I plan to set up an e-commerce site. I understand that setting up a PayPal business account is free, but if I use PayPal, customers can only make payments using PayPal, no? Is there a very cheap / free payment gateway that enables customers to use credit cards?

__________________
online.education

PayPal allows for CC payments without needing a paypal account

__________________
And how can we win, when fools can be kings

I suggest you to use pay pal. It allows your costumers to pay by using their credit cards as well as debit cards too. You can ask me why pay pal when there are lot of payment processors around, because pay pal gain the trust of all the webmasters and all the people who use it as their payment processor. For at least some more years it will be in the top of the list. I don’t think there is any other payment gateway as cheap and best as pay pal.

I could never use paypal, it never liked me, I could never use it. But I've never met anyone else who didn't like it. Would definitely suggest it. Completely secure, easy to use, free... The list goes on. I suggest it.

I'd recommend PayPal: although the fees can be fairly steep.
Check out ppcalc dot com (I can't make links yet) for a fee calculator.

You can use Paypal checkout. you can also try google checkout if you from USA or UK. If you like to sell product then you can use ZEN-Chart, Oscommerce, openfreeway, Joomla virtuemart . Thanks