Card payments

 

Complete Guide to Merchant Accounts and Payment Gateways


Are you looking to arm yourself with the knowledge to ensure your business has the best merchant account?

Great, so let me be clear:

This is not some lame guide full of filler and cliches, it’s the defacto guide on the internet for merchant accounts.

You’ll get to see everything from the basics of what a merchant account is and does, though to the top companies based on your business type. Plus; fees, getting set up and everything in-between.

Grab a coffee and by the time you finish this article you will be a merchant account expert too.

So let’s get going. 

 

 

First up:

If you don’t fully understand what a merchant account is then watch this video.

 

 

Introduction

Whether you run a startup or an established business, payment processing is a core component and determinant of your company’s success. With fast-track technological advancements and innovative payment processing solutions currently on the market, you may ask yourself what are the processes and costs of setting up a merchant account or payment processor?    

Equally important – Do you need advanced technical skills to handle complex or basic integration processes end to end? Otherwise can you simply rely on your in-house team of skilled professionals, outsource the tasks to an independent contractor or pivot exclusively on the expertise and advice of your payment processing provider?   

This easy-to-follow and comprehensive guide not only will get down to the nitty gritty but will also give you a clear idea on what skills you might need to becoming a master at taking in-store or online payments. Don’t worry about technicalities –  just let your entrepreneurial spirit come forth and everything will fall into place!

For a quick outline, here are the main points:

  • Local (UK) and global players – Find out who holds sway in the industry and how their services can benefit your business and determine its trajectory. Our top 10 list sheds light on the best features for choosing the right payment processing provider for your company.
  • Security concerns – How can you protect your company and your customer from fraudulent attempts and decrease liability? From PCI DSS compliance to SSL Certificates, there are solid methods to convey trust in your brand and increase conversation rates by as much as 35%.
  • Payment Gateways and PDQ Machines – Whether in-store or online, payment processing solutions can seem a bit daunting for the uninitiated! However, as you’ll discover down below there is a step-by-step implementation for each instance.
  • Costs –  Having a merchant account and payment gateway can incur unexpected costs (north of £1,000 annually) if you do not fully understand its scope and purpose for your business. Setup fees, transaction fees, gateway fees, chargeback fees, monthly or flexible plans, PCI DSS compliance and other security issues can make your merchant account spending skyrocket without a solid financial plan. Let us guide you through with our accurate quotes!

 

In this guide you will find

 


Top 10 Merchant Accounts in the UK

 

For a brick-and-mortar business the benefits of accepting electronic payments over cash-in-hand are rather obvious – popularity with consumers (in 2016 more than half of all payments in the UK were made with a credit or debit card), better record keeping, lower risks and faster transactions. However, when it comes about the online medium, you are spoiled with two very attractive options – merchant account or online payment service/processor. Which one should you choose?

Why does it matter which merchant account to choose?

The type of your business and turnover are crucial in determining what works best for you – a merchant account normally comes with a contractual monthly fee but lower charges per transactions and better customer support with dedicated relationship managers per account. On the other hand, an online payment processor comes with little to no contractual obligation and no monthly fees but higher transaction charges. For a startup or any business testing the market and generating less than £2,000/month in total payments, an eCommerce solution like PayPal is the way to go. For more established businesses a merchant account equips you with an arsenal of benefits:

 

  • Fast automatic payouts (straight into your bank account) within 1 to 4 days after customer purchased online
  • Cost effectiveness – The higher you earn the lower the transaction fees
  • Multiple payment methods – In addition to PayPal, debit and credit cards, traditional merchant account providers also offer you the options for virtual terminals (over the phone or email) and bank transfers
  • Dedicated customer support
  • Advanced anti-fraud security and risk management and/or PCI DSS compliance
  • Data and analytics tools linked to your unique Merchant ID
  • Better international currency exchange rates compared to online payment processors’

 

In the UK, much like anywhere else, there are two types of traditional merchant acquirers – high street banks (HSBC, Barclays, Lloyds etc.) and independent payment service providers (Worldpay, Sage and others) which offer more competitive rates and reasonable contracts. Many of the companies in this industry have bought each other and merged into new payment service providers, so do not be surprised to find out they offer more or less the same features and are all somehow interconnected.

In our top 10 list for UK merchant accounts, we take a close and in-depth look at the major players, what makes them stand out and how you can benefit from their services. In the comprehensive comparison table, we have outlined the core features that are currently prevalent in the industry.

Looking for info on a specific company info? Click and jump to supplier.

1. World Pay
2. Sage Pay
3. Lloyds Bank Card Net
4. First Data
5. Payment Sense
6. Global Payments
7. Barclaycard
8. Elavon
9. PayZone
10. Cardcutters

 

So, here is our top 10 providers reviewed.

Quick jump if you are looking for free payment processors or international merchant accounts.


Worldpay logo


 

Worldpay screenshot

 

Worldpay are the leading payment service provider in the UK and one of the largest in the world. Their impressive array of features, strong global presence and integration, dedicated customer support and innovative ecommerce solutions make them the stellar contender of our top. Here are some key unique features:

Top features:

  • Flexible pricing with a Pay As You Go plan for both in-store and online businesses – In our analysis Worldpay are one of the few traditional merchant acquirers transparently advertising this payment plan. Rates start at 2.75% + £0.20/transaction and go down with a higher turnover.
  • Omnichannel Payments – While merchants in the UK are still trying to decipher the benefits or even the true meaning of this revolutionary strategy, the reality is that omnichannel payments have been around for quite some time. These solutions enhance customers’ in-store and online shopping experience via multiple platforms and integrate all payments into one single point of sales. It’s as if the boundaries between the online and physical mediums cease to exist!
  • Solid focus on Asian markets – Through their Asian-focused alternative payments such as UnionPay and Alipay, Worldpay open your business to a new galaxy of opportunities – from China! With more than 300,000 Chinese tourists visiting the UK yearly and 2.7 times more online spending with UK retailers than domestic shoppers, your business can benefit greatly if you know where to look for new sales horizons.
  • Industry-leading security – Whatever crosses your mind in terms of enhanced and advanced security, just tick it off the list!  
  • Superb website navigation and online resources on technical processes – Worldpay are unique in how concisely and clearly they advertise their services but more so in how much technical material they provide you with!

Our Rating: 

See Worldpay review
Visit site

 


SagePay logo


 

SagePay screenshot

 

If you called the odds on Sage Pay as a runner-up, congratulations –  you got it right! They come in a close second, with an array of features almost as comprehensive as Worldplay’s.

 

  • In addition to Dynamic Currency Conversion (in-store) and Multi-currency Payment (online) which let international customers pay in their own currency, Sage Pay also offer Tax Free shopping for non-EU citizens.
  • Competitive transaction rates – from £0.59/transaction (for invoice payments).
  • Great customer service – The positive online reviews about the company speak volumes!
  • Free advanced fraud screening tools – While some of their competitors charge extra for this service, Sage Pay go the extra (online) mile to strengthen your business with the best security practices.  
  • Seamless and fast integration – Their API supports most major shopping platforms and even a highly efficient stock management system for a better cash flow management.

Our Rating: 

 


Lloyds Logo


 

Lloyds bank card net screenshot

 

As an award-winning merchant service provider with an emblematic reputation, Lloyds Cardnet attract major businesses in the UK. While their service is not sublimely rich in features, they have a very transparent and fair pricing system which is designed to support your business growth.

 

  • Personalised service with a dedicated relationship/project manager – This tailored service is another solid testimony to Lloyds’ strong commitment for their clients. This service is offered in addition to the card payment helpline.
  • State-of-the art Clover station (smart-till) – While your EPOS system might be more of a bare-bones cash register by today’s standards, the Clover station is a genuine business management solution which lets you control your inventory, manage employees, transactions and ultimately offer superb customer service.
  • Seamless and rapid setup process – One of the downsides of having a merchant account is the lengthy registration process which requires you to provide ample evidence of your business history, business model and plan, solvency, financial liability and any other supporting documents. While this is still the case with Lloyds Cardnet, they do try to expedite the process within 10-15 days so you can have your merchant account up and running no later than within a month.   
  • Fixed Rate of 1.25% for all MasterCard & Visa Credit & Debit Cards (AMEX not included) if you’re a Lloyds Bank Business Account holder.

Our Rating: 

 


First Data


 

First Data screenshot

 

Headquartered in the US and serving more than 6 million merchants, First Data are one of the largest payment processing providers in the world. One aspect that distinguishes them from their competitors is that they provide merchant solutions not only to small businesses and multinationals, but to financial institutions as well.  

 

  • In talks to introduce UnionPay – While this partnership has been successfully reached in the US, for the UK market they are still in negotiations.
  • Free online technical guides –  Whether you run a restaurant or a coffee shop, their free guides containing detailed information on profitability and customer loyalty through technical solutions and innovations represent an extra service valuable to your small business.
  • Global Merchant Gift Card Programme – Designed for retailers offering gift cards and vouchers, First Data Merchant Branded Gift Card Programme focusses on end to end solutions such as gift card market research and campaigns, client conversion, system reliability and fraud protection.
  • Their multi-currency payment and dynamic currency conversion come with regularly updated currency rates which minimises risks associated with financial losses ensued from fluctuations.  
  • Advanced API Integration and Hosted Payment Page – Their payment gateway is a solid ecommerce solution that alleviates security burdens for your business while allowing you to increase brand recognition with customised and branded pages.

Our Rating: 

 


Payment Sense logo


 

Payment Sense screenshot

While accolades such as Europe-leading merchant service provider might not knock it out of the park for you, then consider Paymentsense’ negotiation power on the market to offer you the best transaction rates – or at least that’s their solemn promise to you!

 

Paymentsense are an established fast-growing corporation with a personal take on their 2009 startup story – two level-headed entrepreneurs experiencing a business epiphany moment while in Las Vegas concluded that the card payment processing industry was broken and they wanted to fix it. Apparently, what happens in Las Vegas doesn’t stay there for too long!

 

  • Ideal for small and medium sized businesses – As their marketing strategy dictates, they proudly promote the founders’ story and a “boutique” approach to working with their clients.  
  • Speedy setup – They streamline the whole setup process within 3 days for credit card machine and 24 hours for a payment gateway!
  • 24/7 UK support – Around-the-clock telephone support and technical assistance by email.
  • Short-term commitment (12-month contract) with flexible plans (starting at £14.95/m).
  • Advanced payment gateway – It supports an impressive range of shopping platforms, including WooComerce, Shopify, Magento, PrestaShop, Drupal, Joomla! and ZenCart.

Our Rating: 

 


Global Payments logo


 

Global Payments screenshot

 

In partnership with HSBC and holding and estimated 20% market share for transactions in the UK, Global Payments are a great merchant solution for local businesses of all sizes!

 

  • Humanitarian approach to business – In addition to being constantly involved in charities and donations, they proudly (and strategically) market their support for the Modern Slavery Act 2015. What does this means for you? It might just happen that you’re supported by a team of professionals truly committed to solid values greater than turning millions of pounds a year.
  • Robust focus on innovative technologies, scalability and global outreach for your business – Global Payments are trailblazers when it comes about taking your business to new heights of profitability.
  • Advanced payment gateway (via Realex) – It supports 3D Secure, recurring payments and full sales reporting.
  • Easy and secure integration with your current EPOS system.
  • Smart Dispute Manager – On top of your online business account that lets you manage your statements, transaction and customer history, you are provided with with a special account that gives you more flexibility and control over chargebacks and retrieval requests.  

Our Rating: 

 


Barclaycard logo


 

Barclaycard screenshot

 

Similar to other high-street banks, Barclaycard operating under Barclays have high requirements when accepting a new business and they normally look thoroughly into your company’s history and business model. Likewise, substantial cancellation fees, long-term contracts (over 18 months in length) and higher transaction fees might make a startup or an owner-managed businesses steer away from their services. On the other side of the coin, Barclays’ 50-year long history coupled with numerous awards and reliable services might compensate for higher prices.

 

  • Ideal for large businesses and established corporations – Enterprise ecommerce solutions for established businesses starting at £75/month.
  • Excellent customer service and technical support.
  • Enhanced security and anti-fraud solutions.

Our Rating: 

 


Elavon logo


 

Evalon screenshot

 

A well-established global company with over 1 million clients, Elavon specialise in vertical markets such as airlines, hospitality, retail, healthcare, restaurants and education. With dedicated services for both small businesses and enterprises, Elavon take the meaning of “tailored services” rather seriously. In joint venture with Santander, Elavon are one of the 5 largest merchant acquirers in the world.  

 

  • Contactless payments – Elavon support all contactless transactions including Samsung Pay which was introduced in the UK in May 2017, fairly recent. This means that many merchant acquirers are still developing their technology and software to support Samsung Pay. However, innovative providers like Worldpay and Elavon have already implemented this solution successfully.
  • Electronic gift cards – Retaining 100% of purchased value to your business, creating new marketing possibilities and increasing sales, electronic gift cards are the safe and modern solution to reward your loyal customers with more points and offer them personalised service.   
  • MobileMerchant – For small businesses which find POS systems or credit card terminals too cumbersome or simply crave more flexibility on the go, Elavon offer an ideal alternative which lets you morph your phone or tablet  into a payment terminal via the Mobile Merchant’s payment app and a Bluetooth card reader.
  • Flexible Payment gateway – Elavon have developed two efficient ecommerce solutions tailored to your business needs and size: Global Gateway for larger enterprises and Elavon Online Payment Gateway for small and medium sized companies.

Our Rating: 

 


Payzone logo


 

Payzone screenshot

 

Nipping at the heels of their competitors in terms of annual transactions , Payzone are in no way inferior to other dominant merchant acquirers. In fact, they have strong relationships with other top performers such as Barclaycard, Elavon or Global Payments. Friendly, committed, creative and with a 25-year history under their belt, Payzone prioritise and cement their focus on small businesses.

 

  • Affordability and flexibility – With a 12-month contract and no joining fees, Payzone are a true saver for small businesses.  
  • Advanced payment gateway – It supports integration with 52 shopping carts, including WooCommerce, Magento, Drupal, OpenCart, ZenCart. In addition to API integration and Hosted Payment Page, it supports Transparent Redirect – a camouflaged method which gives your customer the impression they are still on your website when purchasing although their payment details never touch your system.
  • Fast setup and fast payouts.
  • UK-based support 7 days a week.

Our Rating: 

 


Card Cutters logo


 

Card Cutters screenshot

 

The smallest merchant account provided (over 3,000 clients) on our list, Card Cutters cater primarily to small businesses, independent retailers, and short-term events (trade shows, conferences) and they excel at doing it. With a fair, transparent and competitive pricing policy, you can rest assured that you are provided with cost-effective solutions and won’t be hit with hidden fees or charges.  

 

  • Flexible plans – Whether you need to rent a credit card terminal for 3 days or 48 months, Card Cutters offer you plenty of options tailored to your business.
  • Smart POS – For a merchant account services provider of their size, they truly go the extra mile to offer you as many options as possible: Clover Mini or the full-on Clover station (modern point-of-sale) can really make your business stay ahead of the curve.
  • Contactless payment – Apple Pay, Android Pay and Samsung Pay
  • Multilingual payment gateway – The back-office supports major European languages such as English, German, French, Dutch and Italian.
  • Excellent online reviews – Card cutters claim to be #1 on Trustpilot Reviews in terms of eCommerce solutions (a 95% Excellent Score out of 240 reviews at the time of writing).

Our Rating: 

 


 

For further details, have a look down below at our comprehensive comparison of the top UK merchant accounts:

 

Merchant Supplier World PaySage PayLloyds Bank CardnetFirst DataPayment SenseGlobal PaymentsBarclay
Card
ElavonPay
Zone
Card Cutters
Countertop Terminal
Portable Terminal
Mobile Terminal
Payment Gateway✔**
Virtual Terminal✔**
DCC & MCP*
Contactless
Smart Till/Clover Station
Omni Channel Payments✔***
Chinese Market – UnionPay
Flexible Pricing
Pay As You Go Plan
Fraud Risk Management
24/7 Support
No Joining Fees✔****
Star Rating54.54.54443.53.53.53

* Dynamic Currency Conversion & Multi-currency Payment

** Via Realex Payments

*** Via Evo Payments

**** If you’re a Lloyds Bank Business Account holder

 

Top Free Payment Gateways

 

Before we dive any deeper into the the online shopping medium, we need to be crystal clear on one salient aspect – there is no such thing as a free payment gateway provider, otherwise they would not be able to exist and operate as a business. Instead, what we refer to as free are online payment processors (aggregate merchant accounts) which do not require a monthly payment plan and upfront setup fees. Normally, these are independent companies which do not tie you down with an annual contract and can be setup within minutes – thus, ideally for smart businesses or startups without a steady volume of sales and financial history.

As previously mentioned, the benefits of having a traditional merchant account outweigh the higher costs, but these solutions are not designed to support companies on a shoestring payment processing budget. Likewise, you might not even have a clear idea of your business model, buyer personas and you simply wish to tread the waters before diving any deeper. If you cash in less than £2,000/month in total sales, sticking to a free payment processor might also be a cost-effective ecommerce solution for your business.

 

But what is a payment gateway and how does it work?

To put it simply, a payment gateway is like a credit card terminal but for online payments. It is a plug-in (extension) service that integrates with your website and processes payments without having the need for your business to be PCI DSS compliant. Customers’ payment details are never passed or stored on your server or system.

This means that the details are processed on a PCI DSS hosted payment page either redirected or iframe (pop-up) and personalising the payment gateway with your brand/logo is more challenging with some providers like PayPal. However, as you will notice in our comparison table most major payment gateways providers do offer API integration at the current stage. For marketing purposes, it is crucial you choose a recognisable and well-known provider your customers are familiar with – otherwise they will not feel safe or comfortable to complete the transaction.  

 

Free comes with a price

While transaction fees with merchant account providers vary from 2.5% to 2.9% + markup/transaction, a free payment processor normally charges you approximately 3.4% + markup/transaction which in the long run will considerably eat away at your gross margins. Since these providers/aggregators do not assess or underwrite based on the nature of your business when you open an account, they take higher risks in accepting your business – which means you might have your account terminated and funds frozen without prior notice if they deem your business high-risk. Disputing these decisions can take months! Remember that “I’ve read and understood the terms and conditions” box? – Read it very carefully before scrolling down and ticking it off within 3 seconds!

Pro Tip

Although the online processor is PCI DSS compliant, you might want to install SSL certificates on your website to build trust among your customers.  For more details, read Security, PCI DSS & Costs


We’ve outlined the most popular aggregate (free) merchant accounts and although it is not particularly a top 9 list, our classification is based on the number of features, reputation and reliability of each provider. For the first 5 major industry players, we have designed a unique comparison table zeroing in on the best available options to merchants in the UK.

 

Here are our findings:


PayPal standard logo


 

In PayPal’s case, their reputation undoubtedly precedes them – no need for a pompous introduction! With over 192 million users in over 200 markets, PayPal continue capitalising on their own 20-year momentum and monopolising the eWallet market even against other giants in the industry.  The business accounts or merchant accounts are divided into three main categories: Standard, Pro and Express. Since this comparison analyses free payment gateways, we will take a closer look at the Standard version and its comprehensive array of benefits:

Pros:

  • Solid merchant account solutions for both in-store POS (purchased separately) and online payment gateway – Their fast and secure card reader in tandem with a tablet-based system is one of the best performing POSs on the market.
  • Fast payouts – Given that many businesses (low-risk) can transfer funds into their bank account in as little as 2 hours, PayPal definitely pit successfully even against traditional merchant accounts.     
  • Express checkout – Cart abandonment is severely exacerbated by a long checkout process. PayPal were pioneers in introducing a 3-step fast checkout that allowed customers to complete a transaction in the blink of an eye.
  • Shipping fee calculator – Although most major shopping carts like WooCommerce come with this feature already integrated, it is reassuring to have a fallback plan or a second option.  

Cons:

  • Does not support AliPay or UnionPay – China is a world unto itself and even global players like PayPal should adapt to new trends and scale their strategy to suit all markets.
  • Highest transaction fees in our list – Reputation comes with a hike in prices!
  • Payment Page is hosted only and non-customisable.  

Our Rating: 

 


Stripe logo


 

A direct and ferocious competitor of PayPal – The only major con about this feature extravaganza of a payment gateway is it doesn’t integrate with PayPal. While Stripe are a perfect choice for businesses of all sizes, the reality is that large enterprises are better equipped to fully benefit from the impressive array of digital solutions that Stripe offer. As a small business or an owner without a dedicated in-house IT team you probably won’t have the time or resources to make the most of Stripe’s features.

 

Pros:

  • Incredible rates/transaction – even lower than traditional merchant accounts’. Scroll down for more information.
  • Support for AliPay and WeChat payments – Stripe went to where PayPal are still limping behind: China. If Facebook Messenger had met WhatsApp somewhere in China, they would have probably spawned what’s now called WeChat – a 1-billion user mammoth of a social app without which life would be nonexistent in China!
  • Solid API integration – Highly customisable, secure and compatible with all major shopping carts and beyond, the integrated payment page does not redirect customers away from your website.

Cons:

  • Not-so-fast payouts – 7-day rolling!
  • Does not support PayPal.

Our Rating: 

 


Amazon Pay logo


 

They are the world’s undisputed ecommerce, cloud computing and media guru, but have yet to figure out how to outmaneuver PayPal and Netflix. Their eWallet and payment gateway, Amazon Pay, is rather pretentious in relation to its worldwide prevalence – their eWallet solution is adopted by only 33 million users. However, the payment gateway is rich in features, reliable and secure which makes it ideal for all types of businesses. Here are some of their signature features:

 

Pros:

  • Amazon A-to-z Guarantee  –  This option allows customers to get a full reimbursement for their purchase or cancel their payment if they are not entirely satisfied with a purchase made on a third-party site using Amazon Pay. Pretty nifty!
  • Comprehensive online technical guidelines and materials – In fact, the technical content is so in-depth and explanatory, it feels like you are pulling all-nighters back in university!
  • Advanced payment gateway with both hosted and integrated pages! Just like it’s the case with any other API integration, you DO need solid technical skills to implement it yourself.  
  • The Amazon Pay express – Simple and fast within 3 steps, the transaction is completed!

 

Cons:

 

  • High transaction fees!
  • Does not support PayPal.
  • Long withdrawal time – 5-7 business days.

Our Rating: 

 


Braintree logo


 

A brainiac branch of PayPal, Braintree have beautifully developed into a brand of their own selling a wide range of top-notch digital and ecommerce solutions that took the market by storm. More efficient and competitive than their Paypal father in pretty much every aspect, Braintree are exceptional at what they do – maybe not so much in customer service but we are still on the free payment gateway section, aren’t we? Suitable to businesses of all shapes and scopes, they are a strong contender among the best ones.

 

Pros:

  • Better transaction rates than PayPal’s – scroll down for more details!
  • Supports UnionPay – Braintree’s ambitions to go global and scalable can only benefit your business growth and outreach.
  • Solid payment gateway –  It supports both hosted and integrated payment pages, with the option to customise according to your brand’s needs and goals.
  • Advanced fast checkout – In addition to PayPal’s One Touch Checkout, it support Visa and Amex Express Checkout.

 

Cons:

  • No in-store POS.

Our Rating: 

 


2 Checkout logo


 

Albeit in the top 5 league, with enhanced features and a global presence, 2Checkout do not command the same brand reputation as the aforementioned providers. One major aspect that differentiates them from the rest is that 2Checkout use the service of in-house underwriters to assess the nature and risk of your business when you open an account with them.   

 

Pros:

  • Supports Paypal payments.
  • Supports a wide range of shopping carts – You have more options for integration than with other providers, although most businesses nowadays only use WooCommerce, Magento or Shopify which are supported by most payment gateways.
  • Accepts multiple currencies and recurring payments.

 

Cons:

  • High chargeback fees – they can even go up to $65 for non-US-dollar payments!

Our Rating: 

 


 

When it comes to alternative FREE payment gateways and smaller local providers, you need to take into consideration if the plethora of features of the top 5 is relevant and necessary to the trajectory of your business. Here are some other options you might want to consider:

 

 


Klarna logo


 

 

Klarna are quite a unique payment processing provider based in Europe. They allow consumers to make online purchases without providing payment details to the merchant. They use the customer’s national ID number to run a micro-credit check on them and they ask customer for payment (credit card, bank transfers, etc.) within 14 days upon receipt of purchase.  While this unorthodox method of payment might seem counterproductive, in fact it has been proven to reduce cart abandonment and streamline the checkout process. Buy now, pay later!

 


WePay logo


 

Another solid startup trying to make a bijou dent in PayPal’s supremacy, WePay have started out in Boston through crowdfunding. With a bit over 180 employees located in California and the UK, WePay have been recognised as one of the best companies to work for – which translates into excellent customer service for you and your business! Providing a modern payment gateway with API integration, solid anti-fraud checks and dedicated support, WePay are nonetheless for the niche market.  

 


Skrill logo


 

Skrill who are a London-based digital payments company started out in 2001 and expanded their operations in Europe and the US. They handle global payments in nearly 200 countries and 40 currencies. Skrill are known for their easy-to-use money transfer services such as personal funds transfers, ecommerce sites, trading platforms, and online gaming sites. Offering simple integration, 1-tap payments, convenient and fast withdrawals, Skrill services are ideal for international money transfers.

 


BlueSnap logo


 

BlueSnap’s all-in-one payment solution is rich enough in features to almost be included in our comparison table and compete against the Big 5. BlueSnap are a surprisingly feature-packed provider and a seeming combination between Stripe and Braintree, supporting PayPal payments, AliPay, recurring payments, API integration, hosted payment pages, virtual terminal, multiple currencies, advanced anti-fraud solutions and PCI DSS, and plug-ins for most major eCommerce platforms like WooCommerce and Magento. However, their high chargeback fees of over $25 and $75/month accounts maintenance fees for merchants bringing in less than $2,500/month in total sales, made them slip out of our comparison table.

 

Here’s an in-depth features comparison of the Big 5:

 

Payment Gateway PayPal StandardStripeAmazon PayBaintree Standard2Checkout
Fees/transaction3.4% + 20p* (online only)1.4% + 20p for European cards.3.4% + 20p*

1.9% + £0.20

2.4% + £0.20 (Amex)

2.4% + $0.30
Additional Cross-border Transaction Fees2.9% + 20p for non-European cards.0.4% – 1.5% 1%1.5%
In-store POS/Card Reader
Chargeback Fees£14£15.00£14£20 $25
Visa/MasterCard
PayPal Transactions
American Express
Chinese Market WeChat, AlipayUnionPay
Withdrawal Time2 hours – 4 days7-day rolling5-7 business days2–5 business days, depending on the payment method.2–5 business days, depending on the country and currency.
Multiple Currency
Recurring Payments
Hosted Payment Page
Express/ Fast CheckoutOne Touch™ checkout1-tap mobile paymentsThe Amazon Pay express

One Touch™ checkout

Visa Checkout

Amex Express Checkout

API/Integrated Payment Page (Customisable)**
Free built-in anti-fraud/PCI DSS
Compatibility with Shopping Carts/Supported Plug-insWooCommerce, Magento, Shopify, OpenCart, PrestaShop, Wix + others

WooCommerce, PrestaShop, Shopify, Wix, BigCommerce + others

WooCommerce, Magento, Shopify, OpenCart, PrestaShop, BigCommerce + others

WooCommerce, Magento, Drupal, OpenCart, BigCommerce + others

WooCommerce, Magento, Shopify, Drupal, OpenCart, PrestaShop, BigCommerce + others

Shipping Cost Calculator
No setup fee/No monthly payments
Star Rating54.54.54.53.5

 

* For less than £1,500 in monthly sales. It goes down to 1.4% + 20p/transaction for monthly sales above £55,000.

** Available in PayPal Payments Pro.  

 

Global logo

Best International Merchant Accounts & Payment Gateways

 

Now that you have a better idea of what a merchant account is, how a payment gateway can increase the growth of your business and what features are a must-have, let’s direct our attention to the general pulse of the global market.

 

You might ask yourself – Do I really need my business to go global even if I am a microentrepreneur? The reality is that with an online business you can increase your catchment area exponentially and it is easier than you think. You only need three simple tools to start with – Inbound marketing (the cheapest and most efficient form of marketing), a logistics company like DHL or UPS to handle your international shipments and a superhero payment gateway/merchant account.

 

But what if you just want to stay local and promote your services or products within your community? Your budget has a big say in how much spending you put aside for a merchant account/payment gateway. By now you have probably digested the myriad of benefits and features that come with a solid and reputable payment processing provider. Regardless of the size and scope of your business, what makes international merchant accounts so paramount to your business is flexibility and scalability. You can only start by using the services and features you need and once your company grows you can save money just by just staying with the same merchant account and obtaining better discount rates. Most importantly – you show your local or global customers that you care about their needs, how they choose to pay and in what currency.  

 

The next list contains a miscellany of both merchant accounts and payment gateways that we have already analysed, in addition to new ones. However, there is a stronger focus on their global outreach in this case. Here are our findings:   

 


PayPal pro


 

All good ecommerce things start with PayPal! The Pro version of PayPal payments contains all the features bonanza of the previously analysed Standard version but it goes well beyond. Just like with the Standard version, customers do not need a PayPal account to pay for products or services on your website.

 

  • API integration for a highly customisable and secure payment page – no redirection to PayPal’s Standard hosted page, unless you select it! Go ahead and take the chance to put online that brand logo you are so proud of!
  • Instantaneous funds withdrawals – within minutes! Just imagine how easy it is to manage your cash flow and accounts receivable.  
  • Enhanced fraud management – Supports 3D-Secure and Address Verification Checks! If you accept payments from less reputable areas, this is your magical tool to reduce losing sales due to fraudulent attempts.   
  • Free integration, technical support and email/phone support during business hours in the UK.
  • Only £20/month – Remember, this option contains all the Standard features (except One Touch checkout) and it lets you integrate with a POS/card reader too.
  • Negatives – Account needs approval (up to 72 hours). On the other hand, there is less risk for your funds to be frozen without prior notice due to a high-risk status.

 


Shopify Payments logo


 

If you are one of the millions selling through Shopify, their payment gateway is an incredibly solid and sensible ecommerce solution –  plus, if they are not up to your standards you can always switch to other payment gateway providers hassle-free. Similar to PayPal, they offer both in-store and online payment solutions with all the bells and whistles in terms of security, multiple currencies,  shipping rate calculation, languages and beyond.

 

TIP: They offer free SSL Certificates. What does this mean to your business? Read here for more information.

 

  • Since they are one of the top 3 global ecommerce platforms, Shopify sport an impressive array of plug-ins in terms of shipping, logistics, inventory, marketing & SEO that all integrate with their payment gateway. This means that whatever you expect your payment gateway to do, it will go above and beyond that!
  • From Facebook and Messenger sales to digital gift cards and PayPal, Shopify Payments provide you with all the necessary resources to make your business shine and dare to shoot for the stars – 5 stars to be more precise!  
  • Flexible pricing – Their 3 types of monthly plans are fair and transparent ($29, $79 and $299) depending on the needs of your business. Click here for a detailed pricing plan.

 


Authorize.net logo


 

One of the the main reasons Authorize.net are not part of the Big 5 list of free payment gateway providers is that they are not free – the service incurs a £19 monthly fee on top of the setup fees (£37).  However, at 2.49% + £0.15/transaction, this pre-PayPal era merchant account aggregator offers competitive rates for the UK market. Compared to its rivals, their pricing is not so SME-friendly and they lag at equipping your business with the resources to reach global markets seamlessly, but they are a solid and reliable provider with a good track in customer service and support.  

 

  • Supports PayPal payments – As a rule of thumb, remember that for the global markets even if you do not indeed to have the bulk of your sales through PayPal, their logo will add credibility and trust to your business by as much as 24%.
  • Supports MOTO payments (virtual terminal), recurring payments, Visa and Mastercard and basic fraud prevention (Address verification and card code verification).
  • Fast and simple checkout – The suggestive “Buy Now” button lets your customers speed out the payment process.
  • Negatives – For international transactions there is an additional 1.5% charge and a £15 monthly fee for accepting additional currencies (only USD and some European currencies). Ouch!

 


Stripe logo


 

As previously discussed, Stripe are phenomenal… in pretty much every aspect! Scroll up for a more detailed analysis. If your business advertises or intends to promote products and services to the Chinese market, Stripe are the only free payment gateway allowing you to do so.

 


Amazon Pay logo


 

If you have a small shop or business selling through Amazon, either locally or internationally, chances are many of your consumers use Amazon Pay or at least debit and credit cards. This is an ideal solution for Amazon merchants since PayPal payments are not accepted. Scroll up for a more detailed analysis!

 


Braintree logo


 

If you hobnob or rub shoulders with the likes of Airbnb or DropBox, then you might want to follow suit and use Braintree Enterprise commerce infrastructure tools for your company. They proudly promote their white-glove global support – although considering the highly personalised attention and tailored services, it’s more of a Michael-Jackson-glove support.

 

  • In addition to the features of Braintree Standard (scroll up to revise), the Enterprise edition brings new cards to the table – volume-tailored transaction rates, guarantee of continuous uptime, data portability, and advanced fraud screening.
  • If you are serious about going global, Braintree Enterprise is a… no-brainer solution!  

 


Worldpay logo


 

We ranked Worldpay as the #1 UK merchant account – and that’s for a good reason! As a traditional merchant account acquirer, they are truly committed to putting your business on a global pedestal, through their impressive range of payment methods, predilection for Asian markets, dynamic currency conversion and multiple currencies.

 

  • They are among the very few major traditional merchant account providers accepting high risk businesses from industries such as gaming and gambling.
  • Worldpay are genuine trailblazers –  From omnichannel payments to highly advanced point of sale stations, you can rest assured that you are always in the loop with future global trends that benefit your business both locally and internationally.
  • Scroll up for more detailed information and comparison!   

 


SagePay logo


 

Although with less focus on Asian markets, Sage Pay are nonetheless a solid contender among the UK merchant accounts with a strong flair for conducting business internationally. They have the expertise and in-house or in-partnership consultancy team to help your business grow sustainably at a global scale. With an impressive range of features and an advanced payment gateway supporting multiple currencies, as well as in-store POSs and terminals designed with international customers in mind, Sage Pay deserve their spot among the best international merchant account providers.

 


Adyen logo


 

As a true tech globalist, cutting-edge Amsterdam-based Adyen cater to high-profile and sophisticated clients such as KLM, Facebook, Booking.com, Expedia, Burton and less fashionable clients like Crocs. If you crave to enter this star-studded league, you may happen to be in luck – they do take smaller wannabes on board too! Their solutions are absurdly unique and innovative to the point that you might think to yourself – “Do I really deserve this?”

 

  • Offering online, in-app and in-store payment solutions with all the omnichannel bells and whistles, built-in risk management (RevenueProtect),  dynamic checkout (awesomely monikered “frictionless payment flows”) and many other fancy features, Adyen is the cool kid in town everyone wants to play with.
  • Around the world… with more than 250 payment methods and more than 150 currencies.
  • Super cool fancy terminology like RevenueAccelarate –  Which is explained through terms such as “Smart Issuer Logic”, “Dynamic Card Validation”, “Intelligent routing” – are you lost already? In a nutshell, this is a highly innovative technology that has to do with saving those failed transactions declined because of outdated and convoluted processing systems with the end result of helping you regaining some lost profits. How awesome is that?
  • Negatives – Although their technological innovations and fancy terminology might seem super cool at first, for the regular merchant or entrepreneur it can become a bit tedious to fully understand what they mean.

 


Alipay logo


For UK businesses expanding to the Chinese market or simply entrepreneurs advertising products for China, AliPay is the must-have ecommerce solution. Currently, in the UK merchant account providers have already started offering this option to their clients. If you want to beat your competitors to the punch, you can add AliPay payment gateway in tandem with your preferred payment processor.

 

  • Albeit AliPay is supposed to be PayPal’s rival in the East, the reality is that with 520,000,000 users Alipay dwarfs PayPal’s 300,000,000 users and no one single consumer in the western world uses PayPal for absolutely every aspect of their life. By comparison in China they do – Alipay is used for online transactions, bank transfers, checking investments, splitting bills in restaurants, paying utility bills, topping up mobile phone credits, buying train tickets – do you see where we are going with this?
  • Solid solutions for both in-store and online payment processing.

 

Padlock icon

Security, PCI DSS & Costs

 

We’ve thrown around names like PCI DSS compliance, SSL certificates, advanced anti-fraud management and 3-D Secure for quite a lot. Each and every one of these solutions has a specific purpose in making sure your website stays secure and your customers can safely purchase from your store. Although having security measures in place for in-store or online transactions is mandatory, nowadays it is almost implied that your business is compliant with such practices and payment processing security has become a matter of marketing – “who has the best and most innovative security solutions?”

 

As an entrepreneur, it is your job to make sure that your business advertises its security and data privacy to the highest extent and uses this technology to really drive sales and streamline the checkout process.   

 

PCI DSS – The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard formed in 2004 by major credit networks/schemes such as American Express, Visa, Mastercard and other regional banks like JCB. The mandatory requirements to be PCI compliant depend on the size of your business, which can range from Level 1 (over 6 mil Visa transactions/year) to Level 4 (less than 20K Visa transactions/year) – most SMEs fall between Level 3 and Level 4.

 

Whether you accept credit card payments in-store, online, over the phone or via email, your business is required to be PCI DSS compliant or to pass this burden to an accredited third party. Many traditional merchant account providers charge an annual PCI DSS compliance and management fee in the ball-park of £30-£50 per account while most third-party processors (like PayPal) offer free PCI DSS for hosted payment pages and some for API integration as well.

 

The path to becoming PCI DSS compliant independently is peppered with assessments of your firewall, software, data breach history checks, nature and risk of your business. For large companies these individual assessments can go up to £50,000. So, the most convenient solution is to opt for a merchant account or online processor which can handle or reduce this burden for you.    

 

The reality is that the liability and insurance policies for data breach are very complex and you need to discuss or read the terms and conditions very carefully when you sign a contract with any provider.

 

SSL Certificates – Secure Socket Layer Certificates do not replace or reduce the burden of being PCI DSS compliant. They only provide protection (secured/encrypted connection) between your website and customer’s details (such as names, addresses, telephone numbers, email addresses and so on) over the Internet. SSL certificates are one of the many requirements to have installed on your website for becoming PCI DSS compliant.

 

Most merchant account providers or third-party aggregators do not offer SSL certificates, with a few exceptions, and this task is down to you to deal with. If technical knowledge is not your strongest suit, then have your website developer purchase and implement these certificates.  

 

Why are these certificates your strongest marketing tool in terms of security?

 

Let’s be honest – your customers probably have no idea what PCI DSS or SSL stand for or how their complex scope truly enhance personal data and credit card security.  But your customers will most likely be familiar with logos such as Norton (Symantec), Verizon or Comodo – that’s because most ecommerce websites inundate their shopping pages with the logos of these SSL certificates.

 

But even if your customers are not familiar with these SSL certificates’ logos, their browser (Google Chrome, Safari etc.) will flag the connection to your website as “not secure” should you have not installed them. Go up to the URL of this website and check it for yourself – depending on your browser you’ll notice a “secure” or “encrypted connection” message. That’s an SSL certificate and that’s why before any other security measure, it’s your most powerful marketing tool for the online security.

 

What about the cost? Due to their guru-like marketing importance, they do not come cheap at all. Your web developing company might get you some better rates or if you use Shopify they come integrated for free. Norton (Symantec) are among the most expensive ones on the market with packages starting at £168/year and going up to a whopping £3,000/year advanced security solution. Comodo are currently gaining ground as the world’s top SSL certificates provider with highly competitive prices starting at a £45/year basic option to  a £2,000/year Enterprise Pro solution.

 

Tokenization – Let’s put it as simply as possible. The tokenization process refers to sensitive data (payment details) submitted by your customer which can be stored so that whenever customers shop again on your website they do not need to introduce their payment details again. This sensitive data is not actually stored on your website (your payment gateway processes this information and sends it to a cloud data vault) but instead is converted into a unique alphanumeric token with no intrinsic value, stored on your website.

 

This means that even if someone could hack into your website there is no way they could steal your customers’ payment details since the token does not have any valuable information. For customers this is a hassle-free payment option at the click of a button – “use this card for completing the purchase”! Most merchant account providers offer this solution at no extra cost.

 

Credit Card ID (CCV2) – This is the 3-4 digit number called the CCID on the back (Visa, MasterCard) or front (Amex) of your card. This code (which in some western countries is legally required for not-in-person credit card transactions) reduces phishing scams and makes the card less useful in case of a data breach since most merchants are forbidden to store your 3-digit security code anywhere in their system. Generally, this service is automatically included in a payment gateway at no extra cost.

 

Address Verification System (AVS) – As the name says it, quite suggestively, this security system checks the billing address of a credit card user against the address on file at the credit card company. This service is usually part of the anti-fraud and risk management package most merchant account providers offer and it includes CCV2 too. Keep in mind that many banks outside the UK do not support AVS and you might experience an increased rate in declined cards  – as such, if you trade or sell globally from the UK it is best to check transactions manually or partially disable AVS for countries with lower risks in fraudulent attempts.

 

3-D Secure – This is an additional layer of security for online credit and debit card transactions that is used around the world. Reducing the risk of fraud and chargebacks (liability shift), this service verifies your customer’s identity (normally through an additional password sent to customer by their bank via an SMS) at the last stage of checkout. Some merchant account providers may offer this solution at an extra cost (per transaction) while other providers like Sage Pay offer 3-D Secure for free. One of the downsides is that it does not work with recurring billing.

 

EMV – This revolutionary chip-card processing technology has been around for years and most card readers in Europe support EMV (about 90% of all). The results speak volumes –  there’s been a  nearly 70% decline in fraudulent card transactions since its adoption in the UK. Most credit card terminals in the UK accept both EMV and NFC (contactless payments) and many merchant account/payment gateways providers like Shopify, Worldpay, Sage Pay offer EMV terminals and POS stations. Providers like PayPal or Shopify sell EMV card readers starting at £35/device while merchant account acquirers normally rent them out.

 

PDQ terminal

PDQ Machines, Smart POS systems & Costs

 

First off – just breath! These fancy names should not scare you away – we are mainly talking about your card terminal and cash register in this section. Most modern terminals and POS systems/stations offered by UK merchant account providers support both EMV and NFC technology, which puts your business in line with the latest chip & pin, anti-fraud and contactless payment processing trends.

 

PDQ machines and EPOS systems link directly to your unique merchant ID and with integrated payment methods nowadays you can manage digitally pretty much all aspects of your business such as transactions, inventory, customer buying history along with cash flow and accounts receivable.

 

We’ve mentioned the countless benefits of PDQ machines several times throughout this article but in fact PDQ machines do not need any selling points – simply every brick-and-mortar business which caters to consumers or clients nowadays needs one or more types of card terminals/readers.

 

You can either purchase PDQ machines outright (£200-£800 depending on features) or you can lease them (£20-£30 per month/device). These machines have a high depreciation rate, need to be constantly updated and their life cycle is short due to fast-track new technologies emerging on a constant basis. As such, renting them might prove to be a better and cost-effective solution in the long-term.  

 

There are 4 main types of chip & pin PDQ Machines:

 

  • Countertop – The most popular card terminals in the UK. Secure, fast and reliable, they are the number one option for most merchants across the country.
  • Portable (wireless/Bluetooth) – They connect via Bluetooth to a central dock, and they operate within a range of roughly 100 metres.
  • Mobile (GPRS) – They connect via a SIM card and are ideal for merchants who constantly conduct their business on the go.
  • Card reader – These ultralight and ergonomic machines connect to your phone or tablet via an application to process customers’ payment details anywhere. Customer simply inserts their card into the reader/keypad, introduces their PIN and then you can conveniently issue them with a receipt straight away.

 

What about your POS system?

 

Gone are the good old days of your chunky unsophisticated cash register! Currently, the most used smart POS system in the UK is Epos Now whose machines you see scattered all over the city – they are the industry-leading provider of traditional till software and hardware that include a bundle of top-notch features such as reporting, inventory control, staff management and CRM while allowing third-party integration with apps specialising in accounting, booking engine, mailers, employee schedulers, ecommerce tools.

 

Among UK merchant account providers that offer smart POS stations, First Data’s revolutionary and sublimely elegant Clover stations are overwhelmingly popular. Clover stations look like something Apple would sell if they had developed in-house POS devices. As such, if you wish to associate your business or premises with a point of sale device that oozes innovation and modernity, Clover stations are your answer.

 

Equally cutting-edge is Worldpay’s EPOS system (My Business Hub) which offer similar features to Clover’s.

 

Similar to card terminals, smart POS stations can be either purchased (north of £1,500 for a complete set: tablet, barcode scanner, cash register, receipt printer, credit card machine with stand) or contractually leased on a monthly basis with rates starting at £50/station.

 

How icon

How does credit card processing work?

 

Ever wondered what goes on behind the scene when placing an order? We bet you have!

 

The reality is that a complex financial process occurs within the blink of an eye! There are so many players in this game, sometimes even financial experts fail to understand all the minuscule parts of this elaborate and intricate process. However, we’ll attempt to explain it in the easiest and most entertaining way possible!

 

Keep in mind that this is a very simplified version of what really happens behind the scene and it tries to approach simultaneously in-store and online credit card transactions via a merchant account provider.  

 

Let’s imagine a play or a drama in three acts with six main characters:

 

Acts:

  1. Authorization (chasing after the funds)
  2. Capture (catching the funds)
  3. Settlement (Happily ever after – the funds are here!)

 

Characters:

1.Cardholder (The hero of the story – Your customer)

  1. Issuing Bank (Your customer’s bank)
  2. Merchant (The Business – You)
  3. Acquiring Bank (Your bank)
  4. Credit Card Network/Scheme/Association/Company (Visa, MasterCard, Amex etc.)
  5. Processor (Your Merchant Account Provider or Third-party Aggregator)

 

Scenario 1: On a beautiful warm sunny day in London, a ravishingly good-looking cardholder walks in your meticulously decorated store. The mysterious cardholder sheepishly approaches your counter, asks for your freshly-baked scones and confidently hands you their most precious item – the credit card. You smile profusely and radiantly!

 

Scenario 2: On a beautiful warm sunny day anywhere in the world, a ravishingly good-looking cardholder puts on their pyjamas and gets ready to order online from your store. The mysterious cardholder sheepishly contemplates purchasing from your meticulously well-designed webstore and finally decides to place the order using their most precious item – the credit card!

 

Here’s what happens next:  

 

Authorization

  1. Cardholder inserts/swipes their credit card or manually introduces their credit card details (online).  
  2. Your Processor steps in! The terminal (POS) or payment gateway securely (PCI DSS) captures customer’s data and sends it to the Issuing Bank (and your Processor).
  3. The Processor asks the Credit Card Network (Visa,Amex, MasterCard) to authorize the transaction which then routes it to the Issuing Bank.

Capture

  1. The Issuing Bank accepts or declines the transaction based on customer’s available funds and passes the information back to the Network. The Network relays the transaction results to the Processor.
  2. The approval or decline is sent to the merchant or website.
  3. The Processor or Issuing Bank sends the funds to the Credit Card Network which deposits the money into the merchant’s Acquiring Bank.

Settlement

  1. The Merchant’s Acquiring Bank deposits the money (minus deducted fees) into the merchant’s bank account. Withdrawal times/payouts vary (usually 2-7 working days).
  2. Cardholder completes the transaction and receives a receipt.
  3. At the end of the day or other established cycle, the Merchant or website sends either automatically or manually a batch of all authorized transactions to the Processor or Acquiring Bank.

 

Let’s hope for a happily-ever-after ending – No refunds or chargebacks!

 

Processing fees

Merchant account processing fees

 

Throughout this article we’ve taken a close look at the bulk of fees charged by various types of merchant account providers. Here you can get a broader view on the overall merchant account expenses. These costs are crucial to your business and it’s imperative you include them in your P&L and cash flow statements on a monthly basis and have a separate breakdown sheet with all the fees so you can monitor any fluctuation and change in rates.

 

Apart from the fees we present down below, please keep in mind that some merchant account providers sneak hidden/junk fees into your contract and you might not be aware since the percentage is very low and unnoticeable to a financially untrained eye. For some types of businesses, with a higher risk, there might be a rolling reserve fund imposed on your account (a 5%-10% amount of all your monthly sales held by the bank to cover contingencies such as chargebacks and refunds, which  is normally returned within 6 months).

 

Also note that the type of your business industry, volume of sales and pricing plan (interchange plus, interchange differential, fixed/flat percentage, tier, billback) might make your actual fees look completely different from the ones in the table down below. We are analysing the model of an SME, low risk, with an interchange plus pricing model since most UK merchant account providers transparently advertise their prices based on this particular model.   

 

Credit and debit card charges are a real burden for merchants in the UK, which is why many businesses attempt to cover these card-inflicted losses by passing the surcharges to their customers. However, due to a new initiative from the UK government, starting January 2018 merchants across the UK will be vehemently forbidden to charge customers any fees for using their credit or debit card.  

 

Charges/fees Amount Description
Transactions

20p-40p/0.5%-0.75% for debit cards

1.4% – 5% for credit cards

1.4% – 3.4% + markup (online)

  • In-store transactions are considered lower risk than online transactions with a lower probability for chargebacks and frauds.
  • Debit card charges are considerably lower than credit card charges.
  • The percentage/transaction is the fee charged by the Credit Card Network while the markup is normally added by the merchant account provider.
  • Volume of sales is inversely proportional to charges (the more you sell, the less you pay).  
International/cross-border Transactions0.5% – 2.9%, sometimes they incur a markup.
  • International transactions are considered non-qualified transactions with a higher risk and consequently higher rates.
  • Cross-border fees are imposed by Visa and MasterCard and depend on the card brand, country of issue and country where the order is placed in.
  • Traditional merchant account providers have a better negotiating power to lower these charges for your business, especially if you operate and manage a larger enterprise.
  • They come as additional charges, on top of initial transaction fees.
Multiple Currency

Exchange fees between banks

£0-£15/month for accepting multiple currencies

  • Traditional merchant acquirers normally offer dynamic currency exchange (in-store) and multiple currency payments (online) which give financial benefits to merchants and convenience to customers.  
  • While you might earn some money from the currency conversation, your customers actually pay for this service (3%-7%/transaction + other fees) and they won’t know the total amount of their purchase until they check their statement.
  • Some merchant account providers charge you for accepting multiple currencies.  
POS/ PDQ Machines

Downpayment (£200-£1,500+)

Monthly (£20-£50)

  • Read PDQ Machines, Smart POS systems & Costs.
Payment Gateway

Free

£20 – £30/month

10p-15p/transaction

  • Payment gateways are normally free with a merchant account provider or may incur a monthly charge of £20-£30. If you already have a merchant account provider but wish to use a third-party payment gateway you may be charged £50-£70/month for the service by the third-party provider.
  • Most UK merchant acquirers allow for up to 350 online transactions/month free or charge. After that threshold, they may charge 10p-15p/transaction for the payment gateway.
Virtual Terminal

£10-£20/month

100-350 free transactions/month (10p-20p for additional transactions)

  • MOTO Payments (phone, email) are processed through a payment gateway.
Statement (Account On File)£10-£20/month
  • Some merchant account providers charge paper statements sent in the post on a monthly basis, regardless of whether you want the service or not. Always read the contract and ask the sales agent about this hidden charge!
Daily Batch Processing10p-20p/batch
  • Every time you batch out all your transactions at the end of the day and send them to the processor either manually or automatically a small charge is incurred.
  • If your business is open daily, you would have 30-31 batches/month.
Discount rate

Qualified

Mid-qualified

Non-qualified

  • Rates are determined by Visa and MasterCard and your merchant account provider.
  • The higher the risk, the higher the rate.
Monthly minimum£10-£30/month
  • Most merchant acquirers have a threshold for charging a business if they deem it to be unprofitable or has a very low volume of sales. However, you won’t notice this charge since hopefully your business is steady and remains on a solid growth track.
Monthly plan

£20-£50/month

Significantly higher for enterprises

  • Monthly pricing plans are commonplace among traditional merchant account providers, although companies like Worldpay offer Pay As You Go options too. Most merchant account aggregators do not charge monthly fees for their basic/standard versions.
Setup Varies greatly
PCI DSS £20-£30/year
  • While third party aggregators offer free PCI DSS compliance for hosted payment pages, most traditional merchant acquirers will charge an annual management fee.
PCI-non-compliance £40-£50/month
  • If you choose not to rely on your merchant account provider’s PCI DSS compliance service or become compliant on your own, you will have to pay  a monthly fee. This option is highly unrecommended and normally results in unnecessary financial losses.  
  • You normally have 90 days to become PCI DSS compliant from the moment you sign a contract with your merchant acquirer.  
3-D Secure Transactions

0.3%-0.5 for credit cards

0.10p for debit cards

  • 3-D Secure in the UK improves conversion rates as this security practice is widely recognised by consumers.
AVS (Address Verification Service)

Included

0.05p-0.10p/transaction

  • Some merchant account providers include AVS in their overall pricing plan while others separate it.
Chargebacks£14-£30
  • Online merchants have a higher probability of disputes raised by consumers on grounds of credit card fraud or statements such as “I have never shopped in that store”.
Early cancellationPro-rata
  • Normally early termination fees are calculated pro-rata on an 18-month contract. For instance, if you pay £30/month, you’re 3 months into your contract and want to cancel with 15 months to go, you would pay £450. This is why early cancellation fees are known to be quite cruel and steep in this industry.  
Re-programming and replacements Varies
  • Software and hardware updates or repairs can come with a guarantee but with limitations and for a certain period of time. Most UK merchant account providers offer next-day terminal replacement.

 

High risk accounts

High risk merchant accounts

 

We’ve debated and mulled over high risk businesses throughout the entire article and by now you might have a clear understanding of what that means and the implications of being a high risk company. Although this assessment process applies to all businesses in the UK (physical and online), most merchant acquirers associate high risk businesses with the online due to a higher probability for frauds/chargebacks, instability (rapid and unsustainable growth of sales and deliveries), and the easily disputable nature of sold products/services upon delivery. Here’s a basic list of businesses/industries which might be considered high risk in the UK:

 

  • Debt management and collection
  • Digital downloads (movies, e-books, music, software)
  • Adult entertainment industry (dating and matchmaking sites, adult films, adult toys, adult bookstores and other similar shops)
  • Online/offline gambling sites
  • Airlines and flight ticket issuers
  • Event ticket sellers
  • International shipping (import-export)
  • Investment and financial strategies/schemes and counseling/consultancy
  • Pharmaceuticals (medicine, herbal products, natural and organic ingredients, health supplements, vitamins, diet pills)
  • Real estate
  • Online marketing and SEO services
  • Particularly bad credit rating
  • Social networking websites
  • Tour operators and travel services
  • Web hosting
  • Weapons

 

Don’t despair – there are ways around it! First off, you should never skimp on the quality and reputation of your merchant acquirer and go instead for an unreliable provider luring you in with competitive prices. Some major UK providers like Worldpay sign up small companies with a high risk (except bad credit) and you should shop around to determine which option is the best for you. On a chipper note, not all merchant acquirers assess and underwrite on the same criteria, so with a bit of luck and wit your business might not be even deemed high risk.  

 

UK high risk merchant account providers charge an average fee of 4.5%-5%/transaction (2.5% – 2.9% in the lower end and 7.5%-10% for very high-risk businesses). Unsurprisingly, monthly fees are  not pocket-friendly either, with some providers charging double rates than in the case of standard businesses. In additional, a rolling reserve fund is most likely to affect your cash flow and chargebacks come with steep annual fees.

 

Some of the more reliable and experienced high risk merchant account providers are:

 

  • Web Merchant
  • CashFlows
  • First Data
  • NetBanx

 

What about small businesses or startups with no credit history or bad credit which also operate in a high risk industry?

 

You may start with a free payment gateway like PayPal, although they are not really the most reliable and safe options for high-risk businesses since they can freeze your funds without any prior notice if they consider so. But for a company/startup with no credit history or bad credit rating, this is one way to to go about it.  

 

In an extreme situation, you might need to make some compromises and opt for an offshore merchant account. Europe, the US and Asia are the largest ecommerce markets in the world and they seem not to be losing momentum anytime soon. However, one main difference of financial companies operating in Asian markets is that the underwriting and risk assessment processes do not have such rigorous requirements compared to the almost austere regulations of western merchant account providers.

 

Tax haven destinations around the world have a reputation (other than tax evasion) for helping offshore companies with various financial services. Hubs like Cayman Islands, Panama, Bermuda, Hong Kong, Mauritius or closer-to-home ones in Malta are magnets for financial enterprises providing their services to small businesses or large enterprises which wish to circumnavigate the local regulations of their home country. These processes are legal – if even Queen Elizabeth II holds offshore “savings” in Bermuda as per the latest “Paradise Papers” leaks, who are we to judge? One of the main disadvantages associated with this option is the negative reputation your business might receive, so consolidate a strong and transparent marketing strategy beforehand.

 

US-based Instabill and VeriPayment are reputable examples of such companies operating in most of the aforementioned tax haven hubs offering very competitive prices.

 

Contactless icon

Contactless Payment – Apple Pay, Android Pay, Samsung Pay

 

UK’s love affair with contactless payments has almost become legendary – Visa’s Annual Digital Payments study concluded that within the past 10 years two thirds of UK customers have made contactless payments and in June 2017 alone more than one third of consumers chose contactless payments as their preferred transaction method. While at the moment transactions are capped at £30, it is most likely the cap will increase to £50 or £60 within the next two years since retailers are pushing for this implementation thanks to the popularity of contactless payments.

 

What technology is it used? NFC (Near-field communication) is the magic behind connecting two electronic devices (centimeters away from each other) such as a smartphone and a card reader (terminal) or between two smartphones for data transfer.

 

How does it work? All modern terminals in the UK have an integrated NFC chip that connects to a customer’s mobile device supporting the same technology. All they need to do is place the mobile device a few centimeters away from the terminal and authorize the transaction (via a mobile app) either with their fingerprint/TouchID or a passcode. It is safe, convenient and fast for both the merchant and the customer!

 

Currently there are three main types of contactless payments supported in the UK – Android Pay, Apple Pay and Samsung Pay – each having a unique forte over the others. Android Pay supports the largest number of mobile devices, Apple Pay boasts the largest pool of supported credit/debit cards, banks and retailers while Samsung Pay supports both NFC and Magnetic Secure Transmission (MST) which means Samsung Pay is supported by old-generation terminals too.

 

Still wondering? Jump to the contactless payment bandwagon sooner than later to take advantage of reduced transaction fees, queues and waiting times for payment processing, increase the footfall in your store and stay ahead of the curve!

 

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