With over 60 million credit cards in circulation, every business needs to enable customers to purchase via credit card. However, this comes at a price to UK businesses. Namely, whenever a customer pays via credit card, your business will be charged for the card payment processing fees.
Up until recently, it was common practice for UK companies to pass on payment processing fees to their customers – a practice that has since been outlawed. The onus is now on the business owner to fork out the cost of those pesky fees, alongside all the other overheads that come with running a business.
And whilst this is far from an ideal situation, there are things you can do to limit these costs and keep card payment processing fees to a minimum. By simply switching to a better deal, merchants can save hundreds, or even thousands, of pounds every year.
In this article, we’ll get down to the nitty gritty of the charges involved with payment processing fees. And most importantly, show you how you can bag yourself a better deal by comparing providers and selecting the package that works best for you.
To see how much you could be saving in card payment processing fees, click here to get started.
Payment Processing Fees
The amount you get charged depends on a variety of factors. These include the card issuer, type of credit card, and the value of the payment. And whilst the bulk of the charges will be taken up by transaction processing, there are a number of other fees to consider. We’ll delve further into these below.
The fees detailed below are based on the estimated typical fee for an SME with an annual card turnover of approx. £250,000.
Merchant Service Charge
Simply put, this is the fee that largely goes to the payment processor (Visa/Mastercard etc.) on each credit and debit card transaction you accept.
Approx. fee: Debit Cards (0.25% – 0.35%); Personal Credit Card (0.7% – 0.9%); Business Credit Card (1.6% – 1.8%)
Terminal Hire
This covers the rental charge for your chip and PIN machine.
Approx. fee: Dependant on the type of device. Countertop Terminal (£14-18 p/month); Portable Terminal (£17-21 p/month); Mobile Terminal (£20-24 p/month)
Authorisation Fees
Typically a small charge for each authorisation per transaction.
Approx. fee: 1p-3p per transaction
Minimum Monthly Service Charge
If your transactions fall below a certain level, you will be subject to a minimum charge.
Approx. fee: £10-20 p/month
Set-up Fees
A one-off fee for the installation of new merchant facilities. It’s worth noting that you don’t always have to pay this depending which merchant you go with.
Approx. fee: £50-100
Charge Back Fees
This is charged each time a cardholder requests a chargeback.
Approx. fees: £10-20
PCI Compliance Fees
The fee charged for your annual PCI Self Certification Questionnaire and corresponding compliance certificate
Approx. fees: £2.50-£5.50 per month per MID
A working example: Matilda’s Coffee Shop
Let’s look into a real-world example of what this all means for you/your business and how we can help.
Matilda owns a small but thriving coffee shop in East London. Every year, the coffee shop turns over approximately £120,000 across 24,000 transactions, with a 80-20 split between debit and credit cards.
Juggling a million things at once, Matilda went with one of the first deals she saw in terms of card payment processing suppliers. She went for a well-known company and at £238.00 per month, the price seemed pretty reasonable.
However, now that Matilda is coming to the end of her contract, she has decided to see if she can get an even better deal by conducting a price comparison search.
Current monthly fees
Terminal Rental: £18
Charge Back: £45
Credit Cards: £35
Debit Cards: £140
TOTAL: £238
Let’s Compare
We love a good challenge and so we entered Matilda’s business details and currently monthly fee into our price comparison tool. We received 8 different quotes from UK-based suppliers – but more than that, all were cheaper than the rate she is currently paying. The best deal we could find was a total monthly cost of just £65.40 – almost a quarter of the price of her usual bill.
If Matilda made the switch, she could save a staggering £2071.20 per year!
What are you waiting for?
The example above is something we see on a day-to-day basis. Thousands of businesses could be saving thousands of pounds just by doing a quick online price comparison. For something that takes only a couple of minutes of your time, surely, it’s a no-brainer.
If you want the best deal, here at Compare Card Processing, we let you compare deals with a number of different Independent Sales Organisations who represent hundreds of merchants, negotiating the best rates on their behalf. This way, you get to see what the market really has to offer and know that you’re seeing the lowest possible price.
To get started and see how much you could save, click here to go to our price comparison engine.
