The 10 Cheapest Merchant Services for Small Businesses

During these uncertain times, small business owners should be exploring every avenue possible in an attempt to save every penny.

Comparing the most affordable merchant services is not the easiest task in the world, especially for small businesses with time constraints. So, we’re here to help with our list of the cheapest merchant services available! 

What exactly are merchant services, you ask? When we refer to merchant services, we are talking about a financial service that includes everything a company needs to accept payments.

And why do you need them? Credit/debit card payments are a habitual activity in our day-to day lives, and to understand why you need merchant services, you need to understand how credit card processing works. If you pick an expensive merchant service, you could be forking out big bucks on card processing fees for all of your customers’ debit and credit card payments.

Some of the best card processing services for small businesses cost absolutely nothing to set up, incur no monthly costs, and have some of the lowest transaction fees. Saying that, prices can increase if you’re classified as a “high-risk business” and have to set up a high-risk merchant account.

In this article we’ll compare the cheapest merchant services for small businesses and provide pros and cons regarding their ease of use, costs, contracts and customer support.

 

Cheapest Merchant Services for Small Businesses

We’ve compiled this list of the cheapest merchant services that will keep your monthly costs low and keep your customer experience running smoothly!

first data logo

First Data

With over 20 years of experience in the UK, First Data has become an incredibly popular payment system for small businesses across the country. Their minimum £5 monthly service charge makes them one of the cheapest merchant accounts for small businesses and start-ups, whilst their second to none customer service has been widely praised. First Data review scores are pretty good on TrustPilot too!

First Data’s merchant services cover mobile, contactless and portable card terminals, as well as online e-commerce solutions such as the Clover EPOS system. In 2013, First Data partnered with Clover, giving them access to the Clover Station till and Clover Flex card machine on a standard rental contract.

First Data only offers a 36-month contract and charges a hefty £400 penalty charge for early termination, so you’ll want to make sure it’s the right fit for your small business before signing on the dotted line. 

 

Transaction Fees:

  • Credit Card Fees – 10p
  • Debit Card Fees – 1.25%
  • Authorisation Fee – 2p
  • Monthly minimum – £5

Pros 

  • Hosted payment pages provided for ecommerce sites.
  • Cheap £5 monthly minimum fee.

Cons

  • Locked into a 36 month contract.
  • Customer support not 24/7.

 

 

Payzone

Payzone has been in the game for over 25 years, and there’s no sign of the old dog slowing down just yet. They’ve been offering reliable payment solutions to small businesses since their introduction and through great customer service and affordable rates, they’ve become one of the UK’s leading payment service providers.

Payzone handles over a billion pounds worth of transactions each year, offering a wider range of user-friendly and responsive card machines. The card machines accept all the major credit and debit cards like Mastercard and Visa, in 17 different currencies. Your company can choose to include American Express if you contact Amex directly to have the card added to the machine.

You’ll be glad to hear that Payzone doesn’t charge a set-up fee, joining fee or exit fee if you opt for them as your merchant service provider. They also have the shortest contracts in the business (12 months) so you won’t feel tied down if new opportunities arise. 

Check out our full Payzone Review

 

Transaction Fees:

  • Credit Card Fees – 0.65% +1p
  • Debit Card Fees – 1.3%
  • Authorisation Fee – 3p
  • Monthly minimum – £10

Pros 

  • No set up or exit fees.
  • 12 month contract – lower than most rivals.

Cons

  • No cash register rental options.
  • No dedicated account manager.

paymentsense-logo

Paymentsense

Based in London, PaymentSense is what’s known as an Independent Sales Organisation (ISO) and merchant service provider of American powerhouse, First Data – one of the largest payment processors in the world. Instead of opening a dedicated merchant account, PaymentSense pools multiple transactions in a shared account which ensures your business receives cheaper rates and more affordable fees.

Specialising in small businesses, PaymentSense provides merchant services for over 60,000 companies across the UK. As you’d expect, PaymentSense offers face-to-face countertop, online and mobile payment solutions as well as claiming to send out a card machine within 3 days of application, and a payment gateway or virtual terminal in as little as 24 hours.

Although the company’s online reputation is a little bit hit and miss (check our PaymentSense review for more info), their low fees and high levels of customer service can’t be faulted. The fact that their rates are fixed means you won’t be smacked with a price hike during the middle of your contract. PaymentSense’s minimum contract length is also 18 months which aligns with the industry standard.

 

Transaction Fees:

  • Credit Card Fees – 0.75%
  • Debit Card Fees – 0.96%
  • Authorisation Fee – 3p
  • Monthly minimum – £24.95

Virtual Terminal/Payment Gateway Pricing

Starter Package

  • £8.30 per month
  • Process up to £50k per year

Basic Package

  • £12.45 per month
  • Process up to £250k per year

Pro Package

  • £16.60 per month
  • Process up to £1.2m per year

 

Pros

  • Some of the UK’s lowest transaction fees: 0.96% for debit, 0.75% for credit.
  • Price match promise.

Cons

  • £24.95 minimum monthly spend.
  • Auto-renewing contract.

 

worldpay-card-processor

 

Worldpay

First one on the list you recognise? That’s because Worldpay is a kingpin in the card payment processing world. Responsible for 42% of all card transactions in the UK, Worldpay are a dominant market leader when it comes to popular merchant service providers.

Worldpay have harnessed a great deal of success by providing effective, easy to use card processing solutions and virtual terminals. Worldpay is not only a well-known payment gateway for processing credit payments online, they’ve also had a great deal of success with offline payments options. 

Worldpay offers some of the most flexible merchant service rates around and their entry-package monthly fee almost feels too good to be true. Their extensive in-store payment options give your small business the choice of a card reader, tablet for taking orders, or a Worldpay checkout till with a barcode scanner. 

You won’t have to pay a joining fee which is a huge plus and costs are kept down if you opt for one of the cheaper pricing plans

 

Transaction Fees:

  • Credit Card Fees – 1%
  • Debit Card Fees – 2%
  • Authorisation Fee – 4p
  • Monthly minimum – £9.95

Pricing 

Worldpay offers four pricing plans with no joining fees and 24/7 customer service. And if your machine decides to pack in, all plans include next day terminal replacement.

  • SimplicityOnline payment gateway fee: £19.95 per month + 10p per transaction (after first 350 transactions)
  • Fixed Monthly – Package fee (from): £49.99 per month  includes your card machine rental, authorisation fees, and a certain amount of transactions, too.
  • CustomOnline payment gateway fee: £19.95 per month + 10p per transaction (after first 350 transactions). PCI Compliance Fee: £29.99
  • Pay As You Go – Online set-up fee: £25. Online payment gateway fee: 10p per transaction (after first 350 transactions)

Pros

  • Some of the most flexible price plans for small business – including ‘pay-as-you-go’.
  • Full merchant service provider: online payment, card machines and till systems.

Cons

  • Below average customer reviews.
  • 18 month contracts.

 

stripe-logo

 

Stripe

As one of the new kids on the block, Stripe hasn’t had to adapt to the latest technological updates like the rest of the market stalwarts. Through a flexible pay-as-you-go pricing plan and intuitive user experience, Stripe has become one of the UK’s leading online card payment processing firms. 

Their innovative cloud-based system offers payment processing, robust fraud prevention and high-grade business intelligence through their in-house analytics package ‘Stigma’. Stripe’s transparent approach means there’s no set up or recurring monthly charges, while their sophisticated payment gateway ensures that customers will breeze through your website with no issues.

Stripe accepts credit card, debit card and Bitcoin payments from over 135 countries and also saves payment details after your first transaction so you’re only one click away from getting the job done. You can check out our full Stripe review if you’d like to find out more!

 

Transaction Fees:

  • EU Cards – 1.4% + 20p
  • Non- EU Cards – 2.9% + 20p

Pros

  • Competitive transaction fees.
  • Processes cryptocurrency.

Cons

  • Doesn’t process PayPal payments.
  • No phone support.

 

sage-logo

 

Sage Pay 

Sage Pay is a popular payment processing service with an excellent reputation for security and customer support. The UK merchant service provider offers online, face-to-face, phone and invoice payment solutions which is ideal for small businesses. Sage Pay is owned by Elavon.

Sage Pay’s responsive and easy to use payment gateway permits one-click ordering, and automates repeat payments you’re owed. They also accept all the major credit and debit cards and provide excellent PayPal integration, covering all bases so you don’t miss out on a sale. 

If you’re a small e-commerce business, Sage Pay is well worth a look. Businesses can connect to Sage Pay and Sage Accounts to record their finances which could mean saving money on accounting costs. Sage Pay also guarantees that you’ll receive funds into your bank account within 2 working days. 

It’s just a shame that Sage Pay demands a monthly charge for even the most basic pricing plan, as well as having a three month notice period to cancel your merchant account.

 

Transaction Fees

  • Credit Card Fees – 2.5% (All major credit cards) 1.99% (Visa & Mastercard) & 1.68% (AMEX)
  • Debit Card Fees – 40p
  • Commercial or business cards – 2.5% + premium
  • E-Invoice – 1.5 – 2.2% credit cards & 0.59 – 1.7% debit cards

Pricing Plans 

Sagepay offer three different pricing plans:

Flex

  • £20.90 (virtual) or £13 (face-to-face) per month
  • 350 Transactions per month 

Plus

  • £45 per month
  • 500 token purchases per month 

Pro Package

  • Bespoke Pricing
  • 3000+ transactions per month

 

Pros 

  • Integration into Sage Accounts
  • 24/7 customer support

 

Cons 

  • Monthly fee 
  • 3-month cancellation period

handepay-logo

Handepay 

When it comes to saving money on your card processing services, there’s not many better options than Handepay. They’re so adamant about saving you money that they have pledged to give your business £1,000 if they fail to do so! They’ll also offer you an extra lump sum for referring a friend and cover your costs when you make the switch from another merchant account provider, so there’s loads of ways to cash in!

In combination with no set-up fees, authorisation fees or minimum monthly service charges it may feel you’re onto a winner. The only downside is that three month contract and 12 month cancellation notice period. Despite this, Handepay have more than 7,000 five star reviews and were given a 9.7 out of 10 rating on TrustPilot for their credit card processing service which emphasises their strong customer support and reliable payment service.

Handepay offers a fast and secure way to accept card payments. And while some aspects of its pricing could be clearer, there’s no doubting they have some of the cheapest rates in the UK. Handepay’s ecommerce solutions offer transparent pricing, but it’s merchant account fees and PDQ Card Machines (Process Data Quickly) are a little less straightforward.

Pricing Plans

Handepay Merchant Services Fees
ServicePayment MethodMonthly FeeFree TransactionsCost per transaction
PDQ Card Machine Face-to-faceOn enquiry N/AOn enquiry 
Virtual TerminalOver the phone£9.9920010p
Payment Gateway and Virtual Terminal Face-to-face and over the phone£19.9940010p

 

Pros 

  • Not too many additional fees.
  • Proven and reliable payment services and card machines.

Cons

  • Lengthy contracts. 
  • 12 month cancellation notice.

 

global-payments-logo

 

Global Payments

Global Payments are a well-renowned American merchant service provider whose UK headquarters are based in Leicester. They became the acquirer of HSBC merchant services in 2009 and now accounts for 20% of all transactions made across the country. 

Specialising in the retail, hospitality, healthcare and education sectors, Global Payments are extremely popular with small businesses as a result of their secure fraud prevention, affordable pricing plans and non-existent set-up fees

The popular card processing service has been praised for its innovative payment features for both face-to-face and digital transactions. Through multiple service offerings like Global PAY Now and GP Webpay, Global Payments support all major credit and debit cards, as well as, providing rapid card processing and in-depth reporting tools.  

Transaction Fees

  • Credit Card Transaction Fee – 1.1 – 3.3% +19p
  • Debit Card Transaction – 25p
  • Monthly Fee – £10
  • PCI Non-Compliance Fee – £100 – £190
  • Early Termination Fee – £150 – £500

Pros

  • No setup fees
  • Modern payment features 

Cons

  • Cancellation fees
  • Pricey for low-volume merchants

 

Paypal Virtual Terminal Review

 

Paypal

In PayPal, we trust. As the world’s most dominant merchant service provider, PayPal has accumulated over 17 million businesses thanks to their trustworthy support and user-friendly payment systems. Despite the extensive competition, PayPal remains the most popular payment gateway that you can use with Shopify and supports international payments in over 200 countries and 26 currencies. 

Their automated checkout system ensures customers won’t have to worry about entering their credit card details repeatedly, while the lack of monthly fees makes them accessible for small businesses looking to make their mark. 

Popular shopping carts including Shopify and WooCommerce have been built to support PayPal, whilst also being used as a standalone payment service for clients. The only downside is that PayPal can be pretty expensive for merchants with low sales volumes. 

Pricing

  • Transaction Fee: 1.9 – 3.4% + 20p (Depending on sales volume)
  • PayPal Here Card Machine – £75

 

Pros

  • Trustworthy and simple to use.
  • No monthly fees.

 

Cons

  • Fees charged for non-PayPal payment.
  • Higher transaction fees than some rivals.

square-logo

Square

Square is designed for small businesses who want to combine low costs with fancy features. The online merchant service operates through a high-spec phone or tablet that connects through the free Point of Sale app.

The set-up process is incredibly smooth and can be done in 3 easy online steps. Once set up, your card reader can be activated to take online payments that very same day. 

Square will also accept all of the major cards that competitors like the iZettle card reader or SumUp card reader do, with the exception of Discover, Union Pay or JCB. Transaction fees are identical to that of the iZettle and slightly more expensive than the SumUp Air. However, Square’s lack of monthly costs ensures that it’s the cheapest card reader on the market.

Check out our full Square Card Reader Review.

Pricing:

  • Card Reader Cost – £19.99 + VAT or £39 (excl. VAT)
  • Credit + debit transaction fees – 1.75%
  • Virtual Terminal/ e-commerce transaction fees – 2.5%

 

Pros 

  • Chargeback Protection
  • No monthly fees

 

Cons

  • Not suitable for high-risk merchants.
  • Customer support only available Mon-Fri.

Summary 

When it comes to picking from the massive pool of merchant services providers, there are a few key aspects you’ll need to consider:

  • Pricing & Fees (Transactions, Monthly, Set-up, Plans)
  • Contract Lengths (Notice Periods and Early Termination Fees)
  • System Navigation (Easy user experience and Uncomplicated Payment Process)
  • Suitability for High-Risk Merchants
  • Payment Acceptance (All major credit & debit cards, Apple Pay Amazon Pay, Google Pay (Android Smartphone payments) etc.

It’s important to realise that big brands are not always the best option for your business. Their high transaction fees for low-sale merchants can be an obstacle for small businesses, so sometimes you’re better off choosing a payment provider that has proven customer support and flexible pricing plans.

If you’re ready to save up to 40% on your credit card processing fees, be sure to try out our card processing fee comparison tool. You may also want to dig a little deeper into the best options for your business – see our best credit card machines for small businesses, best card processing services and best UK virtual terminals roundups for a thorough overview!

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