How can small businesses take payments?

#SmallBusiness

By Timothy Adler on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

How you take payments is crucial for any small business. And the Covid-19 pandemic accelerated the shift away from cash to contactless. According to UK Finance, the total value of contactless transactions in 2021 hit £165.9bn, more than double the amount recorded in 2019 pre-pandemic.

It used to be that taking card payments just involved renting a card reader, today’s payment systems connect your till, your inventory and even your bank account – which means you can even borrow money against real-time takings. Today’s payment systems are seamlessly connected.

But where do you start if you want to take payments?

How can small businesses take payments?

Every small business today has to be equipped not only to take debit and credit card payments, whether it’s Visa, Mastercard or Amex, but also new smartphone payment wallets including Apple Pay and Google Pay, and even cryptocurrencies.

Best mobile payment app for self-employed

It’s not just businesses with fixed premises that have to take payments. In today’s contactless world, fewer people carry cash. Which means that any sole trader on the move has to be able to whip out their own card machine.

Payment devices you carry around with you have revolutionised how customers pay.

One of the great changes for the self-employed on the move, whether you’re a mobile hairdresser or a masseur or even running a food truck, has been the advent of contactless payment devices linked to your mobile phone.

Even better than the on-the-go convenience is that, unlike the old days of fixed payment terminal card machines, you don’t have to enter a constricting fixed-term contract. You just buy the machine, download the mobile app onto your smartphone and off you go. Mobile phone payment is via a fixed rate per transaction.

Upfront cost vs cost per transaction

There are two parts to consider: the upfront cost of your mobile phone payment card reader and then the cost to you per transaction.

The mobile phone payment card reader can cost anywhere between £16 for a Square Reader up to £49 + VAT for the Shopify Wisepad 3; the cost per transaction ranges from between 0.8 per cent plus a £0.02 transaction fee if you’re a Revolut customer up to 1.75 per cent for Square and Zettle transactions.

6 mobile devices for payments

Best payment apps for small businesses

With the number of payment methods increasing, there are many payment apps for small businesses to choose from. These payment apps are essential for small businesses and customers alike. With more consumers choosing to pay via contactless and suppliers invoicing online, businesses no matter how small need to be ready to process transactions.

Payment apps for small businesses – either payment gateway or point of sale (POS) – can be used to make bank transfers, mobile payments, online card payments and point of sale payments.

For retail businesses that are taking in more than £10,000 per month, it is best to use a payment app connected to a card reader.

Online payment gateway apps

PayPal for Business

PayNow for Stripe

Point of sale (POS) payment apps

Are there any free card readers for small businesses?

Cheapest card readers for your small business

Rental
	Price per month	Transaction fee
Clover Flex	£14.99 + VAT	1.5%
Barclaycard Flex	£10 + VAT	1.6%
Dojo Go	£20	1.4%
Purchase
	Upfront cost	Transaction fee
SumUp Air	£39	1.7%
Zettle	£29 + VAT	1.8%
Square	£16 + VAT	1.8%
Lopay	Free	0.79%

Source: Small Business

The short answer is no, but there are some lower-cost options out there. Cutting costs is a key consideration for small businesses given what’s been called the cost-of-business crisis.

When thinking about costs, consider your monthly fees along with your transaction fees, set-up fees and any other charges that may be hidden in the small print.