Business Clinic: Credit and debit transactions

Expert advice on the business of running a garment decoration company

Q&A

What‘s the best way for businesses to accept credit and debit transactions?

With the rise of contactless transactions, the UK is moving closer towards a cash-free society; therefore, accepting card payments is essential for businesses. The ease of card payments has proven to increase sales by driving a ‘thoughtless purchase’ trend, and for the business this can counterbalance the fees involved in doing so.

So, what can you expect in terms of costs? Most businesses choose to rent their card terminals, which can be done for as little as £15.00 per month. Fees are then charged per transaction; this varies from provider to provider, however depending on the nature of your business it can be as little as 0.4% of the total transaction amount. We suggest comparing merchant accounts on a pound-for-pound basis, especially if you have transaction statements that show a good trading history. Using a broker can help you with this as they have access to a wide variety of providers and can give advice on a solution best suited to your company. A tip is to watch out for hidden fees: do not compare on rates alone, evaluate all costs involved before making your application.

Another reason for the increase of card sales is the technology now readily available to merchants, meaning businesses can accept card payments from almost anywhere. An example of this is wholesale trade events: customers now widely expect to pay via card be it a burger van or a large clothing order at a trade show. Businesses cannot afford to lose these sales so keeping up with the times is a must. Most portable card machines work using the same radio signals as a mobile phone, meaning that if you can’t connect to secure wi-fi, processing transactions won’t be a problem.

If a bulky card machine isn’t for you, you could consider a smaller, more portable system by using mobile phone or tablet apps. These are perfectly suited to startup companies, although as your business grows they can prove quite costly. After 12 months of trading we suggest shopping around to find a more cost-effective way of processing payments. Accepting card payments is not only proven to increase sales, but also saves time thanks to reduced (or no) trips to the bank and swifter end of year accounts and reporting. In our opinion it’s a no-brainer. But how can you be sure you are choosing the right account for your business? Here are our three tips to ensure you find the right merchant account:

• Always get three quotes – compare them like-for-like and not on the rates alone. Do not pay over the odds for processing card payments.
• Check out the reviews – merchant account reviews are readily available online, however if you know of someone who works in the same industry as you ask for their thoughts. Alternatively, ask your merchant account broker for their advice on factors such as security, pay-out times, contract lengths and back-end reporting.
• Review your account – on an annual basis. Don’t get stuck with an account you’re not happy with or paying too much for.