How to get a credit card machine for a small business?
For some time there has been talk of the ‘cashless society’. Paper money has existed for over 350 years, and in an age of contactless payment and cyber-currency, it seems only a matter of time for coins and bank notes. There are over 160m debit and credit cards in circulation in the UK[i]. With the convenience and security offered by cards, and high levels of acceptance, it would seem an easy decision for businesses to accept them. To do this, they will need four things:
A payment gateway – the secure system that handles the communication between parties such as banks and card issuers
A merchant account – to receive payments made to the business
The card machine itself
A PCI Compliance certification
A card machine is a hand-held device which reads the card data. This triggers a sequence of events within the payment chain (involving banks and the card issuers etc.) which authenticate the card and authorise the transaction. This process is virtually instant.
Why should a small business accept cards?
Quite simply, to maximise the opportunity of a sale. Between 2017 and 2018 there was a 15% drop in the number of cash payments, with card payments outnumbered cash payments for the first time ever As fewer customers now carry cash, restricting ways to pay is likely to restrict sales opportunities. And there are other benefits. Accepting card payments reduces the risks of holding cash on site, and the process itself is incredibly secure. Card payments also avoid other risks such as fake currency. And whilst the card payment process is not 100% immune from fraud, by working with the right Payment Service Provider the risk is minimal. All of these services are offered for a small fee – usually made up of a number of different components, such as:
1. Credit card transaction charges – typically 1% to 3%
2. Merchant service charges – 0.2% for debit cards and 0.3% for credit cards
3. Monthly service fees – usually around £10, but not all PSPs impose a minimum monthly fee
4. Transaction authorisation fees – 1p - 3p per transaction
5. PCI compliance fee – around £3.50 per month
6. Chargeback fees – Usually between £10 and £20
What should a small business consider when getting a card machine?
Many options are available, from standalone machines, to sophisticated integrated solutions offering extra features, services and information to help run your business. It’s likely that it’ll come down to cost, the type and size of business you’re running, and a preference to renting or to buying your machines. Here are some of the popular choices:
Virtual terminals are a web-based service allowing payments to be taken by phone. A key benefit is that they do not require additional hardware to be bought or installed. A virtual terminal interface is similar in design and function to the on-line form completed by a consumer when making a credit or debit card purchase. However a virtual terminal has limited application so may not be suitable as the sole card payment method for a business. Also fees on transactions when the cardholder isn’t present are usually higher.
Wired or countertop terminals are a popular and extremely reliable option for businesses with a single checkout point and POS system. As the name suggests, the terminals are hardwired, meaning they are physically connected to your POS solution, offering quick processing speeds and a stable, durable connection. Further practical benefits are that they have a constant power supply and, unlike their wireless equivalents, are difficult to misplace.
Wireless card machines
These can be useful in businesses such as bars, hotels and restaurants. Wireless card machines enable service businesses to place payment at the heart of the customer experience by minimising the inconvenience to the customer when it’s time to settle the bill. Since payment is typically the final event in a service offer, a wireless card machine can help ensure that the customer leaves with a positive experience of the establishment. Their one minor restriction is that, due to the need for connectivity, they cannot be taken away from the premises.
Getting started, and where to begin
Now you understand about the world of card payments, here’s a simple way to take the first step. Working with a payment provider can enable a small business to quickly set up the equipment, processes and accounts it needs to begin accepting card payments. Once an application is approved, the payment provider can support with the process of setting up a merchant account, which is where customers’ payments are deposited. They can also offer options for card machines. Once the process is enabled it can easily be integrated into a website, creating an additional business channel. Finally, when a test transaction and refund have been done, then congratulations – you’re ready to accept card payments.
The payments landscape is rapidly transforming. Cashless payments, and the opportunities they offer to businesses, are here to stay. Although setting up to receive card payments may at first seem daunting, once up and running the process is simplicity itself. Just think how straightforward paying by card is in everyday life, and how the salesperson takes it in their stride. The key for businesses is to work with a payment partner who understands the landscape and is experienced at working with small businesses. This will ensure that the process is simple and secure, leaving you free to think of new ways to grow your business.