If you know me in any capacity, whether it be professional or personal, then you know I like to talk about card machines. Obsessively. It’s not hard to see where my obsession comes from when you realise how diverse merchant services are. There are multiple variations for the same process.
Card machines come in all manner of shapes and sizes; ecommerce, handheld, countertop, remote, pay-as-you-go. They are all so unique. The latter of these devices, the pay-as-you-go machine, has seen an increase in usage over the last 12 months. It’s not hard to see why this type of card machine has taken off. Customers of these machines do not have to think about terminal rental and memberships; they only pay for the terminal itself and the transaction rates.
These machines are brilliant for small businesses and those who are new to card. Many new businesses simply cannot afford terminal rental; however, they still need to accept card customers. Pay-as-you-go machines allow new businesses to accept card payments and build up their customer base. These card machines are also optimal for businesses which rarely take card payments. Pay-as-you-go card machines are, in my opinion, the best introduction to card.
Nevertheless, the honeymoon period never lasts.
What I tell prospective clients is that, once your business makes more than £2,000 consistently per month, the pay-as-you-go system becomes a drain on the business. The reason for this drain is the abovementioned “fixed-transaction rates”. These fixed rates are set above 1.5% for every card type. This means that businesses are paying Corporate Card rates for card types that are cheaper on a traditional terminal – Debit cards and Credit cards.
Realistically, more businesses take Debit/Credit Cards (Visa/MasterCard) then they do Corporate Cards (American Express). The rates for both these cards can often be cheaper on a traditional terminal. The reason for this is that banks are often competitive when it comes to Debit / Credit rates. This is because of the number of consumers who pay using these methods. Furthermore, consumer Credit/Debit cards do not offer expensive perks, such as a discount on hotels. In my experience, the rates for Debit cards can be between 0.3%-0.5%. The range for Credit cards can be slightly higher coming in at 0.6%-1%.
As you can probably see, 0. is a greater saving. Businesses would much rather have the lower rates than have to pay corporate rates for common card types. It’s why I usually tell businesses that if they make over £2,000 a month consistently then their best option is to switch. The main worry I find with switching is the cost of the terminal rental. Whilst terminal rental is an additional cost, the savings made by having a cheaper transaction rate will cover the cost of terminal rental. And, in the long run, it will generate a greater saving for the business.
If your business makes over £2,000 consistently, and you think its time to make the switch to a traditional card machine, then why not reach out to us? Bespoke Merchant Solutions is happy to assess your current rates. The reason we are 35% more competitive is because our goal is to create tailored packages for our clients. Our fixed processing charges means that your business could save a considerable amount over a pay-as-you-go system.