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Key Takeaways

Plastic Magic: Ecommerce credit card processing transforms your credit card into a digital purchasing tool, enabling online transactions without using physical cash.

Doomed without Smooth: A seamless checkout experience is crucial; any hiccup can damage customer trust irreparably, underlining the importance of selecting a reliable credit card processing service.

Money Moves: In the U.S., credit card transactions dominated retail sales in 2022, showcasing a growing need for ecommerce sites to adopt effective payment processing solutions.

Dance of the Dollars: Credit card processing involves a nuanced exchange between the online store, credit card networks, and banks, ensuring secure and seamless transactions for customers.

The Heartbeat of Ecommerce: Understanding credit card processing is vital for ecommerce success, as it directly affects sales, customer satisfaction, and the ability to build loyalty.

The hard part is over: You’ve officially started an ecommerce business.

You’ve got your fancy ecommerce platform, all the most important pages, product imagery that slaps, and now it’s time to sell your beautiful stuff to the masses.

But wait... there’s one more tiny (read: massive) detail you need to figure out. Before you start selling your products online, you gotta set up your ecommerce credit card processing situation.

Arguably more important that those well-lit product photos that you are so proud of, credit card processing makes it possible to actually receive money for the actual product.

Plus, the service you choose really matters. Any bad checkout experiences could doom your reputation with customers.

Once they experience issues with their transactions, no amount of money will earn back that trust.

By learning how to set up your ecommerce credit card processing, you can ensure your customers don’t leave your website without the product they came to purchase.

Why does it matter? In the U.S. alone, credit card transactions accounted for 70% of retail sales in 2022, amounting to $4.98 billion dollars in spending. That number isn’t going down, either.

Business owners running ecommerce stores must have streamlined payment processing solutions so they don’t miss out on sales and fail to provide the best customer experience every time.

Futher, with the right credit card processor, your online business can reduce shopping cart abandonment rates and build customer loyalty.

So, let’s look at all the aspects of credit card processing so you can choose the best option for your growing ecommerce brand.

What is Ecommerce Credit Card Processing?

Ecommerce credit card processing is how your piece of fancy plastic allows you to buy real products and services online without ponying up any actual cash.

Imagine this: You're online shopping, and you find the perfect pair of shoes.

You strut up to the digital counter, whip out your credit card, fill out the details, and make a payment in a flash. But wait, what happens behind the scenes to make that payment possible?

Credit card processing is like a secret handshake between the online store, the credit card company, and the issuing bank.

It's a complex dance of credit card information exchange, encryption, and authorization to make sure your payment is secure and legit.

Think John Travolta and Uma Thurman shaking their thing on the dance floor in Pulp Fiction.

uma dancing with john pulp fiction
Like this, but it's your ecommerce site dancing with payment gateways and such.

Why is Credit Card Processing So Important to Understand? 

Great question! For starters, it's a key part of the ecommerce boom.

Online shopping is more popular than ever, and customers and retailers alike need a safe and reliable way to pay for all our retail therapy.

Plus, credit card processing affects everything from fraud prevention to customer experience, so it's crucial for businesses to get it right.

It’s a complex process that involves tons of communication and security layers. We take this behind the scenes process for granted, but it allows us to buy things online without issue.

How Does Credit Card Processing Work?

credit card payment process flowchart
Complex but powerful, the credit card payment process is a lot of invisible communications.

Ecommerce credit card processing is similar to traditional credit card processing, but it happens entirely online. It’s not as hard or scary as it seems, either. 

Here are the basic steps involved:

1. The customer enters their payment info: They enter their credit or debit card information on the ecommerce website's checkout page.

2. Payment information is sent to the payment gateway provider: The ecommerce website sends the payment information to a payment gateway, which is a secure service that communicates with the payment processor.

3. The payment gateway authorizes the transaction: The payment gateway verifies the payment information and authorizes the transaction if the customer has sufficient funds and if the information is accurate.

4. The payment processor processes the transaction: The payment processor receives the transaction information from the payment gateway and processes the transaction with the customer's bank or credit card company.

5. The credit card transaction is approved or declined: The bank or credit card company approves or declines the transaction, and the payment processor sends the result back to the payment gateway.

6. The payment gateway communicates the result to the ecommerce website: The payment gateway communicates the result of the transaction to the ecommerce website, which then displays a message to the customer indicating whether the transaction was successful.

7. Payment is deposited into the merchant's account: If the transaction is approved, the payment processor deposits the payment into the ecommerce merchant's account, usually within a few business days.

Obviously, ecommerce credit card processing involves several layers of security. Plus, communication between the customer, the ecommerce website, the payment gateway, and the payment processor to ensure a secure and efficient online transaction. 

But there are solutions out there to make your life easier.

One popular option is to get a merchant account, a type of bank account that lets you accept online payments. 

While some fees are involved—like application and setup fees—most merchant account providers support popular credit and debit cards across multiple networks.

Think Visa, Mastercard, Discover, and American Express—the major credit card companies.

A note about third-party payment processors 

There’s another layer to this to add to your decision making process—third-party payment processors.

This could sound awfully complicated. But there’s no need to get bogged down in the complexity of setting up a merchant account and payment gateway.

In fact, many businesses are turning to third-party payment processors like Nadapayments, which offer a convenient all-in-one platform for ecommerce credit card processing.

With third-party processors, you don't have to worry about individual merchant accounts or payment gateway setup—it's all taken care of.

Third-party processors also often offer virtual terminals and point-of-sale systems (POS) to make inventory management systems and financial record-keeping a breeze.

While fees are still involved, you only pay for what you use. This way, you take advantage of the benefits of ecommerce credit card processing without the headache.

How To Set Up Your Ecommerce Credit Card Processing System

Credit card processing can help your ecommerce customers easily and securely make purchases online. But how do you set it up? 

Here is a step-by-step guide to help you set up credit card processing for your ecommerce business and choose which cards to accept.

1. Choose a payment gateway

A payment gateway is a service that connects your ecommerce store to the payment processor. It’s responsible for securely transmitting payment information from the customer to the payment processor. 

Many payment gateways are available, such as PayPal, Stripe,, and more.

Choose a payment gateway that suits your business needs and integrates well with your ecommerce platform.

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2. Apply for a merchant account

A merchant account is a bank account that allows businesses to accept payments via credit or debit cards. 

You can apply for a merchant account through a payment processor or a third-party provider. To apply, you must provide some basic information about your business, such as your business type, monthly sales volume, and payment processing history.

3. Choose which cards to accept

Credit card companies charge different fees for processing transactions, so it's important to choose which cards to accept based on your business needs. Visa and Mastercard are widely accepted and have relatively low credit card processing fees. 

At the same time, American Express and Discover may have higher fees but also offer rewards and benefits to cardholders. You should also consider which cards your target audience is likely to use.

4. Set up payment processing

Once you have chosen a payment gateway and applied for a merchant account, you can set up payment processing for your ecommerce website

This typically involves configuring your payment gateway settings and integrating the payment gateway with your ecommerce platform. You may need to work with a developer or follow instructions provided by your payment gateway provider.

5. Ensure compliance with payment card industry (PCI) standards

To ensure the security of customer payment information, businesses that accept credit card payments must comply with the Payment Card Industry Data Security Standard (PCI DSS). 

This involves implementing security measures such as encryption, access controls, and regular security testing. Your payment gateway provider may offer guidance on PCI compliance and DSS requirements.

Factors For Choosing the Best Ecommerce Credit Card Processor

The service you choose for your payment processing needs must check off certain boxes. Sure, you could just jump at the processor with the loudest marketing, but this decision is worth looking closer at so you come out on top.

Let’s look at what your credit card processor should do to get your business.

Types of payment options

You know your target customers best, so you should have some idea of the way they like to pay.

A great credit card processor will allow for multiple payment methods, like debit cards, mobile payments, digital wallets (like Apple Pay and Google Pay), and the most popular types of credit cards.

Beyond that, if you are both online and brick-and-mortar, you’ll want a solution that includes physical hardware to take payments, like a POS terminal and contactless payment hardware.


Like most ecommerce brands, you likely want to grow. That growth means that eventually, you’ll have a tsunami of orders occurring consistently.

Thus, your credit card solution needs to be able to handle that volume.

Even if you aren’t doing numbers just yet, you don’t want to switch providers in the middle of scaling. Find a solution that can easily take on tons of transactions without batting an eye.

PCI compliance

This is pretty normal these days, but important nonetheless. These processors must comply with the Payment Card Industry Data Security Standards (PCI DSS) to ensure secure handling of credit card data.

Staying compliant is on merchants, but part of that is choosing the right payment provider. So, put it on your checklist!


One thing is certain in payment processing: transaction fees. They come in various forms, but they always come.

Here are the fees you should look for to calculate the cost of using a particular provider:

  • Interchange fees. These are paid to the card issuer and the cost varies depending on a few factors like card type, business industry, and size of transaction. This shows up as a percentage of each transaction, plus a nickel or dime.
  • Assessment fees. Paid to the credit card network for a merchant’s ability to take payment from a certain credit card. This shows up as a percentage of monthly sales instead of per transaction.
  • Payment processor fees. For payment processors like Square and PayPal, they charge a percentage (plus change) for every transaction that varies depending on if the transaction is online or physically swiped. Some processors also charge a flat-rate monthly fee.
  • Chargeback fees. When customers dispute charges on their credit card from you, you not only pay back the purchase amount but also the processor’s fee for reversing the charge. These fees vary widely between credit card processing companies.

This will be a huge factor in your decision as it has an effect on your bottom line.

Customer support

Running into issues with your credit card processor is a big deal. Any amount of downtime means a loss of revenue.

While this can happen with any provider, not every provider has the customer support to handle quick turnaround fixes. Look for things like 24/7 availability, phone and email support, and live chat.

Also, this is a good thing to mine reviews for. If support isn’t great, the reviews will show it.

Integration capabilities

Ecommerce operations are composed of many moving pieces and those pieces must work together seamlessly.

Your credit card processor needs to integrate with your CRM, accounting software, ERP, and of course, your ecommerce platform.

If they can talk to each other easily, your operations will be streamlined for better data accuracy and customer experiences.

International sales functionality

While not all brands have global aspirations, those that do must be able to take payment in whatever form they use internationally.

This means calculating relevant taxes, complying with local regulations, and accepting payment in various currencies.

If you are keeping it domestic, no need to check this box.

What Are The Best Online Credit Card Processing Tools?

Now that we know we’ll always need credit card processing, what are the best payment options?

We've actually put together an in-depth guide to the top credit card processors, which you should look at for all the minute details.

But, I can give you a preview of these options to give an overview. Let’s get into them.

And here are the pricing details for each option:

Tools Price
Stax Pay From $99/month
Shopify POS Plans start at $31/month
Payment Depot From $79/month
Square Online From $35/month and 2.9% + $0.30/transaction
Helcim From 0.50% + $0.25 per transaction
Merchant One From $13.95 plus 0.29% + 1.55% per transaction
Clover From 2.3% + $0.1 per transaction
Stripe From 2.9% + 0.30 per transaction
Worldpay Pricing upon request
Stax Pricing upon request
Preview Image - <h2 class="c-block__title b-summary-table__title c-listicle__title h3" > Compare Software Specs Side by Side</h2>

Compare Software Specs Side by Side

Use our comparison chart to review and evaluate software specs side-by-side.

Compare Software

Let's look at a few popular options in more detail before we wrap things up here.


Stripe Screenshot

Stripe is a popular payment processing option that offers easy setup, transparent pricing, and a range of features, including support for over 135 currencies and the ability to accept payments via mobile devices.


Paypal Screenshot

PayPal is a well-known payment processing option that offers low transaction fees, a user-friendly interface, and a range of features, including support for recurring payments and invoicing.


Square Screenshot

Square is a payment processing option that is designed specifically for small businesses. It offers easy setup, affordable pricing, and a range of features, including support for online payments and in-person and in-store payments via mobile devices. Screenshot is a payment solution option that offers a range of features, including fraud detection, recurring billing, and support for multiple payment types, including credit cards, eChecks, and PayPal.


Braintree Screenshot

Braintree is a payment processing service that is owned by PayPal. It offers transparent pricing, easy setup, and a range of features, including support for multiple payment types and a robust fraud detection system.

But remember, the best credit card processing solution for your business will depend on your specific needs and preferences. It's important to research and compare different options and pricing models to find the one that works best for you.

Get Your Ecommerce Payment Methods Right to Get Paid

From the best ecommerce payment processing software to use to embracing Buy Now, Pay Later platforms to offer your customers flexible payment options—you must stay informed if you’re going to build a successful ecommerce business that offers a frictionless shopping experience. 

What do you think? Has this changed how you think about ecommerce credit card processing? Share your thoughts in the comments below—we’d love to read them.

For more on the latest insights, tools, and tips for ecommerce, sign up for The Ecomm Manager newsletter today!

Ecommerce Credit Card Processing FAQs

OK, finally, let’s get into some questions that didn’t fit neatly into the meat of this post.

What are the security risks of not maintaining PCI compliance, and how can a processor help mitigate these risks?

Non-compliance with PCI standards exposes brands to increased risks of data breaches and financial fraud, which can result in hefty fines, legal costs, and damage to brand reputation.

A compliant processor will not only follow these standards themselves but also provide tools and resources, such as encryption and security audits, to ensure that your business remains compliant, thus reducing the risk of costly security incidents.

How does choosing the right credit card processor impact customer experience in ecommerce?

The right processor enhances customer experience by ensuring smooth, fast, and secure transactions.

Features like one-click purchasing and support for diverse payment options, including mobile and digital wallets, meet customer expectations for quick and easy checkout processes.

Moreover, reliable uptime and quick resolution of payment issues are crucial for maintaining customer satisfaction and loyalty.

What should ecommerce businesses look for in terms of fraud protection from their credit card processor?

Ecommerce businesses should seek processors that offer comprehensive fraud detection and prevention tools.

This includes real-time transaction monitoring, CVV and address verification services, and customizable thresholds for flagging suspicious activities.

Advanced solutions like AI-driven fraud analysis can adapt to new fraud patterns and provide an additional layer of security.

Are there specific credit card processing considerations for subscription-based ecommerce models?

Subscription services require processors that can handle recurring payments efficiently and securely.

Key features to look for include easy setup of payment schedules, seamless updating of payment information, and robust management of renewals and cancellations.

Additionally, ensuring compliance with regulations such as the Visa Account Updater (VAU) can help avoid disruptions in service due to card expirations or cancellations.

Banafshe Salehi
By Banafshe Salehi

Banafshe Salehi is a content creator, marketer, brand manager, and social media specialist with 10 years of experience in elevating brands like Unbounce, Monday Creative Inc., and Sepura Home. Banafshe holds a bachelor's degree in architecture from the University of Science and Culture in Teheran, and certificates in branding, marketing, and media relations from the British Columbia Institute of Technology.