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Top 4 Merchant Account Providers for UK Startups


Starting a new business is an exciting investment into your future, but there’s a lot to before you’re officially a business.

Accepting payments often means setting up a merchant account, but as a new business with no financial records, most traditional merchant account providers won’t work with you.

If they do, you’ll be labelled a high-risk account and you’ll have to pay high fees for the first 1-2 years of doing business.

Luckily, there are plenty of startup friendly merchant account providers in the UK.

However, with each option offering different services and specialisations, there is no one-size-fits-all solution, and you’ll have to research to see which option is a best-fit for your business.

  • Startup merchant accounts offer fees from 1.4% + 20p
  • You can expect monthly fees to range from £0-£10
  • Transaction processing typically takes 1-7 days
  • Third-party payment processors like PayPal are typically the best solution for small business


Starting a business can be a complex process, but your merchant account doesn’t have to be. There are plenty of low-cost, startup friendly solutions you can consider.

In this guide you will find


The Top Startup Merchant Accounts


Startups typically need simple services, easy to understand fees, and low costs. The following startup merchant accounts are among the best options in the UK.


Stripe logo

Stripe is an online payment gateway with rates starting from 1.4% + 20p. Unfortunately, with no credit card terminal and no possibility of accepting face-to-face payments, Stripe isn’t for everyone, but is one of the cheapest payment gateway solutions for startups. Stripe also includes free online reporting, support for SEPA Direct Debit and various other European payment methods, and one-click integration into most major online shopping carts.

See full Stripe review


PayPal logo

PayPal’s payment gateway and point of sale card readers allow startups to quickly set up online or face to face sales with no credit check, no business reviews, and no startup fees. PayPal is cost effective, processes funds in 0-3 days, and is one of the most widely recognised brands in the world.

PayPal Here payment terminals cost £15-£75 each. To use them, you’ll have to pay a monthly fee of £20 per month. If you only need online sales and don’t mind forcing customers to log into PayPal, you can use PayPals merchant account for free.

As a startup, you’ll pay PayPal’s highest transaction fee, which is 3.4% + 20p, but this will drop over time as your income rises.

Sales Volume Transaction Fee
>1,500 3.4% + 20p
>6,000 2.9% + 20p
>15,000 2.4% + 20p
>55,000 1.9% + 20p

See the full PayPal review


Square logo

Square is one of the oldest and largest small business-oriented merchant account solutions, and one of your best options in the UK. Square charges 2.5% for online and keyed payments and 1.75% for chip and contactless payments. You’ll also pay £59 for the Square credit card machine. With no other fees, Square makes a lot of sense for most small-businesses.


iZettle logo

IZettle is a simple startup-friendly merchant account and credit card terminal solution for face-to-face sales. With no payment gateway, iZettle does not support e-commerce, but does offer a credit card terminal from £59 with flat rate pricing at 1.75% for cards and 2.5% for online invoicing. The standard account is free with no additional fees but you can also choose to add-on improved tools and customer support for £20 per month.

See full iZettle review


Why Traditional Merchant Accounts Don’t Work for Startups


Choosing a merchant account typically means looking for an acquiring bank, partnering with them, renting card terminals, and acquiring other solutions such as a payment gateway or virtual terminal. Unfortunately, this route is often expensive, with total costs typically exceeding £80 per month, high fees for non-PCI compliance, and high startup and early termination fees. If you’re starting a new business, you likely can’t afford these fees.

For example, First Data, the largest merchant account provider, charges the following fees:


Fee Cost
Transaction Rate 2% + 20p- 3.5% + 40p (standard 2.7% + 20p)
Monthly Fee £10+ per month
Account on File Fee £5 per month
Terminal Setup Fee £150-£300
Terminal Maintenance Fee £4.75 per month
Minimum Monthly Charge £15
PCI Non-Compliance Fee £35 per month
Paper Statement Fee £5.95 per month
Terminal Replacement Fee £150
Terminal Restocking Fee £250
Customer Service Fee £10 +
Early Termination Fee None
Chargeback Fee £25
Chargeback Review Fee £250


For a basic account, minus any fees or extra services, you’ll pay just under £90 per month.

Third party payment processors like PayPal, Stripe, Square, Paylane, and others help you avoid these additional fees, making them much more startup friendly. The average merchant account also comes with a minimum 12-18-month contract, with high fees if you terminate early or no possibility to cancel. Third party payment processors usually have monthly contracts, no startup fees, and no termination fees, making them much safer for a new business.


Comparing Startup Merchant Accounts


Choosing the right merchant account for your business usually means comparing your options, checking your needs, and deciding which option offers the best value for your business.


Merchant Account Stripe Square iZettle PayPal
Transaction Costs 1.4%-2.9% + 20p 1.75% – 2.9% 1.75% – 2.9% 1.9%-3.4% + 20p
Card Terminal N/A £59 £59 £15-£75
Payment Gateway   Yes N/A NA Yes
Invoicing Yes Yes Yes Yes
Monthly Fee £0 £0 £0-£20 £0-£20
Payment Processing Time 7 Days 1-2 Days 1-7 Days 0-2 Days
Set Up Fee £0 £0 £0 £0
Termination Fee £0 £0 £0 £0
Chargeback Fee £15 Insured to £250 Insured to £250 £14
Contract Length Monthly Monthly Monthly Monthly


If you’re looking for a payment gateway, Stripe offers the lowest-cost solution for startups with no fees and no contract. If you need face-to-face sales, Square and iZettle each offer competitive solutions, although iZettle’s basic solution wins out in terms of cost alone. If you need both, PayPal is your own real option, unless you want to combine services.

If you’re still not sure, Worldpay, Elavon, and First Data offer startup merchant accounts, with fees typically starting around 3.4%.


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