How to accept card payments without a merchant account

When taking payments online, merchant accounts have long acted as a holding place for customer funds before they’re transferred to a business bank account.

But while this is the traditional way to take payments, it isn’t the only way to accept payments online today, thanks to all-in-one solutions that handle much of the setup and management on their behalf.

Unlike a traditional merchant account, payment facilitators allow businesses to accept payments without setting up their own dedicated merchant account. Instead, they provide a ready-made payment infrastructure that handles payment processing, security, and fund transfers.

In this article, we’ll guide you through the steps of accepting payments without a merchant account, what costs are involved, and the pros and cons to help you choose the best payment solution for your business.

How to take payments without a merchant account

The easiest way to take payments without a merchant account is by signing up for a payment provider, such as SumUp, PayPal, Square and Stripe.

While the exact steps vary depending on the provider you choose, here’s what the process typically looks like:

1. Create an account and provide your business details

First, sign up with your business email address. Make sure to choose a business account, since you’ll be accepting payment for goods and services.

Next, you’ll need to provide your business details. You may be asked for:

• Your name and contact details
• Your business name
• Business address
• Type of business and what you sell
• Company registration details if you’re a registered business

2. Verify your identity and add your bank account

To comply with financial regulations, providers usually require:

• A government-issued photo ID
• Your date of birth
• Proof of address (in some cases)

From there, enter the account where you want your payouts sent. Keep in mind that some providers make a small test deposit to confirm the account.

3. Start accepting payments

Once approved, you can use your account to start taking payments from customers, including:

• Accepting online card payments through a website checkout page
• Sending payment links by email or text
• Creating invoices that customers can pay online
• Accepting in-person payments through a compatible card reader (if offered)

How much does it cost to accept card payments without a merchant account?

You can expect to pay from 1.5% to 2.9% in credit card processing fees from payment service providers (PSPs), though this ultimately depends on the provider you choose.

They also differ for in-store and online payments. For example, Square charges 1.4% + 25p online (more for non-UK cards) and 1.75% for in-store transactions. However, if you were to go for a payment processor specific to online payments – such as Stripe – fees can be a little lower.

You can compare payment providers that don’t require a merchant account in the table below. To give you an idea of how much it’ll cost your business, we’ve outlined how much you would pay in fees for each £1,000 spent.

Final thoughts

Taking payments without a merchant account is easier than ever before. Providers like Stripe, Square and PayPal take care of all the technical setup, security, and payment processing – making them a great option for small businesses and anyone looking for a simple way to start accepting payment.

While this usually comes with slightly higher transaction fees compared to a traditional merchant account, the trade-off is less administrative hassle, faster setup, and fewer upfront costs.

When choosing the right provider, think about how you sell, the payment methods you need to support, and the fees that best fit your budget. Comparing your options before signing up to anything can help you find a solution that is both cheap and  makes it as easy as possible for customers to pay.