Ecommerce Credit Card Processing Web Header

eCommerce has been growing rapidly over the few years and it’s not showing any signs of slowing down. According to Insider Intelligence, U.S. online sales are set to grow by 16.1%, reaching $1.06 trillion in 2022.

Even if growth has tapered off slightly since its peak in 2020, it’s clear that eCommerce will continue to take a larger share of total retail sales.

This makes streamlined credit card processing by brands more important than ever to reduce cart abandonment and build customer loyalty. Doing all of that starts with choosing the right payment processor.

In this guide, we’re going to explore everything that your business needs to know about eCommerce credit card processing, including:

  • Why seamless eCommerce credit card processing is important
  • How credit card processing works
  • How to navigate credit card processing fees
  • How to get started with credit card processing
  • Top eCommerce credit card processing companies

Why do Merchants Need to Understand eCommerce Credit Card Processing?

First things first. Why do you need a good eCommerce credit card processing solution? Consider the following.

Customers expect to pay online seamlessly using multiple payment methods

To meet customer expectations for convenient and effective card transactions, retailers and anyone selling onlineneed to be able to offer streamlined card payment processing solutions for all types of payments.

In addition to standalone credit card cards, eCommerce stores also need to accept payments from sources such as mobile wallets, which can hold multiple credit or debit cards. Mobile wallets such as PayPal and Apple Pay are now in widespread use, making up 29% of all eCommerce payments in 2021.

Preventing eCommerce fraud

Payment fraud is a widespread problem in eCommerce—and it’s only getting worse. TransUnion recently cited a 25% increase in online fraud attempts in the U.S. within the first four months of 2021, compared to the last four months of 2020.

Higher volumes of card not present transactions, combined with a lack of fraud prevention technology, have left many businesses unprepared for data breaches. It’s essential that online stores can handle fraud attempts effectively, and it all starts with your credit card processor.

Knowing how to navigate credit card processing fees

Investing in credit card processing services is essential for retailers, but it comes at a price.

From setup fees with merchant service providers to steep transaction fees from major credit card companies like Visa and Mastercard, there are all kinds of costs to be aware of.

Merchant fees are unavoidable in online shopping, especially as credit cards continue to be the favored payment option. But if brands pick the wrong payment solution, they can end up paying unnecessarily higher fees.

By comparing payment processing services and pricing models, you can avoid extra costs and pick the best value solution for your business.

How Does eCommerce Credit Card Processing Work?

To understand how credit card processing works, we need to define a few key terms:

The acquiring bank. The bank that enables the merchant to accept credit and debit cards and deposit the money from online transactions into their account.

The issuing bank. The bank that issues the credit card the customer is using to make an online purchase.

Merchant account. The bank account an eCommerce business holds with the acquiring bank to accept credit card payments.

Payment Gateway. Works like a virtual card reader on an eCommerce platform to transfer card data from the point of sale to the payment processor.

Payment processor. Sends the transaction details to the relevant credit card network and awaits approval for money to be moved from the customer’s bank to the merchant’s account.

Learn More

Steps of eCommerce Credit Card Processing

  1. The transaction is initiated by the customer presenting their card details at the checkout to pay for the items in their shopping cart.
  2. The merchant uses their payment gateway to encrypt this data and send it to the payment processor.
  3. The payment processor reaches out to the credit card network, where it is routed to the issuing bank for authorization if the necessary funds are available.
  4. The issuing bank will either approve or decline the transaction. If approved, the payment processor notifies the issuing bank to send funds to the merchant’s acquiring bank.

What Credit Card Processing Fees are Involved?

There are a variety of hidden fees involved with credit card processing, depending on whether your small business has a merchant account or uses a third-party payment processor. Fees are charged either as a flat rate or as a percentage, depending on the nature of the fees.

Monthly fees. If you are using a third-party payment processor or payment gateway, there will be a subscription fee to access the service.

PCI Compliance fees. Businesses must stay PCI compliant if they are accepting credit card payments from customers. If your payment processor is managing this on your behalf, they may bill this as an additional service.

Transaction fees. A transaction fee is charged every time a credit card payment is made at the point of sale (in this case, your eCommerce website). Because card not present transactions involve more risk than in-person transactions, online payments generally entail higher fees. Transaction fees will be either charged as a percentage or as a dollar amount.

Interchange fees. This is the fee charged by the credit card company for any transaction made using one of their cards. Interchange fees are non-negotiable and will vary between credit card networks.

Verification fees. You may be charged a verification fee to verify a customer’s billing address or identity, especially if they are paying by check.

Termination fees. Some payment processors will charge businesses a termination fee if they choose to end their contract early. This makes it costly to switch providers if you aren’t happy with the service. Consider looking for a virtual terminal that doesn’t enforce a cancellation fee.

How Merchants Can Get Started with eCommerce Credit Card Processing

Now that we’ve established the fundamentals of eCommerce credit card processing, let’s look at the steps you should stake to set up the system in your business.

Decide which payment processor to use

The first step is to set up an account with a payment processor who can facilitate eCommerce transactions. This step requires a bit of research as you need to determine which processor is right for your business.

Here are some questions to ask when considering an eCommerce credit card processor:

  • What is their pricing structure and how much are their fees?
  • Do they integrate with the business tools you’re using?
  • What modes of payment do they support?
  • What are their customer support offerings?

The answers to these questions will help you evaluate different payment processors and make the right decision for your business.

Think about what other payment services you may need

When looking for a payment processor, it’s important to think about other functionalities your business needs to coordinate a smooth payment process. Some payment processors are designed for accepting payments and little else, while others provide wraparound support.

If you’re a new business or are looking to expand to new markets, it’s a good idea to look for a full-fledged payment solution that provides other capabilities. For example, in addition to credit card processing, Stax also offers subscription billing capabilities and customizable invoicing.

Integrate your system with your website

Once your system is online, you need to make sure that it integrates seamlessly with your eCommerce platform for smooth payment processing. Most payment processors offer pre-built integrations with popular platforms and business management tools for an easy set-up.

Alternatively, you can take advantage of their open API to build your own integration, though this requires some in-house experience with software development. It’s also worth noting that some eCommerce platforms, such as Shopify, will charge you extra fees for bringing in an external payment processor.

Perform a test transaction using your system

Before you accept any real-world transactions, you need to make sure that your payment processing system is working correctly.

There are multiple ways of doing this, depending on the credit card processing system your business is using. Some providers offer what is known as bogus payment gateway, where you can process a test transaction to check that your settings are working. Otherwise, you can process a small transaction using a business credit card and refund the purchase, though you will have to pay credit card processing fees.

Top eCommerce Credit Card Processing Companies to Consider

Need help deciding on the right eCommerce payment processor? Here are the leading players in the market.


Bringing together favorable pricing with streamlined payment processing, there’s a reason why Stax is a top-rated credit card processing platform.

Stax offers a unique eCommerce payment solution that gives merchants wholesale pricing with 0% markup on interchange rates, rather than charging a percentage of each transaction. This results in processing fees that are as much as 40% lower than traditional payment processing models.

Best suited for: Businesses processing at least $5,000 in credit card transactions.

Key features:

  • Same-day deposits
  • No contract or termination fee
  • Integrations with Xero, Wave, Zoho, Mailchimp, and Hubspot
  • Advanced reporting and analytics

Payment options: eCommerce credit card processing, in-person payments, invoices, gift cards, ACH, mobile payments

Pricing: Starts at $99 per month


Stripe was one of the earliest eCommerce payment processors on market, and they remain one of the strongest offerings. Stripe accepts a wide range of credit cards, including Visa, Mastercard, American Express, and Discover. But to take advantage of Stripe’s open API, you will need some in-house development capabilities.

Best suited for: International merchants/merchants accepting a variety of payment methods

Key features:

  • Fully customizable checkout flows
  • Accepts payments in over 135 currencies
  • Deposits in 1-2 business days after a transaction (same-day deposits for an additional fee)
  • 24/7 customer support

Payment options: Credit/debit cards, mobile wallets, ACH, Buy Now, Pay Later plans

Pricing: Pay as you go pricing (2.9% + $0.30 per transaction).

Shopify Payments

As well as being a selling platform, Shopify also offers its own payment service. Shopify merchants can sign up for Shopify Payments as soon as they set up their online store, making it a convenient option. However, this service is only available in 17 countries at present.

Best suited for: Shopify merchants

Key features:

  • Seamless integration with all Shopify plugins
  • Deposits in 2 business days
  • Accelerated checkout for returning customers
  • Not available to high-risk industries

Payment options: Credit/debit cards, mobile wallets, Google Pay, Amazon Pay

Pricing: Starts at $9 per month, additional 2.9% + $0.30 per transaction

Final Words

Payment processing might not be the most exciting part of running an eCommerce store, but it’s essential to offering a seamless shopping experience that fosters customer loyalty and trust. By investing in a powerful eCommerce credit card processing solution like Stax Pay, you can ensure that your online store is ready to handle everything from chargebacks to recurring payments—and pay some of the lowest fees on the market.

Request a Quote

FAQs about eCommerce Credit Card Processing

Q: What is eCommerce credit card processing?

eCommerce credit card processing enables online businesses to accept and process credit and debit card payments from customers. It involves a series of steps that includes the customer initiating the transaction, the merchant encrypting the data and sending it to the payment processor, and the issuing bank approving or declining the transaction.

Q: Why is seamless eCommerce credit card processing important?

Seamless eCommerce credit card processing is vital to meet customer expectations for convenient and effective card transactions. It helps reduce cart abandonment, build customer loyalty, and handle fraud attempts effectively.

Q: How does eCommerce credit card processing work?

eCommerce credit card processing involves several steps. The customer initiates the transaction by presenting their card details at checkout. The merchant then encrypts this data and sends it to the payment processor, which then contacts the credit card network. If the necessary funds are available, the issuing bank approves the transaction and notifies the payment processor to transfer funds to the merchant’s acquiring bank.

Q: What are the various credit card processing fees involved?

Credit card processing fees can include monthly fees, PCI compliance fees, transaction fees, interchange fees, verification fees, and termination fees. The nature of these fees can vary depending on whether your business uses a merchant account or a third-party payment processor.

Q: How can merchants get started with eCommerce credit card processing?

To get started, merchants need to set up an account with a payment processor that can facilitate eCommerce transactions. This involves researching different processors to find the one that is right for their business. They also need to consider what other payment services they may need, integrate the system with their website, and perform test transactions to ensure the system is working correctly.

Q: Which companies are considered top eCommerce credit card processing providers?

Some of the leading players in the market include Stax, Stripe, and Shopify Payments. These companies offer various features like favorable pricing, seamless payment processing, customizable checkout flows, and wide acceptance of different credit cards.

Q: What is the role of a payment gateway in eCommerce credit card processing?

A payment gateway acts as a virtual card reader on an eCommerce platform, transferring card data from the point of sale to the payment processor. It plays a crucial role in ensuring the secure transmission of sensitive card data during the transaction process.

Q: What factors should be considered when choosing an eCommerce credit card processor?

When choosing a credit card processor, consider factors such as their pricing structure, the types of payment they support, their integration capabilities with the business tools you’re using, and the quality of their customer support.

Q: Why is it important to stay PCI compliant when accepting credit card payments?

Staying PCI compliant is important as it ensures businesses follow the necessary security standards when processing credit card transactions. This helps protect sensitive cardholder data and reduces the risk of data breaches and fraud.

Q: What are the risks associated with eCommerce credit card processing?

Risks associated with eCommerce credit card processing include payment fraud, data breaches, and the potential for higher transaction fees for online payments due to increased risk. It’s therefore crucial for businesses to implement robust security measures and choose a reliable payment processor.