All businesses need some sort of payment processing system to allow them to accept payments from their customers. For the most part, that means a card terminal to accept debt and credit card payments
In this article, I’m going to walk you through some of the most important factors in your search for the best card reader. By the end, you should be able to research the market for yourself and select the best payment system for your business requirements.
Let’s get started.
Do you trade online?
The first thing you need to consider is about where you trade. Most importantly, do you trade online?
If you’re planning on trading online or even just accepting payments online, you need what’s called a payment gateway, which works in conjunction with an eCommerce merchant account.
That sounds pretty complicated but it’s really just the online equivalent of a card terminal. Your customers type in their details and the payment gateway processes the payment. Simple.
The big things to consider when looking at payment gateways are:
- Is it hosted or integrated?
- Is it secure?
- Will it integrate with your cart?
- How much does it cost?
- Does it accept all required payment methods?
For a more on payment gateways and how to select the right one, check out our blog post What is an eCommerce Payment Gateway?
Offline payments, on the other hand, require a physical card terminal. Most of the rest of this blog will discuss how to select the best card terminal.
Are your customers physically present?
Before we dive into physical card terminal considerations, I’ve got one last diversion. Do you plan to take payments from customers who are not physically present? If so, we need to talk about Card Not Present (CNP) transactions.
A CNP transaction is:
a payment card transaction made where the cardholder does not or cannot physically present the card for a merchant’s visual examination at the time that an order is given and payment effected, such as for mail-order transactions by mail or fax, or over the telephone or Internet.
So, how do merchants process CNP transactions if they don’t have a card to plug into a terminal?
If the transaction is a one-off or CNP transactions are requested very infrequently, the merchant can process the payment by keying in the payment details to a physical terminal. However, it’s not the most efficient means of processing payments and doesn’t really work when you scale up.
For CNP payments at scale, you need what’s called a virtual terminal.
A virtual terminal is basically a digital version of a physical card terminal. It allows you to type in your customer’s details and it processes the payment as normal.
Do you have a fixed location?
Most businesses are pretty straightforward. You have a shop or an office or some other commercial space and your customers come to you. That means you can install a fixed payment system and think no more about it.
One of the only things to think about with fixed locations is whether you need to move about within your premises. Some businesses — think supermarkets, shops and so on — opt for static terminals physically connected to POS systems.
Others — think cafes, bars and so on — need the flexibility to move the terminal around their premises. If decide you need a portable terminal, you have the choice of WiFi or Bluetooth connectivity.
However, some businesses don’t have a fixed location and need to be able to process payments wherever they are. Think market traders, craft sellers and so on.
Up until relatively recently, mobile merchants have only had one option — traditional free standing mobile terminals with internal SIM cards.
On the surface, this is perfectly acceptable. It allows you to take a payment processing system wherever you go and accept payments from customers anywhere you have phone signal.
Unfortunately, these systems have one drawback — price.
The terminals have a fixed monthly rental fee and often a minimum monthly service charge, which can make them expensive for smaller merchants with low transaction volumes.
More recently, a new breed of payment processing system has begun to emerge. Known as mobile point of sale (mPOS), you buy these terminals outright for between £20 and £50 rather than renting.
An mPOS system usually includes a small terminal that you pair with your phone or other mobile device. Your customer slots their card into the terminal and punches their PIN into the keypad. The terminal transmits the payment info to the app, which, in turn, processes the payment.
Whilst mPOS systems don’t have any fixed monthly costs (terminal rental or minimum monthly service charges), the downside is that the rate charged per transaction is higher.
What’s your card turnover?
The next thing to think about is how much money you actually process through debit and credit card payments.
A small bakery putting £1,000 a month through its tills is a very different case to a high-end jeweller taking £10,000 a week.
Like with most things, there are economies of scale in payment processing. Don’t go thinking that you are paying the same rates as Tesco just because the salesperson told you that you’re getting the very best rate.
How regularly do you process payments?
The final thing to consider is the regularity of your payments. A lot of systems have long contracts and fixed monthly fees, which can cause problems for seasonal businesses or businesses with irregular activity.
For example, if you only trade during summer months, there’s no point in picking a system with a 12-month contract and shelling out high monthly charges through autumn, winter and spring.
For businesses with irregular trading patterns, it’s worth considering pay-as-you-go options.
However, be aware that pay-as-you-go systems tend to have much higher payment processing rates, which could wipe out all the savings you’d make from the subscription fees.
How important is support?
Even if you think you know exactly what you’re doing, chances are that you’ll need support at some point. Unfortunately, not all support services are made equal.
It’s incredibly important to evaluate a provider’s support before you select them. You really don’t want to discover they have a seven-day support turnaround when your terminal is broken and you can’t accept payments.
Key support considerations include:
- How quickly do they respond to support requests?
- Does the supplier offer 24/7 support?
- Is their support team based in the UK or overseas?
- What is their terminal switch out policy?
- How quickly can they switch out a terminal?
Compare, compare, compare
Once you know what you’re looking for, it’s time to see what’s on offer. Unfortunately, most people research and buy payment systems the wrong way and end up paying way too much.
For a full guide on how to research payment systems, check out our blog What is the cheapest way to buy merchant services? It covers all the major sales channels and should help you secure the best deal out there.
If you don’t have time to read the full blog, here’s the short version.
Independent Sales Organisations (ISO) are significantly cheaper than other providers and sell the exact same service.
How does that work? Well, ISOs represent large groups of merchants and use their combined buying power to negotiate lower rates from payment processors. ISOs are usually about 40 percent cheaper than buying through a bank or going directly to a supplier.
This is also where Cardswitcher comes in. We allow you compare deals from the UK’s leading ISOs to find the best deals out there. Our comparison process only takes about two minutes and can cut a huge chunk off your card processing bill. Click here to see for yourself.