Four features to consider when accepting card payments - plus big VISA Debit fee changes

Having recently read in The Telegraph that this weekend saw the tipping point in which more payments transactions were made by non cash methods than cash, I thought it would be good to do a follow up on my recent blog “Nine reasons why you should consider accepting card payments” on the main features to consider when choosing a card payment machine, and talk about recent fee changes for accepting VISA Debit cards.


Retail businesses with low transactional values that are also pressured for time should consider a card machine that accepts contactless payment. This allows customer to complete a purchase by simply tapping a contactless enabled card on the card machine. This currently works on values up to £20 but hopefully will be increased to £30 in September this year.

There are several benefits to businesses, including a much quicker turnaround of customers, helping to keep queues to a minimum. Contacless payments also remove the need to provide a receipt unless the customer requests one, again saving time and stationary, as receipt paper will be kept to a minimum.

Portable v Fixed

It is important to consider where you want the card machine to be located before you order it so that it's easily accessible for customers. Once you know where you want it to be located, ask yourself questions such as 'can it be wired up to a power source?', 'can it access a phone line?'.  For some businesses a portable one may be a flexible option.

Land line v Wi-Fi

Many traditional card machines use land lines to process the card transaction. If you have a second telephone line, this won't be an issue. If you only have one line however, this can lead to problems when trying to accept a card payment while the telephone is in use. Some card providers also charge a fee for every line connection when taking the payment. A simple solution to this is to consider a Wi-Fi enabled card machine.

Dynamic Currency Conversion

Businesses in the tourism industry that take payments from overseas customers should consider a card machine that offers Dynamic Currency Conversion. This is a service that allows customers the choice to either pay in Pounds Sterling or their own currency. Most card providers will offer businesses a reduction in the card processing cost for doing so. They can do so because they make a small margin on the exchange rate and can share it with the business.

Other providers

Businesses have a vast choice in ways in which to take card payments. Beyond the typical merchant services there are new providers offering simple fixed price products for businesses that don’t want to commit to long term contracts and want portability such as:

  • PayPal Here – The card reader that connects to smart phone/tablet. It costs £69.95 then 2.75% of transaction fees.
  • iZettle – Again a card reader than connects to a smart phone. It costs £49 plus VAT (free for wired version) then transaction fees between 2.75% down to 1.5% depending on volume of transactions.

As Xero a platinum partner firm with many clients using Xero (award winning cloud accounting software) it is also worth noting that both PayPal and iZettle fully integrate with Xero.

VISA Debit Card changes

Historically businesses have been charged a fixed fee for accepting debit cards and percentage fee for accepting credit cards, but as of 1 March 2015 this has all changed. Previously, the base cost of accepting a debit card was 8p, and on top of this a card provider would charge a margin, so on average a debit card would cost a business somewhere between 9p and 20p, depending on the volume and value of transactions within a business.

From 1 March the base cost changes to 0.2% of the transaction value plus 1p, and again the card providers will add their margin. This is great news for businesses that take smaller value transactions such as sandwich shops and newsagents, that have been put off by high costs, as a £10 transaction cost will now have a base cost of 3p plus margin.

This is not so great news for businesses with higher value transactions however, as a £250 card payment would have attracted a base cost of 8p and is now 50p. The base cost is capped on transactions over £250, but businesses need to watch that their card provider also caps their fees, as some providers are not doing so.

I’d advise businesses to do a review of their card provider charges to ensure they are still reasonable given the changes.

If you would like know more about the above or advice on how to move your business forward please do get in touch.

Grant Smith, Partner

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