Cost of payment solutions
Getting paid is a pretty essential part of any business, but what’s the best payment solution and more importantly, how much is it likely to cost?
What payment methods can I use?
Traditional ways to get paid include cash and cheque, and if you mainly trade business to business, then invoices and BACs transfers are also more likely to be your preferred method.
But with research showing that 71% of shoppers prefer to make cashless payments, it’s crucial to think about accepting credit and debit cards too. Broadly, there are three ways of taking card payments:
- In person (face to face) payments
- Online for ecommerce businesses
- Phone for mail order
How do card payments work?
Card payments usually take just seconds to go through but the process itself is made up of several steps:
- Authorisation – when you accept a card, it needs to be checked by a payments company who confirms the customer has enough money to pay for the item.
- Sale – money is taken from the customer and held in a merchant account (along with any other card transactions taken by your business that day).
- Confirmation – money held in the merchant account is then forwarded to your business bank account (usually at the end of the week).
How do I set up card payments?
The easiest way to set up card payments is to buy an all-in-one package. These payment providers fundamentally do all the ‘behind the scenes’ work that needs to be done to authorise and confirm the sale.
These packages typically enable you to take in person and online payments so whatever you need, will usually be provided (for example, if you need a card machine in store).
Bear in mind that if you use these solutions for ecommerce, most of them will redirect customers to their own websites for the transaction and then redirect them back to yours when the sale is complete.
Examples of all-in-one payment providers include:
- PayPal
- Worldpay
- Stripe
- Square
If you’re looking for something a little more bespoke, you can arrange your own payment processing. This is slightly more complicated as you’ll need to source a merchant account that ‘holds’ money before it goes into your business bank account. You’ll also need to choose a ‘payment gateway’ which handles the transaction from authorisation to confirmation.
Setting up your own processing system is more complicated, but you should be able to fully integrate the payment platform with your own website, helping you create a seamless transaction for your customer.
How much does it cost to set up card payments?
This comes down to the provider you choose. Costs will vary depending on the size of your business, the number of transactions you process and whatever level of service you agree to.
When you compare providers, you’ll need to consider:
- Set up costs.
- Cost of card machines, either to buy or rent plus servicing fees.
- Transaction fees (merchant services fees), this is money taken by the payment provider. It’s typically a percentage per transaction (usually around 1%-2.5%) but it could also be a flat fee per sale or a combination.
You’ll also need to check transaction fees for debit versus credit cards, for example, there’s usually a higher charge for credit card transactions. Plus, if your business sells abroad, it’s a good idea to find out what you might be charged for European or international card transactions.
Which is the right card payment solution for me?
If you’re just starting out or run a micro or small business, all-in-one payment providers are likely to be the easiest solution. These will usually come with slightly higher set up or transaction costs, but this might be a pill worth swallowing if you need to set something up quickly.
If you’re more established, you may prefer to arrange your own payment process. This option is more likely to have higher set up costs, especially if you’re attempting full integration where customers don’t ‘leave’ your site to pay.
When you’re weighing up your options, think about:
Set-up costs and commitment
Check to see what set up costs there are and if you need to make a minimum commitment.
Customer support
Look at what customer support is offered and compare reviews. Large firms might be competitive on price but if something goes wrong, you’ll want to be confident that it can be fixed quickly.
Customer experience
All-in-one packages tend to be ‘hosted’ so that customers are redirected to another website for payment. For some customers, this can be off putting and could lead to lost sales. Integrated solutions are more tailored and can mean overall better customer experience.
Fees
Check fees and how they are charged but also consider what’s included (for example, are card readers provided or are there any add-on services offered at a discount). Customer support may also play an important part here too and pricier solutions may offer more comprehensive service plans and 24/7 support.
*The estimations provided on this webpage are for a £100 transaction and are independently provided by HaMuch Ltd. Prices are not guaranteed and quotes may vary when contacting your provider.