14 Reasons Why Small Businesses Should Take Card Payments

The Growth of Debit & Credit Card Payments

The small extra cost of card payments is an understandably common objection for small business owners.

Despite its steady decline, particularly in the last 10 years, there's still something about cash that feels 'safe'.

Bank transfers, a common alternative have their advantages, too.

But cash and bank transfers are clunky in unique ways.

We believe that 'card first' is the optimal approach for nearly every small business, and you should be pushing it as your preferred payment method for most transactions.

50% of all payments in the UK are now made on debit cards. So, perhaps, as so many have done already, it's even time to go cashless!

UK Payment Method Trends
UK Payment Method Trends (Source: UkFinance.org.uk)

14 Reasons Why Your Business Needs to Accept Card Payments

A theme here is that card payments make your customers happy. In the long run, this will increase your sales by more than the small percentage it costs to process your card transactions. Happy customers tend to be more profitable and are more likely to refer new customers to you.

It's not just about your customers, either. Small business owners are busy, short on time, and not fans of risk. By offering card payments as well as (or in place of) cash & bank transfers, you can reap benefits that can far outweigh the small processing costs associated with card payments.

Here are our top reasons why you should be taking card payments:

  1. Your customers simply expect card payments as an option. This was a pretty steady trend before the pandemic... it's now stronger than ever since the constraints of COVID-19 forced businesses to adopt new solutions.
  2. Your customers save time logging into their banking app, going to a bank or cash machine, and/or getting the right change.
  3. If you're running an event, your customers are more likely to turn up to it if they haven't got cash on them... rather than risk an awkward "can I pay next week?" on arrival.
  4. Your customers can track their spending more effectively when paying by card. Lots of banking and financial apps now automatically categorise card spending by type to help customers manage their money more effectively.
  5. Your customers might prefer to manage their finances using credit cards, not just cash & debit cards.
  6. Your customers can feel safer spending on cards as they can be eligible for extra consumer protection, e.g. Section 75 'chargeback' regulations.
  7. You make it easier for everyone to pay you, no matter their location across the world!
  8. Happy customers are, in general, more profitable AND more likely to refer new customers to you.
  9. You reduce the number of customers that 'didn't have cash on them' and end up owing you money
  10. You save time and money chasing debts
  11. You save on the cost and risk of managing cash, e.g. storing it, going to the bank, having it collected, ordering change, etc.
  12. You can track and analyse card payments more efficiently than cash and bank transfers
  13. You can link the data in card payment providers to accounting tools for simpler bookkeeping
  14. If you're in an industry that is sensitive to fraud or money laundering, the extra checks associated with card payments can help you meet your obligations.

Can You Charge More For Card Payments in the UK?

In short, no.

In the UK, it's been illegal to charge extra for card payments since 2018.

It's not just card payments that were affected - the law change covered cash, bank transfers, as well as services such as PayPal.

In effect, the change in law made it illegal to discriminate against any type of payment method, not just credit & debit cards.

Even if you choose to take a risk and ignore the law, there's a good chance that your customers might be annoyed at the extra charge.

Given the change was headline news in 2018, and it's been pretty well adhered to, some customers will be openly annoyed with you. Worse still, lots will be disgruntled and won't say anything at all. A portion will probably stop using you altogether, and you'll be the last to know.

How Much Do Card Payments Cost in the UK?

Charges tend to vary slightly depending on the supplier you choose to process your payments. As a guide, you should be paying less than 2.5% for a standard debit or credit card payment (ideally less than 2%).

Here are some example costs from one of our favourite service providers - Sumup. Sumup provides a great balance of functionality, service, and cost:

  • Monthly cost: £FREE
  • Point-of-sale iOS app: £FREE
  • Card reader: £39
  • Card transactions: 1.69%
  • Invoice transactions: 2.50%
  • Money arrives in your bank: Next day

About Tom Irving

With a background in FinTech, Tom has 20+ years of experience taking ideas from concept to reality. Having honed his skills as a Business Analyst, he led successful Product Management and Marketing teams in various startups and enterprises. He's always loved solving problems using technology, something he utilises now to drive growth and innovation.