The card has firmly established itself as the preferred means of payment for most customers.
Because payment processors take a share of every card payment, your small company gets, locating a low-cost merchant service is critical if you want to keep your profit margins modest.
But it’s not as easy as looking for the lowest transaction charge; several variables influence the entire cost of merchant services.
To help you choose the best solution for your specific requirements, we’ve broken down merchant service charges and compared the lowest merchant services for small companies.
What is the definition of a merchant service?
A merchant services provider is in charge of processing electronic payment transactions, providing your company with everything it needs to accept credit and debit card payments safely and securely.
You’ll need to pay for merchant services whether you want to accept payments in person, online, or over the phone.
Fees for merchant services
Merchant services’ diverse fees and pricing schemes might be perplexing. But don’t worry; we’ll go through the most common ones so you can be sure you’re receiving excellent value from your service provider.
Fees for transactions
transaction fee : Every card payment you accept incurs a transaction fee. Although it’s broken down into three independent fees (interchange, assessment, and processor markup), it’s usually presented as a percentage of each transaction as a consumer.
Card-Not-Another transaction cost for online or phone payments is the present fee. Due to the heightened danger of fraud, it’s a slightly greater proportion of each payment.
- Monthly processor fee – regular charge for using the service
- PCI compliance fee – a fee for remaining compliant with the Payment Card Industry standards
Fees for unforeseen circumstances
A chargeback fee -is assessed when a transaction is reversed or refunded to a customer’s account.
contract termination fee-If you want to end your contract early, you will be charged a contract termination fee.
You may be able to negotiate a better rate on some fees, but this is usually only accessible to high-earning firms on tiered models.
Pricing models for merchant services
Merchant service providers utilize four different pricing models:
Flat rate — regardless of sales volume, one basic flat pricing covers all fees and additional markups. Although the cost-per-transaction is often greater than alternative models, the predictable and clear costs make it an excellent choice for small firms.
Contracts with tiered pricing reduce your cost-per-transaction as your sales volume or monthly takings increase. Thresholds vary for each supplier, but the best deals are generally reserved for bigger companies with many turnovers.
Interchange plus — the supplier adds a markup to the interchange costs. This is perhaps the most predictable and competitive pricing plan on your sales.
Monthly subscription — you pay a monthly fee for reduced or even no transaction costs. It may be the most cost-effective alternative, but only if the total amount paid on fees with another provider would otherwise be more than the subscription cost.
Which merchant services are the most affordable for small businesses?
One of the most difficult aspects of directly comparing merchant service companies is their varied fees and pricing strategies. We’ve opted to compare companies by demonstrating each pricing strategy with an example.
|PCI Compliance Fee
Challenger merchant services like SumUp and Square are ideal for small companies with fluctuating monthly revenues since they don’t need a contract and offer a single transaction price with no hidden fees.
This means you won’t be paying excessive monthly fees if your company is slow, and you’ll be able to quickly calculate your monthly expenses. Transaction costs of 1.69 percent or more, on the other hand, are no longer a good deal as your business grows.
|PCI Compliance Fee
|WorldPay Online Payments
|£19 – £45 per month
|2.75% + 20p or £19 per month
|£69 or £4.99 per month
|£29.99 per month
|WorldPay from FIS
|0.20 to 2.25%
|from £17.95 per month
|£29.99 per month
WorldPay’s monthly subscription model allows flexible payment arrangements, ideal for small established companies with consistent monthly takings, such as hairdressers and restaurants.
Its monthly payments are aimed to make changes as simple as possible by covering all common expenses. As you can see, costs are far greater than those charged by SumUp and Square. This is because they provide clients with more advanced security, reporting, and other services.
FIS, a financial technology corporation based in the United States, is currently in charge of WorldPay’s contracts. Monthly expenses vary based on the size of your company, but we’ve included them as an illustration of the low transaction fees you may get with a contract.
|PCI Compliance Fee
|Variable depending on region and payment method
Adyen employs the interchange rate to calculate expenses, which is a charge paid between banks for the acceptance of card transactions. These vary greatly by area and payment method, but they all guarantee that the cost of each transaction can be determined precisely, offering you complete transparency.
There are no monthly or setup costs; however, a minimum invoice of €100 (£83) per month is required depending on transaction volume and area.
I’m not sure which merchant service is best for me.
The easiest method to get the lowest merchant service for your company is to do extensive research, compare suppliers, and determine how various pricing structures fit your unique business configuration.
Alternatively, if you’re ready to begin comparing merchant services, just fill out the below to get estimates from leading suppliers.