The Rise of Card Payments in the UK
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 have their advantages, too... but both are clunky for businesses in their own special way.
We really 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.
Perhaps, as so many have done already, it's even time to go cashless!
What are the Benefits of Accepting Card Payments?
Save Time, Reduce Risk & Debtors
Small business owners are normally 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:
- You make it easier for everyone to pay you (no matter their location across the world!)
- You reduce the number of customers that 'didn't have cash on them' and end up owing you money
- You save time chasing those debts, often repeatedly
- You save on the cost and risk of managing cash, e.g. storing it, going to the bank, having it collected, ordering change, etc.
- You can track and analyse card payments more efficiently than cash and bank transfers
- You can link the data in card payment providers to accounting tools for simpler bookkeeping
- 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.
Customers Love Paying By Card
More importantly, 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 throughout their lifecycle with you, and are more likely to refer new customers to you.
Here are 5 reasons why card payments will put a smile on your customer's faces:
- Your customers simply expect card payments as an option now. 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.
- Your customers save time logging into their banking app, going to the cash machine and/or getting the right change
- 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.
- Your customers can track their own 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.
- Your customers might prefer to manage their finances using credit cards, not just cash & debit cards.
- Your customers can feel safer spending on cards as they can be eligible for extra consumer protection, e.g. Section 75 'chargeback' regulations.
Can I 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 Does it Cost to Take Card Payments in the UK?
Charges tend to vary slightly depending on the supplier you choose to process your payments.
Here are some example costs from one of our favourite service providers. Owned by PayPal, Zettle (formerly iZettle) provides a great balance of functionality, service, and cost:
- Monthly cost: £FREE
- Point-of-sale mobile app: £FREE
- Card reader: £29
- Card transactions: 1.75%
- Invoice transactions: 2.50%
- Money arrives in your bank: 1 to 2 days
- Xero accounting integration: Yes
About Tom Irving
With a background in FinTech, Tom has 20+ years of experience taking ideas from concept to reality. Having originally honed his skills as a Business Analyst, he went on to lead successful Product Management and Marketing teams. He's always enjoyed solving problems using tech, spanning a wide range of companies, from NASDAQ-listed enterprises to London startups.