We are frequently asked “Who has the cheapest mPOS device?” and much as I hate inconclusive answers…….”It depends“. Most merchants choose mPOS by brand (love or hate PayPal?) or by cost. Cost is not always obvious because of the numerous different tiered pricing structures used in the market. In this post we’ve put together a detailed analysis of the cost of each mPOS device to help inform your choices.
A glance at the headline rates don’t really help an informed decision. One third of the market uses tiered pricing whereby the rate reduces with turnover so its essential to make an estimate of your own expected card turnover to establish which rate applies to you.
Then there’s Adyen, who are the only supplier with a “traditional” card pricing structure whereby debit is (currently) charged at a fixed rate per transaction and not a percentage. So you need some estimate of what percentage of your card will be debit vs. credit (hint, probably 50%+).
Then, theres the “traditional” terminal hire model which is not shown in table opposite. Small business can be quick to dismiss this as an expensive option but its essentially a trade off between terminal hire costs and higher transaction rates. You buy an mPOS device and it costs you £60-£120 and is probably good for at least 3 years. Hire a terminal and it will cost c.£540 over the same 3 years. Nil-brainer? Well, no! mPOS transaction rates are broadly double on credit cards and currently 8 times more expensive on debit (excluding Adyen). See below for more detail but mPOS is a more expensive route above £1,000 – £1,500 of card turnover per month. And in 2015 when interchange reduces, assuming merchant acquirers pass these reductions onto merchants, then transactions using traditional terminals will become even cheaper and the mPOS pricing gap will grow even wider.
Our regular blog readers will recognise this graph from our previous posts. We graph the monthly cost of each device for specific card turnover levels and we assume the upfront cost of purchase is spread over 3 years. The traditional terminal is based on a static terminal – if you want to consider a mobile version then lift the dotted line by £8-£10 per month. We also assume a 50:50 debit:credit card split.
It shows emphatically that above £1,000 – £1,500 per month, a traditional terminal is considerably cheaper than all mPOS options (excluding Adyen) – at £7,000 per month they are 2-3 times more expensive. At this point Adyen begins to become more expensive than a traditional terminal because you can get lower card rates than their 14p / 1.4%. Within mPOS devices you can see that Adyen is a clear winner on price above £400 – £600 per month. Of the others, SumUp is the price leader until the lower rate tiers from Payleven and iZettle kick in at around £5,000 per month.
Taking the same analysis and looking in more detail at the sub £2,000 per month card turnover gives different conclusions. At this level, the tiered rates of iZettle, Payleven, WorldPay Zinc are not significantly different from the rest of the pack. The upfront cost of the device also becomes a more important factor.
At this turnover level, SumUp with a 1.95% rate is best value, closely followed by Payatrader at 2.3% (more on the Payatrader additional features below). Adyen Shuttle is more expensive than the pack up to £400 – £600 turnover due to its £10 minimum monthly service charge, but above this it storms into the lead.
We are looking at this very much from a card present, Visa/Mastercard perspective. If you want to accept payments by phone (CNP) or accept AMEX then you have to look closer at which options do this and what the AMEX cost is. Sumup is interesting in that it is the only one to charge the same 1.95% rate for AMEX.
From a pure cost perspective its not hard to see that our favourite is Adyen Shuttle by a country mile. Yet, the device is not championed by UK merchants in the same way as the more expensive, recognised brands. Adyen is a highly successful company based in Netherlands, partnering with Vodafone with a longstanding payments credentials dating back to a time when the founders built Bibit – now the core of the WorldPay ecommerce gateway. Its physical device is not materially different from any other device yet it seems to, wrongly, suffer from the old adage “If its too good to be true…..“.
We are also fans of Payatrader. It is not the cheapest at any turnover level as the above demonstrates but it is well priced for its genuine differentiating factors which are of real value to certain merchants :
- Its the only device which is a standalone terminal and does not require to pair with a smartphone. Whilst smartphone payments will one day soon be widely accepted, there is still a segment of customers who do not like to enter card details into a smartphone tethered device.
- For free, you also get the ability to accept online payments, ie a free Payment Gateway. We think this makes it one of the few “pay as you go” payment gateway in the UK market. Most others currently have a monthly fixed cost or a set up fee.
We’ve taken the 6 cheapest devices and presented their features and pricing on our Cardswitcher mPOS comparison page. We have unashamedly ignored the others because in our humble opinion they offer no additional material benefits. I am sure there are those out there who would disagree and we would love to here from them as to why they favour a more expensive alternative.