Traditionally, accepting credit card payments meant setting up a merchant account: a dedicated bank account, established through a merchant services provider, that temporarily holds card payments before they settle into your business bank account. Merchant accounts often come with underwriting requirements, monthly fees, and sometimes long-term contracts, which can be a real barrier for new businesses, side hustles, or anyone who wants to start selling quickly without a lot of paperwork. The good news is that you don’t actually need a traditional merchant account to accept card payments anymore. This guide explains your options.
What a Merchant Account Actually Is
A merchant account is essentially a holding account between your customer’s bank and your business bank account, set up specifically to process card transactions. Getting one traditionally involved an application process, credit checks, and sometimes weeks of underwriting, because the bank providing the merchant account is taking on some risk by fronting your business the sale amount before the transaction is fully finalized. This process made sense for large, established retailers, but it’s overkill for a lot of smaller and newer businesses.
Payment Facilitators: The Modern Alternative
Most small businesses today use what’s called a payment facilitator, or “PayFac,” instead of a traditional merchant account. Companies like Square, Stripe, PayPal, and Shopify Payments act as a payment facilitator: instead of you getting your own dedicated merchant account, you’re essentially operating as a “sub-merchant” under their master merchant account. This means you can sign up online, get approved (often instantly or within a day or two), and start accepting payments almost immediately, without ever having to apply for a merchant account of your own.
The tradeoff is that payment facilitators can be quicker to flag or freeze an account if they detect unusual activity, since they’re managing risk across thousands of sub-merchants using automated systems rather than doing individualized underwriting up front. For most small and medium businesses, though, this tradeoff is well worth the speed and simplicity.
Using Square, Stripe, or PayPal Directly
The simplest way to start accepting payments without a merchant account is to sign up directly with one of the major payment facilitators. Square is popular for in-person sales, letting you accept card payments with just a smartphone and an inexpensive card reader. Stripe is popular for online sales, letting you accept payments through a website or app with a fairly straightforward integration, or through no-code tools like Payment Links that require no technical setup at all. PayPal remains one of the most widely recognized options, letting you accept payments through invoices, a “Buy Now” button, or a checkout page, without needing a website at all in some cases.
All three let you sign up with just basic business or personal information, and none of them require you to go through a separate merchant account application.
Selling Through a Marketplace
Another way to accept payments without ever touching a merchant account or even a payment facilitator account directly is to sell through an established marketplace, such as Etsy, Amazon, eBay, or a freelance platform like Upwork or Fiverr. These platforms handle all the payment processing on the backend and simply pay you out on a schedule, meaning you never have to set up any kind of merchant or payment processing account yourself. The tradeoff here is that marketplaces typically charge higher fees than processing payments directly, and you’re subject to their specific payout schedules and policies.
Payment Links and No-Code Checkout Pages
If you want to accept online payments but don’t have a website or don’t want to build one, tools like Stripe Payment Links, Square Online Checkout Links, and PayPal.Me let you generate a simple payment page or link that you can share via email, text, or social media. Customers click the link, enter their card details, and pay, without you needing any website or coding knowledge. This is a popular option for freelancers, service providers, and small sellers who want a fast way to get paid without building out a full e-commerce store.
Invoicing Tools
If your business model is based on billing clients rather than running a storefront, invoicing tools like those built into Square, PayPal, Wave, and QuickBooks let you send professional invoices that clients can pay online by card or bank transfer, again without any merchant account setup required. These tools typically deduct their processing fee from the payment and deposit the rest into your bank account.
Mobile Payment Apps for Peer-to-Peer Style Transactions
For very small or informal businesses, apps like Venmo, Cash App, and Zelle can technically be used to collect payments, though they come with important caveats. Venmo and Cash App both offer specific “business” account options with appropriate fee structures, which is the correct way to use them for commercial transactions rather than their standard personal accounts. Zelle, on the other hand, is designed for person-to-person transfers between bank accounts and generally isn’t intended or well-suited for commercial transactions, and doesn’t offer the buyer/seller protections a real payment processor would.
Accepting Bank Transfers Directly
For B2B businesses or larger transactions, accepting a direct ACH bank transfer or wire transfer is another way to get paid without a merchant account, since these payments move directly between bank accounts rather than through the card network. Tools like Wise, Melio, and even direct ACH features within Stripe or Square let you request and receive bank transfers, typically at a much lower cost than card processing, since there’s no card network fee involved.
Cryptocurrency as a Payment Option
Some businesses, particularly online sellers with a tech-savvy customer base, choose to accept cryptocurrency payments through services like Coinbase Commerce or BitPay, which similarly don’t require a traditional merchant account. This remains a niche option though, appealing mainly to a specific type of customer base, and comes with its own volatility and regulatory considerations that a business should research carefully before adopting it as a primary payment method.
Why Payment Facilitators Are the Practical Default
For the vast majority of new and small businesses today, using a payment facilitator like Square, Stripe, or PayPal is simply the practical default, because it eliminates the friction of merchant account underwriting while still giving you direct, near-instant access to accept card payments. The rise of these platforms is precisely why traditional merchant accounts have become less common for smaller businesses — the payment facilitator model absorbs the underwriting risk and complexity so individual businesses don’t have to deal with it.
When You Might Still Need a Traditional Merchant Account
As a business grows to a high volume of transactions, a traditional merchant account with negotiated interchange-plus pricing can become cost-effective compared to the flat rates charged by payment facilitators. Certain high-risk industries (such as certain subscription services, adult content, or businesses with a history of high chargeback rates) may also find that payment facilitators are unwilling to support them at all, pushing them toward a specialized high-risk merchant account provider instead. If your business hits either of these situations, it may be worth exploring a traditional merchant account relationship, ideally with the help of a merchant services broker who can help you compare offers.
Fees to Watch For
Whichever payment facilitator or tool you choose, pay attention to the per-transaction percentage fee, any fixed per-transaction fee, fees for instant payouts to your bank versus standard payout timing, chargeback fees, and any fees for international transactions if you plan to sell to customers abroad. These vary meaningfully between providers and can affect your overall cost more than the headline percentage rate alone.
Getting Started: A Practical Path
For a brand-new business, the fastest and simplest path is usually to sign up for Square (if you’ll primarily sell in person), Stripe (if you’ll primarily sell online through a website), or PayPal (if you want broad recognition and flexibility for invoicing and online sales) — all of which can be set up in a single sitting with no merchant account application required. As your business grows and your transaction volume increases, it’s worth periodically reassessing whether a lower-cost interchange-plus processor or a negotiated merchant account relationship would save you money.
Common Concerns About Payment Facilitators
A frequent worry new business owners have is whether payment facilitators like Square, Stripe, or PayPal are somehow less legitimate or reliable than a traditional merchant account. In practice, the opposite is often true — these platforms process an enormous volume of transactions for millions of businesses and have invested heavily in fraud prevention, uptime, and security, often exceeding what a smaller regional bank’s merchant account offering would provide. The real tradeoff isn’t reliability, it’s the automated nature of risk management: because a payment facilitator manages risk algorithmically across a huge pool of sub-merchants rather than through individualized human underwriting, accounts can occasionally be flagged, held, or reviewed based on unusual transaction patterns, even for entirely legitimate businesses.
Another common concern is what happens if a payment facilitator freezes or holds your funds. This does happen occasionally, usually triggered by a sudden spike in transaction volume, a large single transaction that’s unusual for your account’s history, or activity that resembles patterns associated with fraud. The best way to minimize this risk is to keep your business information accurate and complete, respond quickly to any verification requests, and, if you know a large or unusual transaction is coming, consider reaching out to your provider’s support in advance to flag it. Businesses that process consistent, predictable volume tend to encounter these issues far less often than businesses with highly irregular transaction patterns.
It’s also worth understanding that using a payment facilitator doesn’t mean you’re stuck if your business changes. Migrating from Square or Stripe to a more specialized merchant account later, once you have consistent processing history and higher volume, is a well-worn path many growing businesses take, and it’s rarely as disruptive as business owners initially fear.
Final Thoughts
Accepting payments without a traditional merchant account isn’t just possible — it’s now the standard path for the vast majority of small and growing businesses, thanks to payment facilitators, marketplaces, and no-code payment tools. The barriers that once required businesses to go through lengthy merchant account underwriting have largely been replaced by instant-approval platforms, letting you focus your energy on running your business rather than navigating payment infrastructure paperwork.
