The number of payment cards in circulation worldwide increased by nearly 1 billion between 2022 and 2023 to reach about 26.7 billion, so businesses that do in-person sales need a way to accept card payments quickly and easily. A credit card payment app is software for a phone, tablet, or other mobile device that allows you to accept credit card payments directly from your device instead of using a traditional cash register or bulky hardware. These apps turn your device into a point-of-sale (POS) system that can process transactions, record sales, and even track inventory—all through an app you can install without much setup.

In this guide, we’ll discuss what to know about credit card payment apps, including how they work, what they cost, and how Stripe can help make these payments even simpler.

What’s in this article?

• How do credit card payment apps work?
  
• What features should a credit card payment app offer?
  
• Security measures of payment apps
  
• How can Stripe Terminal help manage credit card payments?
  
• What are the costs associated with credit card payment apps?
  

How do credit card payment apps work?

There’s a remarkable amount of coordination behind the quick tap or swipe of paying with a credit card payment app. Here’s a step-by-step breakdown of how these apps work:

• When a customer is ready to pay, they either pull out a physical card or open a digital wallet, such as Apple Pay, on their phone.

• If their card has a chip, the app and its attached reader gather the information stored in the chip. If it’s a phone-based wallet, the reader receives the token that stands in for the customer’s card details.

• The moment card data enters the app, the information is encrypted. Sensitive details are scrambled so unauthorized parties can’t intercept usable card numbers.

• The app sends the encrypted data to a payment processor (which might be integrated with the software). That processor routes the request through the card network (e.g., Visa, Mastercard), which then connects with the issuing bank.

• The bank reviews the request, confirms whether credit is available, and approves or denies the transaction. This result is communicated back to the app, which shows you or your staff whether the payment went through.

• At the end of the day, the business submits its approved transactions to the processor and the funds move into the business account within a few days, less any fees the processor charges.

What features should a credit card payment app offer?

If you’re searching for a credit card payment app, you’ll notice there are many options with different capabilities. The features that matter most to you will depend on your business model, but here are some of the top features worth seeking out.

Inventory and catalog management

If you sell physical goods, you might need an app that tracks your stock levels or integrates with your inventory management system. Even if you sell only a handful of products, having an accurate inventory count can save you time and money.

Tipping

Tips are important if you run a salon, coffee shop, or other service-based business. Many payment apps allow you to set default tip percentages so customers can tap a button to add their tip instead of reaching for cash or doing mental math. This can increase average ticket totals in an organic way.

Tax management

Sales tax can be a challenge if you’re selling in multiple locations or if local laws have specific rules for different products. Some payment apps handle this automatically by detecting your location and applying the correct tax rate. That can save you a lot of manual effort, especially if you sell both online and in person; you won’t have to guess or update spreadsheets whenever rates change.

Receipts and records

A payment app should record each transaction in the event of a return or discrepancy. Sending digital receipts (either by email or text) also creates a connection with your customers and provides another opportunity to reinforce your brand by customizing the receipt.

Integration with other tools

If you’re already using accounting software or an ecommerce platform, an app that syncs transactions automatically can simplify your administrative tasks. You won’t be stuck exporting spreadsheets or re-entering data by hand.

Recurring billing or invoicing

Some apps let you send invoices or manage ongoing charges for subscriptions and memberships. Instead of having separate tools for recurring and one-time payments, you can keep everything organized in one place.

Security measures of payment apps

Whenever you handle credit card numbers, you’re managing sensitive data. That’s why the Payment Card Industry Data Security Standard (PCI DSS) applies to any business that stores, processes, or transmits cardholder data. If you accept cards, you’re responsible for keeping your customers’ payment details safe.

Payment app providers often simplify PCI DSS compliance by handling encryption for you. That way, you don’t have to interact with unencrypted credit card numbers, which are easier for fraudulent actors to steal. Payment apps that accept contactless payments typically use near-field communication (NFC) technology to transmit payment details, which further helps prevent fraud.

But even the best app can’t help if your device is compromised. That’s why it’s wise to set strong passcodes on phones or tablets, keep your operating systems updated, and avoid installing unknown software that might open the door to malware. If you lose your device, some payment apps have remote wiping or other security features so no one can gain unauthorized access.

How can Stripe Terminal help manage credit card payments?

Many people know Stripe for facilitating online payments, and Stripe Terminal takes that infrastructure into physical checkout experiences. If you’re already using Stripe for your ecommerce or subscription billing, you can use your Stripe account for in-person transactions. Here’s a closer look at how Stripe can help.

Unified hardware and software

Stripe Terminal offers purpose-built card readers that work with your phone or tablet. Instead of using third-party readers, you can get hardware that’s already designed to securely connect with Stripe. You’ll be able to accept credit card payments and contactless payments via digital wallets. The readers’ software automatically updates so you don’t need to worry about manual patching.

One data stream across all sales

If you sell both online and in person, you might end up with a mess of separate receipts, transaction histories, and bank deposits. Stripe Terminal ports everything into the Stripe Dashboard right alongside your online transactions so your daily, weekly, or monthly reports give you a more holistic view of your business. You can see which sales came from in-person shoppers, which ones came from your website, and how they add up to simplify accounting.

You can also watch for patterns. You might notice that in-person sales surge at specific times or that online orders peak on weekends. Having all your sales data in one place helps you make more informed decisions.

Developer-friendly integration

Stripe is known for its developer tools. If your business has a custom app—such as a membership system or specialized ordering platform—you can integrate it directly with Stripe Terminal so you don’t have to route users through a separate POS app. The code libraries and application programming interfaces (APIs) are thoroughly documented so your developers can build the custom experience you want.

Global reach

If you’re opening pop-up shops overseas or selling at international events, you can tap into Stripe’s global support. Cross-border business can be complicated, but Stripe operates in numerous regions and currencies, which is a real help for international ventures.

Risk management

Stripe encrypts all payments made through Stripe Terminal. The reader sends sensitive data to Stripe via end-to-end encryption and tokenizes the card data, so your POS system only receives the payment token. This keeps customers’ card details safe without much effort on your part.

What are the costs associated with credit card payment apps?

Payment apps generally charge various fees for their services. Below are the main fees you might encounter.

Processing fees per transaction

Credit card payment apps typically charge a percentage plus a fixed amount for each transaction they process. These rates can vary depending on your region, the specific payment method, and your overall sales volume. A business with a higher transaction volume might be able to negotiate for lower rates.

Monthly or subscription fees

Some apps also charge monthly or annual subscription fees along with transaction fees. Others charge a flat monthly fee for advanced features such as in-depth reporting, inventory management, and dedicated support.

Hardware costs

While these apps run on phones or tablets, you might still need a card reader or specialized terminal. Depending on the provider, you might have the option to lease or buy the hardware. It’s also important to figure out how many devices you’ll need based on how many cashiers or sales stations you have.

Add-on fees

These apps might charge additional fees for features such as premium support, add-on software modules, and certain security measures. If you need a custom or complex integration with your accounting system, the provider or a third party might charge for that service as well.

Currency conversion fees

If you’re selling to customers who pay in another currency, some payment providers charge an additional conversion fee, often about 1%–3% on top of your usual rate. This might not be a factor if you sell only to local customers, but these fees can add up if you have a lot of international customers.