Retail Credit Card Processing: What’s Involved?

Retail Credit Card Processing: What’s Involved?

Twenty-nine percent of consumers prefer to pay with credit cards and 42% prefer to pay with debit cards, according to findings from the Federal Reserve Bank of San Francisco. If your small business isn’t accepting card payments, you could be losing business from customers who don’t want to carry cash for in-person purchases. Retail credit card processing can help your business catch up to the payment options these customers are looking for.We’ll explain what retail credit card processing is, what you’ll need to accept credit cards in your business, how much it will cost, and the best merchant services provider to use.

Retail Credit Card Processing — What Is It?

Retail credit card processing allows you to accept credit cards as payment in a brick-and-mortar business, such as a store or restaurant. This is different from online credit card processing, which allows you to accept credit card payments virtually.Retail credit card processing is also different from debit card processing. Though both involve the transfer of money from one bank account to another, this is accomplished through a different process. In short, debit cards use funds directly from the customer’s bank account. Credit cards, on the other hand, draw on a line of credit provided by the credit card issuing bank. The issuing bank pays your business for the purchase, and then the customer pays them back later.For this reason, credit card purchases usually cost your business more in fees than debit card purchases.

What Is Needed to Process Credit Cards in Person?

retail credit card processing: A man pays with a credit card at a grocery store

In order to process credit cards in person as retail business, a few things need to be set up.First, you’ll need a business bank account. You can set one up with the bank of your choice.You will also need a traditional merchant account, or TMA. Since it’s not secure to move money directly into or out of your business bank account, this account acts as a “holding tank.”In addition, you’ll need either a merchant services provider (MSP), like Nadapayments, or a payment service provider (PSP), like Stripe, Square, or PayPal. The MSP or PSP will be the middleman between you and the credit card issuing bank. This provider will make sure the money you make from transactions makes it into your bank account.Keep in mind, your MSP or PSP may open a merchant account for you. For example, Nadapayments handles this step for you, making it even easier for you to get ready to accept credit card payments.Setting up accounts and choosing a service provider is only part of the game, though. You’ll also need some special equipment.

Necessary Equipment for Credit Card Processing

When you process payments in a brick-and-mortar business, you’ll need some equipment. If you want to accept mobile payments as well, that may require different equipment (or software).For in-person payments, you’ll need a terminal device to read your customer’s credit card information. This device talks to the credit card networks and banks involved in credit card transactions. As a merchant, you can also use advanced point-of-sale systems (POS) that perform many additional functions, such as inventory management and payroll. If you use Nadapayments as your payment processor, you’ll have both a credit card machine and virtual terminal that make it simple to accept in-person transactions, online payments, and even payments through a mobile device. Our credit card terminals are Wi-Fi and EMV-capable, and they enable you to accept the following payment methods:

  • Major credit cards, like American Express, Discover, Mastercard, and Visa, including chip cards (EMV)
  • Debit cards
  • Apple Pay (iOS)
  • Google Pay (Android)
  • Contactless payments (tapping the card)

Paying for Retail Payment Processing

Retail credit card processing: A credit card sits in a credit card machine

So how much does retail credit card processing cost? There are three categories of costs you need to be aware of. Money paid to retail credit card processors falls into one of these categories:

  • Fees
  • Rates
  • Equipment Costs


There are many moving parts to credit card processing, and each of the companies involved needs to make money for the service they’re providing. For example, transaction fees are levied by the card network and the issuing bank. Fees are also charged by the payment gateway and credit card processor. The major types of fees are:

  • Interchange fees: These are set by the major card networks — American Express, Visa, Mastercard, and Discover. They help those companies offset risks and recoup costs. Interchange fees are actually charged against the issuing banks, who then pass that cost along to business owners like you. As the most significant cost involved in payment card processing, interchange fees can vary a lot, depending on the type of card used, your business type (such as if you’re a high-risk merchant), and the way it is presented, among other factors.
  • Service or assessment fees: This fee goes directly to the credit card network. They are also known as network fees.
  • Markup fees: These are charged by the payment processor. These fees help them defray the costs and risks associated with managing merchant accounts.


The term “rates” refers to the pricing models that MSPs and PSPs charge for their services. Here are four common pricing models:

  • Flat-rate pricing: This is when a payment processor charges a fixed fee for all debit and credit card purchases, no matter the card used. This model is used by payment service providers such as Stripe, Square, and PayPal.
  • Tiered rates: This is when a processor levies a fee dependent on the type of card and how it is presented. Tiers are arranged by the volume of transactions in a given business day, as well as risk involved with each transaction.
  • Interchange-plus pricing: In interchange-plus pricing, merchants are debited a certain percentage of the sale, which is based on the interchange fee of the card being used. A small per-transaction fee is usually added.
  • Subscription: Here, the processor assesses monthly fees to provide service. They also usually charge a small fee per transaction.

Equipment Costs

It’s important to factor in equipment expenses when considering how much retail credit card processing will cost. Some credit card processors offer free card readers. Others have equipment for sale, and other companies (like Nadapayments) rent you the necessary equipment.Base-level credit card terminals provide a keypad, a display screen, a magnetic-stripe card reader, and the ability to use chip cards (EMV). Other card readers offer wireless capabilities or are part of larger POS systems that include receipt printers, cash drawers, and other add-ons.

A Cost-Effective Retail Payment Processing Solution

A woman takes a credit card payment in a cafe

There is no shortage of credit card processing services to choose from. But if you’re looking for an MSP that’s easy to use and cost-effective, check out Nadapayments.If you use Nadapayments as your payment processor, you’ll have both a credit card machine and virtual terminal that make it simple to accept in-person transactions, online payments via email or an e-commerce site, and even payments through a mobile device. Nadapayments’ credit card terminal is available for only $35 per month. It’s Wi-Fi and EMV-capable, and it enables you to accept the following payment methods:

  • Major credit cards, like American Express, Discover, Mastercard, and Visa, including chip cards (EMV)
  • Debit cards
  • Apple Pay (iOS)
  • Google Pay (Android)
  • Contactless payments (tapping the card)

Usually, businesses must pay processing fees when accepting credit cards — typically around 3.5% of each transaction.With Nadapayments’ surcharge program, instead, the customer will cover the costs. This makes the surcharge program a very cost-effective and transparent pricing model. It enables you as the merchant to realize $100 from a $100 transaction. There are no hidden costs or fees involved. Nadapayments’ payment solution gives your customers a choice. If they want to use a credit card, they’ll pay a 3.5% surcharge. But if they want to avoid the fee, they can pay with cash or a debit card. This program actually encourages customers to use cash or a debit card.For example, here is how the same $100 purchase would work depending on if the customer paid with a credit or debit card. Credit CardDebit CardPurchase amount$100$100Fee you pay0% ($0)1% + 25 cents ($1.25)Fee customer pays3.5% ($3.50)0% ($0)Total amount customer pays$103.50$100Total amount you receive from the purchase$100$98.75And, it’s easy to keep your customers informed about the costs they might pay — or not pay. Nadapayments will provide you with the signage needed to inform your loyal customers about the surcharge program.Nadapayments is 100% legally compliant, works with credit card installment plans, and provides 24/7/365 customer support, because all clients are VIPs!

Start Accepting Credit Card Payments in Your Business

A customer makes a purchase with a contactless payment

These days, it’s important to be able to accept credit cards in your business. As a merchant, you will need a business bank account, a merchant account, and a merchant services provider. And you’ll need the necessary equipment, such as a credit card terminal or a point-of-sale system.Paying for retail credit card processing is a complex business. So, be aware of the fees, rates, and equipment costs involved.You have a lot of choices when it comes to merchant service providers. One of the best choices you can make is to use Nadapayments, a leader in the payment card industry. If you’re ready for cost-effective retail credit card processing, get in touch with Nadapayments today.

About the author
Aleksey Nugid
View profile
Share this post

Link copied