phone with a headphone jack into a digital payments device capable of accepting credit cards.

Square provides their card reader for free in many cases, and you can be set up to accept card transactions very quickly. Many of the other companies mentioned now offer similar setups and services.

While the new style of flat rate and fee structure can be attractive to small business owners, a well-informed merchant services provider will likely be able to get you better rates overall, and can be a useful advisor about innovations and new technologies in the payments space.

You may also like: Credit card processing fees—what small businesses need to know

Let Womply help you find the perfect credit card processor for your small business

Getting set up to accept credit cards can be very confusing and overwhelming for small business owners. However, Womply has direct relationships with a number of the nation’s top processors, and we can help you navigate the complexities and get you set up with a processor that not only provides competitive rates on reliable credit card processing, but can give you additional tools that can help your transaction data into actionable insights to help you attract and retain more customers!

Click here to check out our small business loans resources. Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free!


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