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Hidden Costs of Card Payments

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We've investigated the costs of several large card payment providers and in UK and found some shocking information about their pricing and the hidden fees attached to using their services. In this article we will explore the truth about the pricing when it comes to accepting debit/ credit cards as a business.

A study done by the UK card association stated that: 

"Overall, three in every four pounds (75 per cent) spent at UK retailers were on a debit or credit card last year, up 10 percentage points since 2009. People use debit cards more than credit cards for spending, with 77 per cent of all card purchases in the UK made using a debit card. Just over 1.1 million outlets now accept cards, an increase of 4.2 per cent on 2013, as a growing number of small traders now take them." 

(Source: UK Card Association) 

Many have turned to the larger companies like Worldpay or Paypal for these facilities. Banks like Lloyds or Barclays offer merchant accounts which are incredibly expensive and often require a large deposit to be put down to cover charge backs, something not all small businesses can provide. 

Unfortunately, not all these options are as cost effective as they might seem at first glance. We have looked at some of the largest Card Payment Providers in the UK and analysed their costs for taking card payments face-to-face, over the telephone and through emailed paylinks. We have then compared it to SmartTrade App to show you why we are the best option for small businesses when it comes to taking card payments.

For the sake of accuracy and non-bias I have included screenshots from the companies actual websites to back up the information provided in this article.

Paypal

Online: Online customer Cards 3.5% + 20p for online (via the web this is £35.20 cost per £1,000!) and get 1.9% at £15,000 per month turnover (a poor rate for such high turnover).

Face to Face: PayPal Reader £79.95 customer cards 2.75% up to £6,000 per month, £6k - £10k = 2.4% + 20p

* 3.40% + 20p for card payments made by swiping the magnetic strip or manually entering the card details.

Over the telephone: Take customer cards over the telephone £20pm and same card rates as online. Online Cards 3.5% + 20p for online (via the web) and get 1.9% at £15,000 per month.

Outside EU Cards 3.9% per transaction on top

Summary: I was amazed by how expensive Paypal really was. As a small business  if you are turning over £6,000 a month (which is a lot) you would have to give up 2.75% of each penny and pound up to this amount. That's £165 a month or almost £2,000 a year until you go over £6,000, where it becomes 2.4% + 20p. Hardly a massive drop for that sort of turnover. Also, with across border fees you could end up paying over 7% percent for an international transaction. That's £70 per £1,000 transaction. Crazy! The card reader is also very expensive at £79.95. The card rates are a nasty shock as you have to dig quite deep to find out what you actually pay with Paypal.

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Payleven

2.95%  for card payments over the phone

Amex’s charged at 2.75% and so are all monthly transactions up to £2,500

Rates range from 2.75% - 1.5% depending on volume.

That’s coupled with very expensive card readers might price out many small - medium businesses.

Summary: Initially Payleven looked good. Their card rates are decent and are low for high volumes. But, they charge 2.95% for over the phone transactions and 2.75% for Amex's. For companies who do a lot of transactions through a virtual terminal this is bad news as they won't benefit from the low rates unless transactions are done through their card readers, which isn't always possible. The card readers are another problem, alongside a receipt printer they could run you over £200. No emailed receipts? Also no paylinks so you don't really get a full package and limits the way you can take card payments.

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Worldpay

Face to Face: You need to rent a card machine for a certain amount of months, usually 36 months but you could haggle them down to 18 months if you are good at bartering - costs are over £20 a month just for this service. There is also a cancellation fee for backing out early.

You also have to pay for PCI compliance: “You will still need to pay the £29.99 annual management as this is applicable to all customers irrespective of your compliance status. - See more here" - Worldpay Website

£7.50 per month for virtual terminal

Paylinks £7.50 a month:

4 working days to clear

Total package can add up to a lot for face to face card payments, payments over the phone or emailed paylinks, not exactly the cheapest for small to medium sized businesses and the lock in contracts for the card readers is a killer.

Summary: Worldpay are the largest card payment provider in the UK with over 52% of the UK market. There is no denying they are great for retail stores or large chains who don't pay much attention to "small" costs such as card fees. I also do not doubt the quality of their service, I just don't think they are as good for small-medium businesses or large companies with a mobile work force. Pay as you go is a pretty standard 2.75% + 20p and their £19.95 Pay Monthly boasts the same fee of 2.75% for credit cards and an impressive 0.75% for debits. If we want to get a full package here is how it would look. At least an 18 month contract for a card reader at £20+ per month. £7.50 a month for card payments over the phone. £7.50 a month for paylinks. £29.99 annual PCI charge. The costs just keep stacking up and I don't see this as a very viable option for many businesses.

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iZettle

iZettle do a decent deal for small-medium sized merchants who want to take card payments face to face.

Transparent pricing which changes depending on volume per month.

They do require a card reader and have two options, one is free but is limited. It does not take contactless transactions or have a display. The other card reader is £59 and requires a bluetooth connection which is sometimes unreliable.

They do not offer a virtual terminal for card payments over the phone.

And they do not offer customers the option to get paid by link.

Summary: Good if you really need to use a card reader and you don't need any other service. For transactions up to £2,000 a month it still ends up being 2.75% per transaction. It's not a complete payments package so you would need to take on other services to get over the phone payments, paylinks and accounting integration.

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SmartTrade App

SMARTTRADDE 2.jpg   

No card reader needed

Take payments on Mobile App and Web Dashboard

Paperless invoices, quotes and receipts

Online via emailed paylinks: 2.15% + 20p

Face to Face: 2.15% + 20p

Over the telephone: 2.15% + 20p

Maximum card fee is 2.15% + 20p for subscribed users, negotiable depending on volume

Plus Card Transaction fees that can be 0%. Yup 0% per card transaction! Card fees can be split or completely passed onto the customer bill. SmartTrade App is the only service that offers this feature.

All mentioned features are part of the Lone Ranger Package for £8.49pm.

Find out more by visiting our pricing page.

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