Top 4 UK ‘No Credit Check’ Merchant Accounts
If you have bad credit or no credit, you may have difficulty getting a merchant account without being classified as high risk.
Sole traders and small businesses earning less than £5 million per year are judged by owner/operator credit, so if yours is bad, it could send your transaction fees soaring to over 4%.
A bad credit merchant account will also likely include high monthly costs and a rolling reserve deposit of up to 25% of your total monthly transactions, all of which can be incredibly steep for a small business.
There are no credit check solutions available, so let’s explore those now.
The solution for small retailers is to seek out a no-credit check merchant account, where you can apply for an account without risking the acquiring bank looking at your financial records. Unfortunately, there aren’t many no credit check merchant accounts in the UK, but they are available.
- Most third-party payment processors do not use a credit check for merchant accounts
- Merchant account credit checks go back 6 years and 10 years for bankruptcy
- You can expect rates from 1.4% + 20p from no-credit solutions
- No credit check merchant accounts are often geared for online sales
No matter what your credit, you can qualify for a merchant account, especially by choosing to go through a third-party payment processor. However, you should still check rates, compare offerings, and make sure you’re getting the best deal for your business.
There are dozens of solutions you can use to get a merchant account with no credit check. However, the following include the top 5 options. Most of these options do not run credit checks on you or your business, allowing you to quickly set up and begin processing credit card payments in days.
PayPal Pro costs £20 per month and includes face-to-face and online sales, with a payment gateway, credit card terminals through PayPal Here, and payment processing for customers without logging into PayPal. You can set up an account and start accepting transactions immediately. PayPal may freeze your account for additional verification, but will not typically run a credit check.
PayPal charges rates based on your sales volume:
|Sales Volume||Transaction Fee|
|>1,500||3.4% + 20p|
|>6,000||2.9% + 20p|
|>15,000||2.4% + 20p|
|>55,000||1.9% + 20p|
You can expect to pay £15-£75 for a card terminal. However, PDQ machine solutions are intended for micro business, and may not be suitable for a larger business.
Stripe is PayPal’s number 1 competitor in the UK, and your cheapest no credit check merchant account solution. Unfortunately, with no support for face-to-face sales and no MOTO payments, Stripe is only suitable for e-commerce business.
With a flat rate pricing scheme at 1.4% + 20p for UK cards and no additional fees, Stripe is low-cost, easy to use, and relatively headache-free, even for new business owners.
Square offers a £59 card terminal and an online payment gateway with no monthly fee and no credit check. The company charges 2.9% + 20p for nearly all cards and allows you to set up and start accepting transactions within days.
While Square charges higher rates than alternatives like Stripe, the company does offer better introduction rates than PayPal.
Nochex is Stripe’s largest competitor in the UK, offering online payments with no credit check and rates from 2.9% + 20p to 3.9% + 20p. You’ll also pay a one-time setup fee of £50 and will likely pay a rolling reserve or have transaction limits until you re-establish credit with the company.
Amazon Pay offers no monthly fees and no credit check, although you will have to provide your business and banking details. Amazon charges the same rates as PayPal, but with no £20 fee, it will be slightly cheaper.
|Transaction Volume||Processing Fee|
|> £1,500||3.4% + 20p|
|£15,000.01-£55,000||1.9% + 20p|
|<£55,000||1.4% + 20p|
Amazon also offers one-click checkout for Amazon customers.
Comparing Third Party Payment Processors
If you’re considering one of these 5 no-credit-check merchant account providers, it’s a good idea to compare the company, its services, and any specific offerings that makes it uniquely suitable for your business. For example, Amazon Pay is ideal for businesses with e-commerce stores selling on Amazon and their own site. Stripe only offers e-commerce credit card processing. Nochex, Square, and PayPal offers both online and face-to-face sales, but with different rates and offerings.
|Merchant Account||Stripe||Square||Amazon Pay||Nochex||PayPal|
|Transaction Costs||1.4%-2.9% + 20p||2.9% + 20p||3.4% + 20p-1.4% + 20p||2.9% + 20p –3.9% + 20p||1.9%-3.4% + 20p|
|Payment Processing Time||7 Days||1-2 Days||3-7 days||7 Days||0-2 Days|
|Set Up Fee||£0||£0||£0||£50||£0|
|Chargeback Fee||£15||Insured to £250||£20||£15||£14|
This doesn’t necessarily mean that a third-party payment processor is a better solution for your needs. Many merchants with bad credit can correct bad-credit problems by partnering with a high-risk merchant service provider and paying bills on time, which may be something that you are willing to do to improve your credit and your options over time.
If you have bad credit, you are at a bargaining disadvantage. Fewer merchant account providers will offer you a contract, and any company you work with will know this. It’s important that you go into any merchant account contract carefully, fully review fees and costs, and make sure that you’re getting a good deal.
Some of the biggest items to watch out for include:
- Rolling Reserve – A rolling reserve is a type of deposit, where your merchant account provider holds 5-20% of your monthly transaction volume in reserve. This is a standard practice for high-risk merchants to protect the acquiring bank in case you receive a high volume of chargebacks or do not pay monthly fees.
- Higher Fees – Most merchant account providers charge an additional transaction fee of 1-3% for high-risk merchants. If you work with a merchant account provider and apply with a credit check, you will likely see this fee.
- Limited Support – Most no credit check merchant accounts offer online-oriented solutions or market to primarily small and micro business. If you need a larger volume of credit card terminals, you should compare your options based on terminal offerings, or pick a solution that will allow you to reprogram your own card terminals.
Other than that, you mostly have to read the fine print on your contract, make sure you have money set aside in case your account is frozen or your merchant account withholds money for a rolling reserve, and ensure that you have money to continue to make payments.