Find out about card payment options for your small business and the advantages and disadvantages of allowing debit and credit card transactions
More people than ever have stopped carrying cash. So, if you’re a small business that doesn't take card payments, then you risk getting left behind.
The UK Payment Markets 2021 report from UK Finance showed that the number of cash payments made in 2020 fell by 35% compared to the previous year.
Payments with notes and coins now account for just 17% of transactions, while debit cards clock up 44% of payments, and contactless payments 27%.
Nearly a third of the population are also registered for mobile payments like Apple Pay and Google Pay.
With cash going out of fashion, small businesses should consider taking card payments to stay competitive.
If you want to take card payments, there are three main ways to do it:
Anyone who accepts card payments must get accepted for a merchant account - a type of account supplied by a bank or payment facilitator that lets your business process card payments.
When a card payment is made to your business, the money goes first into the merchant account where it’s processed, verified and approved by the customer’s bank. Then the payment is transferred into your own business bank account.
There are lots of providers to choose from - including well-known names like PayPal, Worldpay and Barclaycard, plus Zettle and Square, two providers that are popular with small businesses.
You’ll need to do your research to discover which will offer the best value for your needs (some small business specialist websites have cost comparison tools that can help with this).
You can either buy a machine or rent it as part of your contract from your merchant account provider.
The cheapest card machines are app-based, connecting to your smartphone or tablet, and can cost as little as £19.
Hiring a terminal can be a good option for more expensive card machines. You’ll sign into a contract (that could last 12 months or more) and usually pay a monthly fee for the length of the contract.
When choosing how you want to process card payments, always consider any fees that you’ll be charged on top of the payment machine cost. This will help you get the full picture of how much you’ll be paying each month and can help you compare options easily.
Depending on the merchant account and card reader you opt for, fees can include: