How much can your business save on payments?

Contactless payments have become a necessity rather than just a convenient mode of paying for your purchase. As we take long strides towards a cashless era, it is more important than ever for businesses to allow card payments. 

The past year was fundamentally different from any that we experienced before since the pandemic had a significant impact on our lives and the way we work. And quite obviously, it affected payment volumes in the UK too. According to the UK Cards Association, there was a stark 11% decline to 35.6 million. While many factors considerably led to the decline in the aggregate payment columns, the past year also witnessed trends in how people and businesses paid. To specify, people and businesses made remarkable use of contactless online channels. 

So, to effectively process card payments, as a business, you would need to choose a card processing company. Card processing companies are crucial partners who help facilitate transactions and thus need to be chosen carefully. However, many businesses never think twice about their payment processing costs and pay any amount issued by them. This is our attempt to highlight all the costs your business has to bear. With this knowledge, you can make the right decision for your business and save massively on payments. 

Payment Processing Costs

Payment processing fees tend to be woven with intricacies. Since they depend on numerous factors like the type of card, the preferred pricing model by individual card processors, and the level of risk associated with the transaction. 

The following are the key card processing charges you will pay as a business: 

• Processing Fees or Merchant Service Charge: This cost is associated with accepting varied card types. Every transaction made with a debit card and credit card that your business accepts is charged according to a certain percentage. Moreover, there are three categories that card types fall into. They include Debit, Credit and Commercial. 

The charges are: 

Card Type	Price Range
Debit Card	0.25-0.35%
Credit Card	0.7-0.9%
Commercial Card	1.6-1.8%

• Terminal Hire: The terminal allows the merchant to swipe, insert or hold a card near the device to capture the information. This is a rental cost for the PIN machine and the chip. Payment processing providers typically charge a fixed countertop terminal, portable terminal and a mobile terminal. 

These charges range from: 

Card Machine	Cost
Countertop Card Machine	£14-16
Portable Card Machine	£17-21
Mobile Card Machine	£20-25

• Payment Gateway: A gateway fee is charged when your business accepts payments online. It acts just like the terminal. There is usually a 2-4% charge on every transaction. And there is a fixed fee of about £20 per month for the integrated online payment gateway. 
• Authorisation Fees: These charges refer to an additional fee for each authorisation of every transaction to test the mode of payment. Normally, 1-3p per transaction (PPT) charge will be taken for every payment accepted. 
• Minimum Monthly Service Charge: This fee is applicable on transactions that fall below a certain threshold. The business will be charged a minimum monthly service charge. This amount is usually set at £10-20 per month.
• Set-up Fees: This is a one-off charge for the installation of new merchant facilities. This charge is approximately £10-20 per instance.  
• PCI Compliance Fees: This is an admin fee for the completion of your annual PCI Self Certification Questionnaire and corresponding compliance certificate. This ranges from £2-20 per outlet per month.

These are some of the most important but fundamental costs associated with card payments. The costs your business will bear would depend on multiple factors. Your turnover, the number of terminals you use, the type of card your customers use and whether these transactions are made on an integrated online gateway or in the store, all affect the amount you will end up spending. 

How much will you be saving monthly? 

Now that you have a fair understanding of the costs involved and what you can and can’t do, we can review how much your business can expect to pay towards processing charges with an efficient system. 

To effectively compare, let’s take a look at how much Mauve’s Boutique would pay with an average payment processing company. This imaginary business has an annual turnover of £100,000 and on average, the transaction is valued at £100. For simplicity, let’s assume that the debit transaction to credit card transactions is split in the ratio of 4:6. 

Mauve’s Boutique can expect to pay: 

• Merchant Service Charge – Credit: 1.3%
• Merchant Service Charge – Debit: 0.7%
• Terminal Hire: ￡15
• Authorisation Fees: ￡0.07
• Minimum Monthly Service Charge: ￡10
• PCI Compliance Fee: ￡10

The total monthly cost Mauve’s Boutique will bear is ￡129.92. This is 1.54% of her monthly turnover. 

However, if OmniPay’s Payment Processing Services were considered, this would look very different. 

Revised Statement with OmniPay’s Charges: 

• Merchant service charge – Credit: 0.7% 
• Merchant Service Charge – Debit: 0.5%
• Terminal Hire: ￡10 
• Authorisation Fee: ￡0.03
• Minimum Monthly Service Charge: ￡0
• Set up fee: ￡0
• Chargeback fee: ￡15
• PCI Compliance Fee: ￡0

The total monthly cost of Mauve’s Boutique with Omnipay will be ￡64.6. Which is 0.76% of her monthly turnover. 

In conclusion, savings are ￡65.32/month, ￡783.84/year, i.e. 50.2% yearly.

Knowledge is power! So look around and corroborate the information you receive thoroughly. Certain payment processors are often less transparent with their terms and pricing.

However, remember that the cheapest processing companies aren’t the best either. They may not be the most reliable. Whilst paying the least amount of money to process your card payments, you must find a reliable one too. With the right amount of knowledge, you can make the most effective decisions.