It’s no longer necessary to get stuck with a bad card machine deal, whether you’re thinking of hiring or buying one. So what are the card machine charges applicable to a small business in the UK?

The market is denser than ever, meaning fees are more competitive and contracts more suitable for risk-averse small businesses. Terminals you can buy online have brought the price down. Furthermore, technological improvements have made it possible to produce simple payment terminals at a lower cost than previously.

The charges depend on whether you hire or buy the terminal, what cards you accept and what other services are part of the package. Let us first look at the costs of hiring and compare with buying a card machine.

Hiring a card machine – what will it cost?

Renting a card machine is usually the most risky for a small-business merchant – unless you know what to ask the sales rep and read the fine print in the contract before signing up. Most companies will give you quotes based on your business type, turnover, requirements and level of commitment.

Prices are not transparent on terminal providers’ websites because they vary from merchant to merchant. This can be good if you get the best-suited package for your business, or bad if you’re sold an overpriced deal for your budget.

The type of costs and price ranges are typically the following.

Cost itemTypical charges*
Setup fee£0 – £150
Delivery£0 – £15
Monthly rental fee£18 – £30 per terminal
Merchant accountMonthly fees + extra contract and costs for Amex acceptance
Transaction fees0.6% – 3.5% + other fees
Payouts£0 – £1.50 per batch
Reporting£0 – £5 monthly
Monthly minimum charge£0 – equivalent of remaining fees to reach minimum sales volume
Refunds£0 – transaction fee paid initially
Chargebacks£0 – £30 per chargeback
PCI compliance£0 – £250 annually + non-compliance fees
Terminal servicing£0 – £150 per instance
Early termination£0 – £1200 (equivalent of buying out contract)

*Excluding VAT, except transaction fees where VAT does not apply.

Cost itemTypical
charges*
Setup fee£0 – £150
Delivery£0 – £15
Monthly rental fee£18 – £30 per terminal
Merchant accountMonthly fees + extra contract and costs for Amex acceptance
Transaction fees0.6% – 3.5% + other fees
Payouts£0 – £1.50 per batch
Reporting£0 – £5 monthly
Monthly minimum charge£0 – equivalent of remaining fees to reach minimum sales volume
Refunds£0 – transaction fee paid initially
Chargebacks£0 – £30 each chargeback
PCI compliance£0 – £250 annually + non-compliance fees
Terminal servicing£0 – £150 per instance
Early termination£0 – £1200 (equivalent of buying out contract)

*Excluding VAT, except transaction fees where VAT does not apply.

If you rent a card terminal, you enter into a fixed-term contract that can be 12, 18, 24 or 36 months – even up to 5 years. You can rent for the short term, but this is more pricey and only recommended for one-off situations where you want the best card machine for e.g. a day, weekend or up to a month.

With a hire contract, you rarely get a simple monthly price with predictable fees. A lot of the charges also depend on the card machine model and what is included in the merchant service contract.

The extent of contract lock-in determines some of these charges. Renting a terminal typically means you’re stuck with a contract until you cancel it, but cancelling early leads to an early termination fee which often is the equivalent price of paying out the remaining charges planned up until the end of the contract. This can cost hundreds of pounds, but some providers may let you off easily at a lower cost or even for free (the latter is not common, though).

portable WiFi Ingenico terminal

Standard WiFi/portable Ingenico terminal offered for long-term hire.

Often, you need to cancel 30-90 days before the end of the contract – otherwise, it will auto-renew and you’d need to pay an early termination fee covering the future contract. Inflexible, yes, and it has caused a lot of grief for small-business merchants having to commit to a new contract term without their active consent. Not all companies are stone-cold about this, though, but we certainly recommend reading the small print of a contract on cancellation when you sign up.

You may pay a lower monthly cost the longer your commitment is, which is something stable businesses with enough certainty of future card turnover can consider in their negotiations with terminal providers.

Other charges you’re likely to pay include:

Setup and installation: Some contracts don’t charge for setting up, but it’s common to pay an upfront account creation fee, installation cost for the terminal and/or a general setup fee. You may even have to pay for shipping.

Card machine hire: You usually pay a monthly fee specifically for renting the card terminal (as you see on this list, there are plenty extra costs involved). The exact price depends on the terminal model: a stationary, countertop terminal is typically cheapest, then we have WiFi/portable terminals in the mid range, and 3G/mobile card machines with SIM card incur the highest monthly cost.

You may pay separately for SIM data on a mobile terminal, but it is increasingly common to be provided the mobile data as part of the monthly hire fee.

Terminal replacement and servicing: You often see companies offering “next-day terminal replacement” or the likes, but expect to pay for this. If faults fall under the warranty or the contract covers repairs, you may be able to avoid these costs altogether, but any urgent servicing is rarely free.

Merchant account and payouts: To receive payments, the money has to be processed though a merchant account and settle in your business bank account. When you rent, the terminal provider will set you up with an acquirer providing you the merchant account. Unless the terminal provider offers you a packaged deal with a merchant account included, you will likely pay a setup fee plus ongoing monthly charges for the merchant account. Depending on the acquiring bank, you may pay for each settlement to your bank account.

If you want to accept American Express, an additional agreement typically has to be set up because Amex is not processed by acquirers accepting Visa, Mastercard and other card brands.

Transaction fees: Card transaction fees depend on your typical sales volume, length of contract, business type (high-risk businesses get higher fees) and types of cards accepted. Before you sign up with a provider, you will be given quotes on these card fees.

  • You can expect the lowest fees for domestic Visa and Mastercard, and the highest fees for American Express, JCB, Diners Club and other premium, foreign-issued cards.
  • With currency conversion, you also pay a conversion fee.
  • The base transaction fee is usually a percentage, and then a gateway or authorisation fee, and card interchange if applicable, are added on top.

Monthly minimum sales volume: Many contracts make it a requirement to process a minimum volume of card transactions a month. If you sell for less, you may pay a penalty charge for that month. It differs how much this is, e.g. some companies want you to pay the equivalent in transaction fees you would’ve paid if you reached the minimum.

Reporting: You should as a minimum be able to view transaction charges and payments processed in an account online. However, some companies will charge a monthly fee for even the most basic functions like exporting sales to Excel or getting a paper copy of transactions.

Refunds and chargebacks: If you were to refund an amount back to a customer, you may have to pay a refund fee. The same applies to chargebacks, which can cost up to £30 in admin fees, plus potentially losing the transaction amount if the customer dispute was resolved in the buyer’s favour.

PCI compliance: You can expect to be asked to fill in PCI-DSS compliance paperwork in order to comply with industry standards in card security. This may be 100% your responsibility where you set this up yourself (can cost extra if support is required), or you may submit the documentation for free through your terminal provider.

If you have not set this up in the first few months, you may have to pay a PCI non-compliance fee every month you don’t have this in place (e.g. Worldpay charges £9.99 + VAT per month).

To give a comparison, below are examples of pricing from well-known terminal providers. Additional charges apply to most contracts, and each company offers different packages you can pick from. For example, Worldpay has a commitment-free Pay As You Go plan without lock-in, but this comes at a £150 setup cost and higher fees overall.

Worldpay logo red textElavon logoPayzone logoPaymentsense logo
ReviewWebsiteReviewReview
Lock-in
None (Pay As You Go) – 18 months12+ months12 months12 – 60 months
Upfront costs*
£0 – £150£99+£0+Undisclosed
Monthly fees*
£0 – £23£0+£20+£70 – £80 (hire + extra charges)
Transaction fees (always custom)
~1.5%2-3% or lower0.6%-2.5% + flat feeUndisclosed
Additional charges
PCI compliance, reporting, early cancellation, monthly minimum penalty, terminal replacement, receipt rolls, other charges may apply

*Excluding VAT.

World-
pay
ElavonPay-
zone
Payment-
sense
Lock-in
None (Pay As You Go) – 18 months12+ months12 months12 – 60 months
Upfront costs*
£0 – £150£99+£0+Undisclosed
Monthly fees*
£0 – £23£0+£20+£70 – £80 (hire + extra charges)
Transaction fees (always custom)
~1.5%2-3% or lower0.6%-2.5% + flat feeUndisclosed
Additional charges
PCI compliance, reporting, early cancellation, monthly minimum penalty, terminal replacement, receipt rolls, other charges may apply

*Excluding VAT.

Buying a card machine – what does it cost?

If you buy a card machine, you will need a merchant account to accept payments with the terminal, and transaction fees are of course unavoidable. Merchant accounts carry a monthly fee, so buying does not necessarily mean you avoid ongoing charges. And unless you are covered by a warranty or maintenance package (costs extra), fixing or replacing the terminal can be expensive.

The upfront price of a traditional card machine manufactured by Verifone or Ingenico ranges between £200-£800, usually somewhere in the middle of that. Almost all merchant service providers prefer renting out or leasing over selling, in part because it is more affordable for merchants than buying upfront – but also to lock you into a contract with ongoing fees. It is virtually impossible to find any purchase prices online, but some providers can give you quotes upon request.

Photo: Emily Sorensen, Mobile Transaction

iZettle Reader at pasta stand

App-based card readers like iZettle Reader (pictured) are the cheapest way to get started with card payments.

Pay-as-you-go services selling mobile card machines with payment processing included tend to have a simpler model: they are sold at a subsidised cost and then you pay fixed transaction rates – no personal merchant account required.

Let us compare card machine prices for these low-entry models in the UK:

Card readerPurchase price*Card feesWebsite
iZettle£19-£591.75%
SumUp£19-£991.69%
Square£191.75%
PayPal Here£452.75%–1.0% + extra fees
myPOS£29-£119 + £15 delivery~1.75%**
Worldpay Reader£69Variable**

*Prices excluding VAT.  **Rates are determined at sign-up by your business type, cards accepted, transaction volume and more.

BrandPrice*Card
fees
Site
iZettle£19-£591.75%
SumUp£19-£991.69%
Square£191.75%
PayPal
Here
£452.75%–1.0% + extra fees
myPOS£29-£119 + £15 delivery~1.75%**
Worldpay
Reader
£69Variable**

*Prices excluding VAT.  **Rates are determined at sign-up by your business type, cards accepted, transaction volume and more.

The terminal can be an independently working 3G or GPRS card machine with a SIM card, or a card reader that works with a mobile app. The upfront cost is much lower than with traditional terminals, essentially allowing even cash-strapped merchants to accept cards.

Such payment companies will make money on the card charges, not the card machine or contract. The key things are: there is no lock-in, no monthly cost, and no minimum sales volume required. You pay as you go, use it as little or much as you like, and you are free to stop using it any time without cancellation charges.

This is much friendlier than hiring a terminal with a potentially complicated contract designed to keep you as a customer.

Buy or hire?

Whether it’s best you buy or hire a card machine always depends on a number of things, particularly these five questions:

Are you confident in where your business will be in a year’s or two years’ time? If your card sales are unpredictable, it’s probably not a good idea to enter into a long-term contract where you have to pay monthly fees or a cancellation charge, should you seize to take payments. You can end up wasting a lot of money this way.

Are you a fast-growth startup? If you are, either choose a contract that allows an adjustment on charges (a larger sales volume should give you lower transaction fees), or start by buying a commitment-free card reader, then rent a terminal when sales become more predictable and you can get better card rates.

Do you have time to read the small print in all your contracts and monitor charges? We’re not asking “are you lazy/disorganised”. We’re asking – realistically – does your day-to-day operations require all your attention, and would it mean you may overlook key charges that your payment company can sneak into your ongoing fees? This can easily happen with a complicated contract, so we always recommend keeping an eye out for unexpected fees on your monthly statements.

Do you accept more that £8k-£10k in card sales a month? Even with low-cost card readers, you can get lower transaction rates beyond this threshold and save money using a low-cost terminal. If your sales are steady above this volume, a hire contract with a traditional terminal could be best for you.

Do you want a traditional card terminal and definitely not a small card reader? Many companies want the larger card machines because they are the most durable and advanced. If this is you, consider whether you can afford a new terminal if you purchased one upfront and it broke. Look into costs of repairing and whether it is better with an ongoing service contract for technical support. Hiring may also be the only option if you cannot afford the upfront cost in the first place.