Small businesses often feel like they have no option but
to put up with large fees for accepting card payments.
But it doesn't have to be that way, says Jonathan
Elliott, the managing director of money-saving expert for business
Make It Cheaper.
New ways for customers to pay for products online and on
the high street are being trialled and launched at a dizzying rate,
so it surprised me to read recently that cash payments are on the
According to the British Retail Consortium (BRC), cash
payments accounted for 58% of transactions in the UK in 2011 -
representing an increase of 5.7% on the previous year. It's hard to
dispute that figure given that the BRC surveyed a staggering 59% of
all retail transactions in the UK - but I'd bet the percentage
would be a lot lower if it was calculated by every pound spent,
rather than transactions made.
Cash will probably always be king, but it's big companies are
exploring new avenues to provide the next big payment alternative.
PayPal has recently announced its inStore app, which allows
customers to make mobile payments in high street shops under the
Aurora Fashion Group umbrella (including Oasis and Warehouse)
without needing a wireless signal or 3G access. This is on top of a
partnership the company currently shares with the nationwide
restaurant chain Pizza Express.
If your business relies on face-to-face payments you should
cross your fingers that such methods become commonplace in the
future because this will drive down the fees that you are currently
obliged to pay on transactions made by debit and credit cards - at
present the only two established alternatives to cash.
In most cases you need to facilitate these payments because
that's what customers expect - but you would not be alone if
you don't fully understand the costs associated with merchant
Not only do you pay a portion of each transaction (a percentage
with credit cards and a fixed fee with debit cards), you also pay
for the rental of the PDQ terminal (it stands for 'Process Data
Quickly'), a minimum monthly service charge and card authorisation
fees. Suppliers also partner with security assurance consultancies
and charge a fee to provide secure systems and processes that
enable you to comply with the Payment Card Industry Data Security
Standard (PCI DSS).
The good news is that there are six major suppliers in the
industry that all want your business - and switching from one to
another is not as difficult as you might think. You don't have to
switch bank accounts and although contracts tend to last between
one and three years, lots of them are easy to break. In fact, many
retail businesses that have switched their merchant services with
Make It Cheaper have been up and running on their new contract
within a week and saving 20 to 30 per cent on card processing
As long as cash alternatives remain limited and transaction fees
stay as high as they are, that's the kind of saving that's worth
In association with
See how much you could save on merchant services and other
utility bills by calling Make It Cheaper for a free consultation.
It takes just minutes but could save your business
thousands. Click here for more information.