how to accept credit card payments without a merchant account

how to accept credit card payments without a merchant account

Businesses, regardless of what they sell, must be able to accept credit cards in today’s world of payments anywhere, at any time. Setting up a merchant account with a merchant service provider is a typical way to accomplish this. However, companies may accept credit cards without a merchant account by using a payment facilitator service. Let’s take a look at how credit card processing works and how the two choices vary.

What is credit card processing?

A credit card transaction happens so swiftly and smoothly that it’s easy to overlook what’s going on behind the scenes. Here’s a basic rundown:

The consumer enters their credit card information, which is transmitted by the merchant’s processing solution to the merchant’s bank (the acquiring bank), then to the credit card network (Visa, Mastercard, Discover, or American Express), and finally to the customer’s bank (the issuing bank). To complete the sale, the issuing bank authorizes or denies the transaction request and sends a response back across the card network, to the acquiring bank, and finally to the merchant’s processing solution.

Choosing a service provider

To take credit cards, businesses can enter into a contract with a merchant service provider. Signing up for a merchant account is simple, but it does include filling out an application and getting accepted by the service provider’s underwriting staff. The entire procedure can be time-consuming and labor-intensive.

A payment facilitator service is another possibility. A payment facilitator provider is a bundled merchant account provider that enables merchants to take credit cards without the need for separate merchant accounts. A payment facilitator provider services several businesses by enrolling them into a single master merchant account. As a result, each retailer seldom has to apply for and be accepted for their own merchant account and merchant identification number (MID).

What are the advantages and disadvantages of accepting payments using a regular merchant account vs a PayFac service? Here are a few crucial points to consider.

The registration procedure

The sign-up and on boarding processes for a merchant account provider and a payment facilitator service provider are very different. Individual merchant accounts are not difficult to obtain, but they do need extra documentation and time for approval. Payment facilitator service providers, on the other hand, typically provide a streamlined, speedier merchant account enrollment procedure because each merchant does not need to be approved for their own MID. 

Transaction fees

Because payment facilitator service transactions are part of a shared merchant account, fees are often fixed at a single rate with no alternatives for different rate plans. While this streamlines transaction costs for businesses, it frequently results in lower rates for particular merchants.

A merchant, for example, normally pays the same costs per transaction regardless of how many transactions they handle when using a payment facilitator service. This may be sufficient for a company with a minimal transaction volume. A merchant account, on the other hand, makes more sense for firms that handle more transactions since it offers more customizable pricing options with more savings for larger volume merchants. 

Payment facilitator services, in general, offer one-size-fits-all plans, whereas merchant service providers may adapt card processing plans and pricing to specific business needs and qualifications – potentially saving money.

Costs of equipment

Whether a business processes through a payment facilitator service or its own merchant services account, it must have a mechanism to enter consumer credit card information. It might be as basic as a tiny gadget connected to a mobile device or as complex as an internet credit card processing gateway.

Payment facilitators and merchant service providers frequently run promotions for free or discounted processing equipment. However, merchant service providers typically provide a wider range of accessible payment terminals, which might be tempting to firms with more sophisticated payment requirements.

Volume restrictions

Merchant accounts often provide greater flexibility in terms of transaction volume (which is frequently unlimited) and individual sale amount. Payment facilitator services, on the other hand, typically have a restriction on the volume that can be handled in a given period of time. 


Payment facilitator services and merchant accounts both send out payments to their merchant customers, but how and how soon the funds are dispensed varies greatly depending on the supplier.

Customer service

Customer service is often only available via email or online since payment facilitator companies serve so many merchants. Merchant service providers, on the other hand, frequently give more thorough customer support by phone, chat, and email, including set-up assistance and resolving difficulties. 

Making the choice

What factors should a small business consider when deciding whether to build their own merchant account or use a payment facilitator service to take credit cards without a merchant account?

In conclusion, a merchant account may be less expensive per transaction, provide more flexible transaction volume, comprehensive customer support, and more advanced payment processing tools and services. However, the application and approval procedure is often more thorough and time-consuming. Businesses with a bigger sales volume, more items, or a need for additional customer and business assistance may opt to open a standard merchant services account.

Payment facilitator providers provide streamlined onboarding, which might be beneficial to smaller firms that want to get up and running fast without the hassle of applying for a merchant account. It is crucial to remember, however, that the charges of using a payment facilitator service may be greater, and merchants may be limited in the number of transactions they can process and the customer assistance they can get. Nonetheless, the convenience of employing a payment facilitator service is worth these trade-offs for many small, start-up enterprises.

The easiest approach to decide whether or not to take credit cards without a merchant account is to consider the advantages and downsides as they apply to your specific business.