How does Lopay compare with the competition?

The UK doesn't lack payment companies, and one that caught our attention is London-based Lopay.

Launched in January 2022, Lopay is a young limited company targeting small businesses. Typical of tech startups, its products uses Stripe's payment software. The pricing plans are therefore designed to look attractive for budget-conscious merchants.

It looks like a fine-tuned solution. Yet we know from experience it takes more than a nice website to offer a solid service. We took a deep-dive into Lopay's features to find out if it really is better value than established competitors.

What are the main products of Lopay?

Lopay's only self-made product is its point of sale (POS) and payment app that looks like the free apps from SumUp, PayPal and Square. The connected payment products – two card machines included – are provided by Stripe, so Lopay acts as the reseller.

The cheaper Stripe WisePad 3 Reader (purchase price from £24) works with the Lopay app. The other model, Stripe Reader S700, is a standalone smart POS terminal with a touchscreen.

The payment methods offered include:

• Card reader transactions via contactless and chip and PIN
• Tap-on-phone payments, i.e. contactless card/mobile wallet taps on the merchant's phone
• Payment links sent from the app for online payments
• QR code payments, i.e. customers scan the merchant's app screen to pay online

These features require the Lopay app, which makes a profit every time you accept a transaction.

The app also has a product and customer library, tipping, sales reports and digital receipts – not much else. None of these features are unique, but they are essential for many small businesses.

The premium Stripe Reader S700 terminal has fewer features, such as no payment links.

Are the fees fair?

Where Lopay stands out most is its pricing. Small businesses want to get paid quickly, and Lopay capitalises on that by charging more for faster settlement.

The platform boldly displays the low transaction rate of 0.79%, but this only applies to domestic Visa and Mastercard cards via the card reader. And this is only on the plan where you receive payouts once a week on Thursdays.

On this same plan, you pay 1.04% for domestic Visa/Mastercard if using specific point of sale features in the app. Additionally, 1% extra always applies to international, corporate and American Express cards.

Those cards bump up the rate to 1.79% or 2.04% depending on whether you use more than the bare minimum of the app.

To receive funds the next business day, you can opt for the basic rate of 0.99% for domestic cards, plus 0.25% (minimum £0.03) when using POS features, plus a further 1% for American Express or international cards.

For instant funds transfers, the base rate is 1.79% for UK consumer Mastercard and Visa cards, plus the added fees for other cards and POS features.

Tap to Pay on iPhone or Android costs an additional 8p per transaction. Not many card reader companies charge extra for this feature.

Payment links cost 0.49% extra, or 0.69% more for subscriptions, but this is normal across the industry for online payments.

How fees compare with alternatives

So, these fees are not consistently lower than SumUp's 1.69% or Square's and PayPal's 1.75% per tap and chip payment. They're certainly not lower than Revolut Reader's 0.8% + £0.02 for consumer cards with 24-hour payouts as standard.

Even Square's instant transfers (costing 0%-1.5% depending on where funds go) could be cheapest with Lopay's added fees.

The Lopay Rewards programme could make up for potentially unfair fees. On the other hand, you only get points for tap-to-phone transactions, referrals and using the Lopay Rewards Card (unavailable to new users).

Who benefits most from Lopay?

At face value, Lopay might suit someone who likes the design of the app, speed of sign-up and potentially low fees.

But in our view, it is mainly merchants who accept simple transactions with UK-issued consumer cards via a card machine who benefit from Lopay. The lowest advertised fee is only for those who are happy to receive funds once a week, but this is not what most small retailers are looking for.

You get so much more from competing platforms like Square who includes countless extras without upping the rate for next-day payouts.

The Lopay app looks polished and user-friendly, but that's nothing special in the UK where similar payment apps have been carefully honed for years. For example, Square's and SumUp's apps are very reliable and user-centric, and frequent updates add more features all the time.

Is Lopay worth its own praise?

Lopay claims, on their own website, to be the the "highest-rated payment app". When someone says that about themselves, you should take that with a grain of salt.

We know its initial growth at launch was partly due to clever marketing and investment decisions. Still, we remain sceptical about whether the product is truly valuable for merchants to stay relevant.

Early on, the company got some traction online – namely on Reddit – but it's had few mentions recently and has not taken significant market share. The product doesn't get many searches online either, unlike its main competitor SumUp that goes from strength to strength.

A lack of customer service has been reported by many users, despite high ratings on Trustpilot and app stores. Unfortunately, you can't often trust rose-tinted ratings, especially for a new service like Lopay that incentivises users to submit them.

Lopay is a typical startup with expertise to build a decent app inspired by competitors while appealing to cash-strapped merchants.

However, it completely relies on Stripe's payment core technology instead of a unique setup. Stripe's slow payouts are much-criticised, and it could well be that this deters merchants from relying on Lopay.