How to accept card payments without a merchant account

Making money without a merchant account is easy. Here’s how you do it.

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Our expert team of writers and researchers worked to identify the best payment processing and merchant account providers by focusing on the factors small businesses care about most – value for money, including fees and hidden extras; security protocols and fraud protection; customer support, and ease of access across platforms including mobile.
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A merchant account is a holding place for all the payments processed by a payment gateway provider. The processed payments, minus any credit card processing fee, usually sit in the merchant account for a few days and are then transferred to a business bank account once they’re cleared.

This is the traditional way to take payments – a process which relies on a number of stakeholders and processes. But now, thanks to a new(ish) type of payment provider, a merchant account isn’t actually necessary.

Payment facilitator companies possess the technology to process and clear card payments. They hold your funds in a kind of shared merchant account, then transfer the funds into your business account usually within one to three business days. Instead of being charged separately by your payment gateway and merchant account providers, these credit card processing companies charge you a single fee – a percentage of each transaction.

They’re an easy way to get your business off the ground, but they aren’t a replacement for a traditional payment setup if your business takes more than around £10,000/month. This is because the fees involved aren’t cost-effective once you take a certain amount.

To help you understand costs for your business, with a breakdown of the fees you’ll encounter, we’ve designed a free cost comparison tool to do all the hard work for you. Just fill out a few simple details, and we will provide you with quotes from some of the best providers in the industry:

How do you need to take payments?

Compare Costs

How to take payments without a merchant account

Setting up your business so you can take payments without a merchant account is super-easy. For the most part, it includes choosing your payment provider, downloading its app onto a mobile phone or tablet, and following its simple sign up process.

If you haven’t got a bricks and mortar business, most payment providers also provide the option for you to embed their payment taking technology into your website, allowing people to make purchases through your online store.

As part of the sign up process, you’ll need to provide information on your business, including your expected takings. To be accepted by the payment provider, you’ll also need to have a business bank account set up in your name.

For bricks and mortar business owners, the great thing about payment providers is their app also doubles up as point of sale software. Once you’ve completed the sign up process, you’ll be able to upload your business inventory – whether that’s your shop stock or cafe menu.

Depending on the provider you choose, you may even be able to use the software to set up loyalty schemes, and an online store with delivery and click and collect services. You’ll also have access to sales data, so you know what’s selling and what’s not.

Payment providers including Square, SumUp, and Zettle by PayPal (formerly known as iZettle) don’t charge extra for their point of sale software, but you can choose to upgrade your point of sale features for an additional cost per month.

Accepting card payments without a merchant account – how much does it cost?

The credit card processing fees associated with taking card payments without a merchant account differ for each provider. While Square charges 1.75% per transaction per face to face transaction, SumUp charges 1.69%.

The fees differ again for online payments. For example, Square increases its fees to 2.5% for each online payment made through its system. 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.

Payment providerTransaction fee (in person transactions)Transaction fee (online transactions)
Square1.75% = £17.502.5% = £25
Zettle by PayPal1.75% = £17.502.5% = £25
SumUp1.69% = £16.90n/a
PayPal Here2.75% to 1% £27.50 to £101.9% + £0.20 = £19 + £20
Stripen/a1.4% + £0.20 = £14 + £20

What else do you need to know?

While taking payments without a merchant account is fine for startups or businesses with lower takings, you’ll find much more favourable rates for higher takings by taking out a merchant account with a bank.

As payment facilitators, the companies mentioned above offer businesses a range of ways to take payments including:

  • Face to face
  • Online
  • Through payment links
  • Invoicing

As demonstrated in the previous section, the transaction fee associated with card-not-present payments is higher than card present payments, meaning you can expect to pay the higher rate for each online, payment link, and invoice payment you make.

That said, with point of sale software provided by the payment provider, businesses can take advantage of a ready-made sophisticated payment taking process – for free. They can also add to or upgrade their feature package if required. is reader-supported. If you make a purchase through the links on our site, we may earn a commission from the retailers of the products we have reviewed. This helps to provide free reviews for our readers. It has no additional cost to you, and never affects the editorial independence of our reviews.

Written by:
Aimee is Startups' resident expert in business tech, products, and services. She loves a great story and enjoys chatting to the startups and small business community. Starting her own egg delivery business from the age of 12, she has a healthy respect for self-starters and local services.
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