Card payment – it pays to shop around

08 July 2010
Card payment – it pays to shop around

With the cost of card payment processing continuing to rise, how many traders are aware that better deals can be found for such essential business overheads?

With every penny that leaves a business under scrutiny, there is no hiding place for outgoings such as processing card payments.

Particularly as these payment costs have risen, their existence is more noticeable than ever. But according to one firm, card payments and transactions don't need to be too costly.

Accept Cards believes that business owners are paying steep rates because they do not have the time or resources to shop around for a better deal or don't even realise these are available.

Director Richard Bradley says that a significant number are not aware they can use the credit card processing services provided by any of the seven UK acquiring banks without the need to move their existing business bank account.

"Controlling costs is so important, yet many businesses simply do not review how much they spend on taking card payments, mainly because there is a lack of awareness of the lower rates available.

"Even for small businesses, card processing costs can run into thousands of pounds a year," he says.

Echoing the scenario in other areas of small business lending - including the provision of overdrafts and loans - many firms are seeing their rates increase or merchant services suddenly withdrawn simply because of the industry sector in which they operate.


Banks typically charge between 2.25% and 2.5% for processing credit card transactions and around 30p for debit card transactions. But Bradley says that firms can get better terms if they know where to look for the best deal.

"The solution is to shop around, but this is easier said than done for the majority of businesses - some are not even aware that switching to another provider is an option.

"Accept Cards does all the work by searching for the best deal possible. In addition, it provides peace of mind for business owners, for example by making sense of their statements, which are often convoluted and confusing."

It's a rare and brave trader that turns down card payments. Spending on plastic increased to £360b in 2008, with the trend increasing through 2009 with more than 65% of retail transactions completed by card. The average person holds four cards and more than 140 million credit and debit payment cards are currently in circulation.


Tony Laver, managing director of Laver Holidays in Loughborough turned to the card payment specialist when the firm's bank decided to completely pull out of supplying credit card services to the travel sector. "We had to go back to the drawing board to get an alternative provider," he explains. "Card processing is a facility we don't want to do without. Accept Cards came up with the goods and we have ended up paying a lot less than we were.

"I'm sure there are many businesses out there, including sole traders and new start-ups, which use their own banks for card services without realising they are not tied to them."

Accept Cards co-director Mark Pearson says the firm helped one hotel group reduce rates on credit cards to 1.2%.

The group, with a turnover on credit and debit cards of £10m, also used a specialist currency conversion provider to obtain rates of less than 0.5% for overseas customers paying by credit card.

"This resulted in an annual cost saving well in excess of £5,000 a year, even though the hotels had renegotiated their terms several times recently with their existing provider," adds Pearson.

"Our experience in, and knowledge of, the marketplace means that we are able to obtain cost reductions in virtually every case."


Do I need to change my bank account? No. The bank you use to process your card transactions will credit your existing bank account. Funds will normally take four working days to reach your account.

â- Why do I have to pay fees and how are they taken? The fees are charged by the processing/acquiring bank to cover their costs of processing the transactions and include the fees they are charged by MasterCard and Visa. The bank's fees are charged monthly, in arrears by Direct Debit, and you will receive a monthly charging statement. Typically, the charge is taken during the third week of the following month.

â- Do I need to have a business bank account? Yes. You cannot povide a card facility using a personal bank account.

â- Can I pass the charges on to my customers? Yes. Although this is for credit card transactions only - providing that you advise customers at the point of sale that you are doing this and of the amount to be surcharged.

â- Is there a charge for me to move to a new card processor? In the majority of cases you are free to enjoy the full amount of the annual savings achieved under the preferential deal.

â- How complicated is the application process? You'll need to complete application forms from the bank and possibly the terminal rental company. Each will require copies of identification documentation in addition to the other forms. If you're an existing card user, you will simply replace old terminal with the new one when it's been delivered. â- I'm currently in a contract - can I still apply? Yes. It's still possible to calculate your annual saving to compare against the fee you will need to pay to cancel your existing contract with the bank and on the terminal rental. If the savings are not sufficient, it's worth calculating the optimum time to move your account to achieve the maximum benefit.

â- What types of terminal are available? There are three main types of terminal available: desktop, portable and GPRS mobile. The desktop terminal requires a fixed phone line (which can be shared with other equipment) and a power point. The portable terminal can be moved around within 100m of the base unit, which also requires a fixed phone line and power point and works via Bluetooth or Wi-Fi. The GPRS mobile terminal can be used anywhere the relevant mobile phone signal can be obtained and is ideal for businesses working at shows/exhibitions.

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