How to take Card Payments without a Merchant Account

Remay Villaester (May)

Now that various payment methods are available, it has become mandatory for businesses and companies to accept cards in some form. Whether it is a credit card, digital payment or wallet payment, the card services offer multiple ways to facilitate the customers. As card services are becoming a necessity, the merchant industry is continuously evolving and growing. The aim is to offer innovative ways to accommodate entrepreneurs and help them expand their services.

Along the lines, you may come across an option of accepting card payments without a merchant account. Note that merchant account providers usually have a standing for complexity. The reason why many business owners avoid making a merchant account is lengthy contracts and applications. The high service charges are another highlighting feature business owners consider skipping this option.

It doesn't mean that there are no benefits to working with these providers. But choosing a merchant provider that doesn't require a merchant account is definitely a hassle-free and convenient option.

So how does "taking card payments without a merchant account work"? And what are your options if you're a startup?

Keep on reading to find out the answers to these questions.

Taking Card Payments with a Merchant Account - An Overview

If you think about whether it is possible to take card payments without a merchant account, the answer is "yes”.

Put simply, business owners can accept card payments without a merchant account. That means they don't need a merchant account, which is unique to their business. To make this phenomenon work, you must know what a designated merchant account is and how the process of taking card payment works.

What is a Merchant Account

A merchant account typically refers to a bank account that enables you to take card payments from clients. A merchant account particularly fronts business funds from card payments until customers pay off the card bills.

When a business wants to accept card payments, it works with a merchant account provider. The process begins with applying for a dedicated merchant account. Once approved, the merchant has to go through several underwriting stages and a lengthy contract negotiation process.¹

Once a business owner has a merchant account, he can accept card payment, including online, virtual terminal or in-person.

Typically, the process involves the following steps

  • Once a business accepts a card payment, the payment processing service transfers the data to a merchant account.
  • As this happens, the payment processor contacts your issuing bank before accepting or denying the payment information.
  • If the client's bank accepts the transaction, businesses can take the payments and complete the transactions.
  • Once the bank approves transactions, the payment processor deducts fees and deposits the merchant account's funds.

The steps mentioned above show how significant a merchant account's role is when it takes card payments. So how can you function without it?

Ultimately, business owners require a merchant account in the process. The account doesn't need to be a merchant account designated to the business and its services. Instead, businesses have an option to choose a payment service provider and work with it. Many businesses refer to these service providers as payment facilitators, third-party payment providers, or processing aggregators.

With these payment facilitators, like PayPal or Square, business owners can build a merchant account and add it to their services. There is no need to apply for a merchant account and receive an exclusive one.

In other words, the payment service providers work with only one merchant account. They aggregate all the funds of their customers in that account as they are well aware of the risks associated with taking card payment on behalf of the merchants.

How Can You Take Card Payments without a Merchant Account

As mentioned above, when business owners work with a payment service provider, they don't get a merchant account dedicated to their business. Instead, they have a merchant account where the service provider aggregates clients' funds and transfers to each merchant two days after the transaction.

Let's quickly break down how working with a third-party provider looks like.

To work with a payment facilitator, you must explore different providers in the market to find the one that works best for your company. Compare your options and their features carefully until you find your preferred payment provider.

You need to verify how and when your chosen service provider transfers funds. Once you have all the relevant details, plan revenue streams according to them. Here are some options to choose a service provider that accepts card payments without a merchant account.


PayPal is one of the top options for taking card payments without a merchant account. The online payment service provides plenty of business solutions, enabling people to accept a variety of payment methods. You can connect PayPal to an eCommerce platform or a website by invoicing customers.


Square is another good option to choose as a payment facilitator. It is a well-known service provider that offers a POS system, including an array of software options and a virtual terminal. The platform is famous for its flexibility and ease-of-use.


While Squares provides solutions for companies requiring a POS system, Stripe is focused on making online payments. You can sign up for free with Stripe and accept payments within minutes.

How to save money on sales using Wise Business?

If you sell your products overseas, collecting international payments in your client’s local currency is a must. This is because customers tend to avoid price tags in a different currency as it suggests extra charges on conversion fee.

Merchant Accounts and Payment Gateways can help you collect payments in different currencies however, converting them to your local currency can be quite expensive due to an added mark-up on exchange rates and extra fees. PayPal for example charges 2.5% to 4% of the amount you’re converting depending on the currency.²

With Wise, you can take advantage of the following additional benefits:

  1. Enjoy instant or next-day delivery for a majority of currencies
  2. Cheap payments to vendors and suppliers
  3. Integration withXero andQuickbooks to ease tax reconciliation
  4. Multi-currency debit card and virtual card for faster, safer and more convenient payments
  5. Modern and easy to use app
  6. Bank level security

Start saving today with Wise

Bottom Line

All in all, taking card payments without a merchant account is possible. However, you must choose a payment facilitator that offers your business the right solutions. Thus, the given details will help you understand what a merchant account is and how you can accept card payments without having one.


  1. GoCardless blog post
  2. PayPal Merchant fee

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

Money without borders

Find out more

Tips, news and updates for your location