The world of e-commerce is growing — and fast. Traditional brick-and-mortar stores have been losing ground to e-commerce for some time now. In fact, according to the National Law Review, 2020 saw overall online sales volume rise exponentially.To keep up with these trends, the best way forward is to dive into the world of e-commerce and to take your small business online. But how do you do that?This article is your guide to online credit card processing for small businesses. We will talk about how online payments differ from retail payments, how to manage online payment processing, the fees you might expect to pay, and how to get some help with the whole process.

Online Credit Card Processing for Small Business — What Is It?

While retail credit card processing allows you to accept major credit cards for in-person payments, online credit card processing gives you the ability to conduct transactions over the internet. You might also hear the term “digital payments.” Online credit card payments are one type of digital payment.In some cases, your online payment processor may enable mobile credit card processing as well. This allows you to accept credit card payments in-person via a mobile app, so you don't have to be at your business location with your credit card machine.

What Is Needed for Online Credit Card Processing?

Online credit card processing for small business: person completing an online purchase using his credit card

Online credit card processing is similar to retail processing, but there are differences. For retail sales, you need physical credit card machines or point-of-sale systems (POS systems). But with online credit card processing, you need a virtual system of accepting payments.To process credit cards online, you will need:

  • A bank account
  • A merchant account
  • A payment gateway
  • A credit card processor

Bank Account

You’ll first need a place to put your hard-earned cash. You can open a business bank account with any reputable bank. Processing fees and chargebacks, if you end up having any, will ultimately come out of this account as well.

Merchant Account

When you receive payment from a customer via a credit card, the money is held in your merchant account before it is verified and moved to your bank account.

Payment Gateway

Payment gateways are similar to physical credit card readers. They are tools that validate your customer’s credit card payment details securely, and they also make sure that the customer has enough money to pay you. In addition to credit card payment processing, payment gateways may enable you to take other forms of payment, such as debit cards and ACH transactions. They work between your shopping cart and the bank that issued the payment method being used.

Credit Card Processor

Also called a merchant services provider, a credit card processor is a provider that manages the interaction between a merchant and their accounts and the customer’s credit card company. There are many credit card processors out there. The payment processor you choose should be responsive, have great customer support, offer full PCI compliance, and be reliable.Nadapayments is one of the best credit card processing companies. For one, it makes setup easy because the merchant account and payment gateway are built right in. Plus, Nadapayments enables you to take home 100% of your credit card transactions by eliminating credit card processing fees. We’ll talk more about those fees below.

How Much Does Online Credit Card Processing Cost?

Person holding a pencil while using a calculator

Before you decide on an online credit card processing service, it’s crucial to know how much it will cost. There are two major categories of expenses when processing credit cards online: fees and rates. But there are also other related costs to doing business online that you might incur, such as web hosting or a domain name.


Credit card processing is a complex business, and there are fees associated with each of the involved parties.The three main fees are:

  • Interchange fees: The major card networks (Visa, Mastercard, American Express, and Discover) set the interchange fees, which are paid to the issuing bank. These fees can vary quite a bit depending on different factors. For example, since online transactions are inherently less secure than card-present transactions that happen in person, interchange fees are usually higher for online purchases.
  • Assessment or service fees: Also called “network fees,” these go to the credit card network.
  • Markup fees: These fees go to the payment processor.


Different payment processing companies offer different pricing models. These rate structures will determine how the above fees will be assessed. Here are the main rate structures you might see:

  • Flat-rate pricing is when a processor charges a fixed fee for all credit card purchases. This is the pricing structure used by services like PayPal, Stripe, and Square.
  • Tiered pricing is when a merchant is charged varying credit card processing fees depending on the type of card that’s used for the purchase and how it’s presented.
  • Interchange-plus pricing is when the merchant is charged a certain percentage of the sale plus a small per-transaction fee.
  • Monthly subscriptions are when you pay a set monthly rate for credit card processing. A small per-transaction fee might be assessed as well.
  • Surcharge programs are the most cost effective. This is when the credit card processing fee is passed to the customer, allowing you to keep 100% of the sale amount. Not only does a surcharge program help you save on processing fees, but it encourages customers to use other payment options (cash or debit cards) since they won’t be charged a surcharge for those transactions.

Other Possible Costs of Doing Business Online

Depending on your specific business needs and your current online presence, there may be other costs associated with accepting online orders and payments, such as the following:

  • Domain name: This is the web address that a customer types into their browser to get to your website. For example, and are domain names. You will usually pay an annual fee to register a domain name.
  • Web hosting: This service allows you to store and publish your website. Hosting services usually charge a monthly fee.
  • Inventory management: Some businesses, like doctor’s offices and other service providers, won’t have to worry about inventory costs. But if you’re selling physical products, you might incur charges for storing inventory, shipping, or perhaps even specialized inventory management software.
  • Shopping cart: A shopping cart is a specialized e-commerce software that enables your website visitors to collect the products or services they want to purchase from your online store. Similar to the way a grocery store shopping cart works, the customer will put their items into the cart so they can check out and purchase them when ready. Shopping carts are typically available for a monthly fee.

Start Accepting Credit Cards Online in Your Small Business

As a small business owner, it’s important to be able to accept credit cards online in your business. To get started, you will need a business bank account, a merchant account, a payment gateway, and a merchant services provider. In addition to credit card processing costs, you might also have other expenses, such as web hosting or shopping cart software.One of the best credit card processing solutions you can choose is Nadapayments. It’s fully PCI compliant and offers great customer support. Plus, there are no setup costs, hidden fees, or long-term contracts.Nadapayments seamlessly integrates with e-commerce websites, provides the ability to accept both debt and credit cards, and uses a surcharge program. If your customer pays with a credit card, the surcharge will be automatically applied, and you will save money on processing fees. You can even use Nadapayments' virtual terminal to take payments over the phone or to send invoices via email. Plus, you can use the app for on-the-go mobile payments.If you’re ready for cost-effective online credit card processing for your small business or startup, get in touch with Nadapayments today.