In 2018, card payments surpassed cash as the UK’s favourite way to pay. And experts estimate that 50% of all payments will be made by card in 2020. So, if your business doesn’t take card payments yet, you may be missing out.
In this article, we’ll explain the two main types of merchant service providers and take a closer look at five payment solutions to help you find the right option for your business.
Every business that takes card payments needs access to a merchant account. This is another type of bank account that is separate from your normal business bank account and is held with an external provider. There are two main options:
When choosing a payment solution, it’s important to consider the needs of your business.
In 2017, PayPal launched its mobile card machine to rival competitors such as SumUp and Square. Now businesses can use PayPal to take card payments in person, as well as online.
The PayPal Here terminal costs £45 + VAT. You then pay a fee on each transaction which varies depending on your turnover and the fee structure you choose. Fees range from 2.75% for businesses which turnover less than £1,500 per month, to as low as 1% for those who turn over more than £15,000.
New businesses or those which don’t take card payments regularly. Although transaction fees are relatively high, there’s no monthly subscription fee so you only pay when you make a sale.
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If you need a mobile card reader and are willing to try a lesser-known brand, SumUp can offer lower fees than PayPal.
SumUp has two options which provide different types of card readers:
An additional cost consideration is the 1.69% fee per transaction for all businesses.
New businesses that need to take payments on the go and don’t need lots of features. However, it should be noted that there is no phone support for SumUp in evenings, so it is not suitable for businesses which operate during these hours.
The Square Terminal is a modern-looking piece of equipment that offers a range of features. You can use it independently or alongside the Square Reader (to take payments on the go) and the Square Stand (as your point of sale).
The Square Terminal costs £199 + VAT. You pay 1.75% per in-person transaction and 2.5% per ‘keyed-in or online transaction’ - when a customer pays by card over the phone or through your website. Custom rates are available for businesses with an annual turnover exceeding £250,000.
Small to medium businesses that don’t have a consistently high turnover yet but want to grow and value features that will help them get there. Great for those that don’t want a card machine that’s tied to a counter, such as cafés and restaurants.
Stripe is an online payment processing service for e-commerce businesses and PayPal’s leading competitor.
You pay 1.4% + 20p per transaction for European cards and 2.9% + 20p per transaction for non-European cards.
E-commerce businesses which want to take card payments via their website and businesses which want to receive payment via third-party apps such as an invoicing tool. If you don’t mind waiting a week or so for funds to land in your account, then Stripe offers a good alternative to PayPal with more reasonable fees.
In contrast to the rest of the payment providers featured here, WorldPay provides your business with its own merchant account. This means you have more flexibility to add different options, like a virtual terminal to accept card payments over the phone or the facility to send payment links to customers, as your business grows.
Your fees are calculated based on your annual card turnover and average transaction value. For example, according to WorldPay, a business that turns over £65,000 per year with around 50% accounted for by card payments and an average transaction value of £50 can choose from the following plans:
Both plans include next day terminal replacement.
Established or growing businesses with a high annual turnover, who use their card machine regularly or process high-value transactions.
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