Choosing the right merchant service for your small business

Here, Libby James, founder of Merchant Advice Service, guides us on how to select the best merchant service for your business.

Whether an ecommerce offering or a traditional retail store, you need to be able to take card payments easily and efficiently. In ‘Five tips to get started taking card payments’ Andy Macauley, chief operating officer of Handepay, says, ‘The phrase ‘sorry I don’t take cards’ should be heard less and less.’

In an increasingly fast-paced world, customers need a quick and pain-free payment process, so before you disregard card machines as too expensive and make the decision to use the cheapest payment option on the market, there are certain avenues for you to consider first.

Online and offline options

It wasn’t that long ago that the only possible payment service for a business was a credit and debit card swipe machine (some businesses still use them!) but the industry has evolved quickly over recent years and there are now lots of options for small businesses. In an ever cashless society with increasing technology, a cash-only payment offering really should be avoided.

There are various ways to take payments online. Sage Pay and Worldpay are popular and trusted payment gateway providers. But with popular and trusted comes a high price point. Sage Pay offers 1,000 transactions per quarter for £25 a month, with any extra transactions costing an extra 10p each.

So if you process a small volume of transactions per month, Sage Pay may not be the best option for you.
It’s also worth noting that when customers’ cards are stored for regular payments, and you choose to change supplier, you could lose those saved details with some well-known gateway providers, so it’s important to ask your merchant advisor regarding this stipulation.

It’s beneficial to have PayPal as an additional offering as it helps to widen your customer base. PayPal is favoured as the secure payment option and can be integrated with a number of ecommerce platforms including WooCommerce, PrestaShop, Magento and Shopify.

When it comes to taking payments offline, PDQ machines are the most common forms of making transactions. Modern PDQ machines now accept mobile payments, apple payments and contactless chip payments. They’re used by most retailers and offer a secure transaction process. They also enable merchants to key in card details to take payments over the phone.

PDQs can be further supported by an EPoS system. An EPoS system integrates with your PDQ machine and helps limit human error. They not only calculate transactions, sales and refunds, but track customer information and even keep track of stock levels. EPoS systems hold vast amounts of information and can be tapped into at any time. The ability to track both your customer base and stock levels enables businesses to order the right number of stock at particular times of the year.

So if you have a large customer base and a significant SKU volume with different variables, you could benefit from an EPoS system. Although it can come at a high price point, you’ll see the benefits long term.

Businesses can now call upon wireless chip and pin terminals to take payments. They’re an efficient face-to-face transaction and enable you to take the machine straight to the customer. Perfect for restaurants and bars, they tend to work within a range of up to 100m, depending on your provider.

Although most common with ecommerce businesses, virtual terminals are great for business owners who wish to take payments using a computer, tablet or smart phone. As long as there’s an internet connection, you can process card payments while the card and the cardholder are not physically present.

Finding the right provider

When seeking a merchant service, Andy Macauley stressed the importance that small business owners should go through an ‘introducer’, instead of going straight to the provider. Andy also correctly pointed out that merchant brokers have greater buying power when it comes to securing a better rate than if you attempted to do it solo. Introducers are highly knowledgeable of merchant services and will tailor your plan to suit your business needs. They can also negotiate great rates for you, so it’s always worth investigating the many providers out there.

On top of this, it’s important to note that every merchant provider and introducer will charge a fee for using their service and machines, so you should start shopping around to find the best rates.


As touched on above, all merchants will charge you a fee for using their services. Some will tie you into lengthy contracts but there are some out there who will offer a ‘free’ service in exchange for high transaction charges. Choosing your contract depends on your transaction usage.

If your merchant service is only going to be used on an adhoc basis it’s probably best to go down the route of paying higher transaction costs with low monthly fees. But if you predict you’re going to be taking a high volume of payments, indefinitely, it’ll be in your business interests to fix a plan where you pay a low transaction fee.

Of course this will probably be offset with higher monthly fees, but it’ll suit your business model. Also, there are some providers that will discount the percent they charge you if you hit a certain amount in monthly revenue. Planning on your service usage will help you make a more informed decision.

As a small business or start-up business owner it may be best to opt for a short-term contract and as your business grows you can start to look at introducing lengthier contracts with better rates. It’s best not to be tied into extensive contracts. On the flipside, great transaction rates are often balanced with hidden charges, such as application fees, set up fees, annual fees and monthly minimums. Dealing with a merchant broker should up any confusion and guide you on the best action to take.

Andy Macauley notably points out that ‘Face-to-face chip and pin, customer not present, foreign cards, premium cards and magnetic stripe swiping all carry different rates per transaction.’ So before you choose the most technically advanced option on the market it’s important to consider how much your business can afford in fees.

Getting approved for a merchant service

There are many different options available to online and retail businesses. When you think you’ve found the best route, is it as simple as calling the provider and signing on the dotted line? Not always. If this is your first small business venture, or you’re a young business owner, how can you convince a merchant provider that your small business with relatively modest revenue isn’t high-risk?

Well, there are actually several steps that you can take to help to get approved for a merchant business account:

  • Ensure you have good credit rating
  • Resolve tax issues
  • transparent about your business, past finances and your previous merchant accounts
  • Pay higher fees to accommodate either low credit rating or lack of business evidence.

Choosing the right merchant service is a complex process. Small bricks and mortar businesses or small start-ups need to consider how often their card machines will be used; to, (a) warrant a high-tech machine and (b) to decide on the type of contract they wish to purchase. With online offerings you’ll have to decide if it’s worth integrating a CRM and stock inventory to your payment offering or simply opt for one simple payment option for customers.

When you can’t see the wood for the trees, shopping around and seeking out a merchant broker for the best possible advice is the best action you can take.

Libby James, founder of Merchant Advice Service.

Further reading on choosing a merchant service

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the and titles before moving on to be a Digital Technology reporter for the

Related Topics

Card Payments

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