Theres been a few developments in the Pay As You Go (“PAYG”) card acceptance market since our last update back in December (“Cheapest mPOS?”). Theres some new product including the free card reader from iZettle, some we haven’t explored before and some price changes. Visa debit interchange increases in particular have changed the pricing dynamics.
There doesn’t seem to be any material price wars breaking out which is disappointing as PAYG pricing seems to have plateaued at a significant premium to the traditional merchant account products for merchants accepting over £12,000 in cards per year. Changes that have occurred are pretty minor :
- Because Adyen priced their Shuttle on an interchange plus basis, the recent EU changes in Visa debit interchange, together with Adyen’s own decision to increase margin has made this product relatively more expensive, but still the cheapest option by some way if you have any volume.
- i-Zettle have launched a new free “Lite” device (its “Pro” device which costs £59). All other transaction costs unchanged.
- Minor changes in the cost of the Sum-up and Payleven devices
Who is cheapest ?
The familiar story is unchanged, if you process above c.£1,000 – c.£1,500 of cards per month then renting a traditional terminal is the cheapest option compared to all of the PAYG options, except Adyen which is cheaper until you hit c.£2,000 of cards per month.
Traditional terminals have become marginally more expensive with the EU changes to Visa debit interchange. We’re modelling debit at 0.2% + 6p because we know its readily available at this price.
Adyen Shuttle is now priced at interchange plus 0.6% + 0.1 euros on all cards which represents about a 50% price increase, based on our modelling profile. Still cheaper than all other mPOS options (above £500) but is now more expensive than a traditional terminal above £2,000 per month of card turnover (previously it was cheaper up to £7,000 per month of card turnover). This now looks like more sensible pricing from Adyen – previously it was just too cheap. Well done if you got on board at the cheaper pricing.
Last month iZettle launched a free version of its card reader – the iZettle “Lite”. Whats different ? Well, its blue and it connects through a wire to the auxiliary jack of your smartphone rather than by bluetooth. And did we mention its free which saves you £59 vs. the Pro version? £59 is £59 after all and better in your pocket than iZettle’s. But if you look at this over 3 years then £59 is only a saving of £1.64 per month (modelled above) and personally we’d rather pay more for a card reader to access a lower transaction rate like the Adyen Shuttle.
The SmartTrade App launched was launched in 2014 and is free allowing you to accept cards using only your smartphone. Its not chip and pin, unlike most mPOS devices, which is still more familiar to and preferred by UK cardholders, albeit attitudes are changing. Instead, it uses a combination of a neat scanning technology which recognises the 16 digit pan-key number (see video) and manual input for the expiry/CVV2. You can also use entirely manual entry for CNP transactions and pay by link if emailing invoices to customers.
It costs 2.65% + 20p per transaction putting at the upper end of the cost scale, but theres no device cost and it has a neat function enabling you to pass your card costs to your customers as a surcharge for them to pay, making your card processing costs nil. Of course, you can pass your costs on with any card acceptance solution by adding a surcharge but SmartTrade makes this easy with a one-click function. How your customers will react is a different matter but its not uncommon for small businesses to pass-on card costs.