It cannot be overstated just how much technology is helping people in the UK who have discovered their entrepreneurial spirit and decided to set up their own business.
Increasing entrepreneurship is a key goal of the UK government’s business strategy, and it’s clearly going according to plan after the additional funding and start-up loans scheme were put in place just a few years ago. In 2017, a record-breaking 660,000 new companies were established. To put this into perspective, only 30,000 new enterprises were launched in the couple of years before 2013.
Many of these businesses sell products and services face to face with customers and therefore require a way to accept payments in person. The system you have in place for this is commonly referred to as a ‘point of sale’. In the past, small businesses with very limited funding had to accept the fact that either they accept cash only, or swallow the cost and commitment of renting a card terminal and signing up for an often-complex card acceptance contract.
But now, smartphones can easily be used with a mobile point-of-sale application, allowing businesses of any size to accept card payments anywhere with a WiFi or 3G/4G connection. These mobile card payment systems are cheap and easy to install, portable, and they offer automatic settlement to your bank account usually within one to three working days. To top it off, signing up with a mobile payment provider is often commitment- and hassle-free, which is what many fast-moving entrepreneurs today look for.
What SMEs really need
This is a significant development for small and medium sized businesses (SMEs), since research into UK shopping habits reveals that they stand to lose £1.6 billion in sales through their failure to take any form of payment cards. The UK clearly prefers cashless payments, so those serious about business need to find a low-cost solution.
While chip and PIN is still the preferred card payment method in the UK, contactless cards now account for a third of all card purchases. Moreover, near-field communication (NFC), magnetic secure transmission (MST) as well as other in-store ‘invisible payment’ methods (where the card itself is not present) are growing too. As many as 29% of millennials have cancelled a transaction because the store didn’t accept their choice of ‘next generation’ payment method. So as well as accepting chip and PIN cards, contactless and mobile payment types are therefore unavoidable considerations too.
Fortunately, current technology offers budding and established SMEs a variety of systems to choose from. The major app-based card readers today accept chip and PIN, contactless cards and digital wallets, and they keep updating their applications to stay relevant in the industry. Here is an overview of the most competitive mobile point of sale applications available to UK businesses.
Emanating from the capital of cool (Stockholm), Swedish firm iZettle is definitely the leader of the pack when it comes to using a smartphone or tablet as a point-of-sale device. The company offers a stylish contactless, chip and swipe reader that connects through Bluetooth to your mobile device. It accepts a wide range of cards, authorised by the customer through PIN entry on the keypad or contactless tap. iZettle is consistently ranked highest in customer satisfaction, and its recent acquisition by PayPal will likely solidify its standing with even more resources under its belt to develop their offerings.
Only last year, American Square entered the UK market with its compact card reader and feature-rich POS application. Unlike other card readers in the UK, it requires PIN entry on the mobile device screen instead of a dedicated PIN pad on the card reader. Out of all the free POS apps, Square Point of Sale covers the most needs, even including the option to process card-not-present payments either in your internet browser or via manuel entry in the app. Fees are fixed to 1.75% for any card reader transaction and 2.5% for manually entered cards and invoicing.
SumUp has the lowest transaction fee in the UK for mobile card readers, charging only 1.69% for all card transactions. It is also the simplest of the point of sale applications available for mobile devices, offering the important features for small businesses, but lacking in some more advanced features like tipping. Phone payments can, however, be made available for SumUp customers at no monthly cost for businesses who are already trading face to face.
Not wanting to miss out on the action, PayPal – with an established reputation for online payments – has its own Paypal Here app and card reader. The app has the standard point-of-sale features needed by small businesses, but the transaction fees are more complex, starting high at 2.75% for less than £1,500 monthly sales, going cheaper the more you sell per month. Swipe cards and manual entry are subject to a fee of 3.40% plus 20p.
There are other providers of similar services such as Elavon MobileMerchant and Barclaycard Anywhere. All operate on a similar principle using cntactless and chip and PIN readers, usually without a long-term contract to commit to. The important issue for SMEs is how to get a reliable service at the lowest cost to maximise revenues, and mobile POS applications certainly fit that category.
Read this more detailed comparison between the best card readers currently in the UK.