Traditional credit card terminals are expensive, and often tie businesses into costly long term contracts. In this article we take a look the top alternative payment providers.
You’ve got your business bank account up and running are (almost) ready to open up shop, but how do you accept credit and debit card payments?
If you are operating your business online, then providers such as Paypal, or Stripe, have you covered. Their services are relatively low cost and simple to set up. For direct debits, there's Gocardless, but for physical bricks and mortar stores, accepting card payments is a little trickier.
Introducing mobile card readers
Barclaycard, Sagepay, Worldpay are the big names when it comes to traditional credit card terminals and merchant accounts, but forget costly card machines and fixed term contracts. It’s now easier than ever for you business to accept credit and debit cards in the UK, thanks to a number of mobile payment providers challenging the status quo.
For a small outlay, often much less than £100, your business can start accepting contactless, chip and pin and swipe payments, via the use of smartphone or tablet, and a free app.
Even some of the traditional payment providers are getting in on the act, with Worldpay teaming up with John Lewis to launch their mobile solution.
Advantages of mobile card readers
Mobile card readers offer the same functionality as their traditional counterparts in that they can generally accept all major credit cards, using swipe, chip and pin, and contactless payments. Many even work with ApplePay.
- Smaller and lighter than traditional point of sale terminals
- Mobile by nature – can be used away from premises e.g. at trade shows
- No fixed contracts or other costs
- Quick and easy to setup
These card readers are popular with all kinds of business from hair salons, clothing stores, coffee shops, exhibitors, food trucks, and more.
Disadvantage of mobile card readers
It's not all sunshine and roses though. As a new technology some customers may be unfamiliar with mobile card readers, and be confused when you pull out a phone or tablet to take payment. It should be said however, that fixed point of sale solutions are available to make the mobile reader look every bit as professional as a traditional terminal.
- No printed receipts (without separate device)
- Need compatible tablet or phone
- Smaller, maybe less durable
- Can lack professional appearance
What you should know
Before we look at the top mobile card readers, there are some things you need to know about accepting credit and debit card payments. Many of these points hold true for both traditional terminals and mobile ones.
1. The more you make the lower the fees
Terminal/merchant account providers charge a fee for each payment you receive. This often starts out at 2.75% of the transaction for business takings up to £2,000 per month. Depending on your tariff processing fees could be as low as 1.5% for amounts over this figure.
2. American Express costs more
Regardless of whether you're using a mobile reader or a traditional terminal, American Express payments almost always cost more to process. If your baseline fee is 2.75% for VISA and Mastercard payments, expect to pay closer to 3.5% for American Express.
3. Payment takes time
Again, no matter which company you use, payment is seldom immediate. Typically payments are recieved within 3-5 days, but can take longer (a lot longer in some instances), so that's something that should be factored into your business' cashflow.
4. Refunds will cost
Whilst there's usually a 1.5-2.75% on transactions refunds can be significantly more.
5. Avoid charge backs
Of course it goes without saying that you want to avoid disputes with customers, sometimes it's just not possible. One thing you definitely want to avoid though is a chargeback. Point of sale providers can often charge up to £25 for every disputed transaction. If the actual transaction is less than that, you could in some cases be better mitigating your losses by off refunding the customer.
Top mobile card readers
Mobile readers are where all the action is at the moment. Over the past few years competition in this area has increased exponentially, leading to some cracking deals for small business owners. Whatever your business it's now easier than ever to start taking payments.
Contactless card reader and fees from 1.5% – 2.75%
iZettle is a Swedish based company that only recently entered the UK market. The company claims to be used by 75,000 small businesses across Sweden, Norway, Denmark, Finland, the UK and Germany.
iZettle has signed an exclusive deal with EE and the devices are now available across EE stores nationwide, or via it's website. The standard card transaction fee is 2.75%, but you start to get cashback at the end of the month when sales reach over £2,000 per month. At £13,000 worth of sales per month the net fee falls to 1.5%
Another feather in the cap for iZettle is that it integrates with online accounting software Xero.
Like all mobile payment providers, the app can be downloaded for free.
Card fee: 2.75% (dropping to 1.5%) | Terminal cost: £59 | Contactless: Yes | Payment speed: 7 days | Refunds: Free
Mobile payment processing from a household name
These days Paypal is household name. Most people that shop online will have use paypal at some point, that should promote confidence when a customer notices a paypal card reader in your store.
Like most mobile payment solutions there’s no monthly fees or fixed term contracts. Simply download the free app and order your card reader online. Paypal also offers a full range of point of sale equipment, for a professional looking setup.
Card fee: 2.75% | Terminal cost: £59.99 | Contactless: Yes | Payment speed: immediate to Paypal account | Refunds: Costs depend on Paypal account type
The mobile solution from a traditional merchant provider
Worldpay’s are best known for their traditional merchant account services and point of sale devices. Their mobile payment solution was launched in 2013. Unfortunately, their card reader technology doesn’t seem to have moved on since then. Although the terminal only costs £39.99, there’s no contactless support or Applepay.
The standard card fee is 2.75% per transaction, but you can reduce this to 1.95% if you're willing to go ‘pay monthly' at a cost of £5.99. It would take transactions to the tune of £750 per month to make the latter worthwhile.
Card fee: 2.75% | Terminal cost: £39.99 | Contactless: No | Payment speed: 3-4 days | Refunds: £0.70
An alternative to the mobile alternatives
If you'd prefer a more traditional card reader but still want to avoid being locked into a long contract, then Payatrader might be the answer.
The mobile solution from a traditional merchant provider
Payatrader is designed start-ups and small businesses. It’s a traditional style terminal but with no monthly fees or other ongoing financial or contractual commitments.
The company boasts that it's the preferred option for thousands of UK small businesses. Think accountants, solicitors, mobile businesses, couriers, franchises etc…
It offers all in one countertop card readers form £10.83 per month with no fix term contract, or mobile readers from £13 per month. Both accept contactless payments and Apple pay, the latter uses a GPRS signal to transfer data whilst the former is a plugin device.
In addition to the terminal rental there's also a £99 one off setup fee, and a £50 deposit. Still this compares well the £150 start up fee charged by Barclaycard, £15 rental fee, and 18 month contract.
Card fee: 2.9% (30p min) | Terminal cost: Rental | Contactless: Yes | Payment speed: 4-8 days | Refunds: 2%