Card payment processing in the UK is changing fast. It’s important for smart retailers to keep up with the trends to ensure they make the right decisions about payment options.
Cheques are no longer guaranteed by card since June 2011, contactless payments have been introduced and mobile payments are on the horizon. Customers still trust cash the most yet expect to make even small purchases by card. What are the right card payment processing options for your small business?
Accepting cash payments is the most straightforward for consumer-facing businesses taking relatively small payments. Retailers and merchants accept cash, tradespeople accept cash, just about ever customer facing business does.
One big advantage over cards is that commission is not paid to process payments. Cash does have disadvantages though. Record keeping, money management and security are all more difficult than with electronic payments. Businesses offering only cash transactions may be restricting themselves as customers carry increasingly smaller amounts of cash about their person.
Chip and PIN Terminal
Chip and PIN payments have been around since 1995. Debit and credit cards in the UK all have chip and PIN and card payments have become ubiquitous over the years. Merchants such as taxi drivers, market traders and tradespeople now offer chip and PIN.
Chip and PIN terminals come in countertop, portable or mobile models to suit all types of business. There are even chip and PIN machines which can process payments through mobile phones.
For small retailers cost per transaction is around 25p. On top of that there are the upfront costs of setting up a merchant account and buying or renting a machine. There is also a minimum monthly service charge.
Contactless Payment Terminal
Contactless payments are made by waving your contactless payment card near a contactless terminal. The details are read through a type of magnetic field called near filed communication (NFC) and the payment made, no PIN is required. In the UK, payments up to £20 can be made with a contactless card. Millions of cards in the UK are now enabled for contactless payments.
Contacless payments have been trialled and rolled out on a limited basis to date. Big-name retailers accepting contactless payments include Tescos, Marks and Spencer, ASDA and Co-op, though mostly in London at present. Many other retailers are accepting contactless payments too, look out for the contactless symbol.
Public confidence in contactless payments remains low at present with just 10% of users claiming to feel ‘protected’ using contactless payment cards.
Mobile payments work using the same technology as contactless payments (NFC). Many commentators suggest contactless payments are a bridge to mobile payments. Mobile payments are made by waving your mobile phone near the contactless payment terminal. The data is read by NFC and the payment made.
Mobile payments are available in the US though not yet in the UK. The 2 big names in the market at present are Google and ISIS, though there are many others vying for market share.
Online payments are a type of card-not-present (CNP) payment. The payments are processed via a payment gateway and work with a merchant account. You can get a free online merchant account with Paypal or you can ask your current merchant services provider to see what they offer.
Small Business Options
It is important small businesses are aware of the options available and the changes taking place for a few reasons:
Know the options: If you are a tradesperson you can now offer chip and PIN payments using your mobile phone with a chip and PIN reader. Mobile chip and PIN machines are also widely available. If you are a small retailer investing in a chip and PIN terminal are contactless options available? Knowing all the options will give you one up on most of your competitors.
Futureproofing: Is it likely your customers will be expecting contactless payments and even mobile payments in the next couple of years? Its worth investing in the right terminals so they last as long as possible.
Branding: Those businesses wishing to be viewed as market leaders may want to offer the latest payment option to customers. That is undoubtedly a driver for some of the large retailers introducing contactless payments.
I hope you found this article useful. There are more in depth articles on the various card payment processing options on the site, feel free to take a look. If you have any questions don’t hesitate to contact me using the contact form.