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Play your cards right
Card machines make payments easy for your customers. But are you getting the best deal? With so much choice, it’s wise to shop around.
The concept is simple. You install a device from a company known as a ‘merchant acquirer’. The device takes card payments from your customers into a special account that acts as a holding pen. The acquirer and the card issuer ensure that the money’s cleared and move it into your actual business account.
It’s a hassle-free experience for your customers, and a streamlined way of doing business for you. But, with so many merchant acquirers charging a range of fees, and so many different types of card readers, it’s not a relationship you want to rush into. As a basic rule of thumb, systems fall into two categories. You can either buy a card machine upfront or hire one for a monthly fee as part of a contract.
We spoke to James Ward from electronic payments experts Olthem, to get his advice. His company specialises in finding the best deal for its customers.
“By carrying out a review of merchant service costs, it’s possible to generate savings of up to a third. That’s why it really pays to do your homework, or speak to someone like us,” James says. “For most hospitality businesses, the rental model is likely to be the best option,” James tells us. “But choosing the provider that’s right for you isn’t just a case of finding the one that offers the cheapest start-up fees.”
How much choice is there?
The card market is incredibly competitive. It can feature complicated terms and conditions, so be careful not to be lured in by a low rate that will increase once you have signed up, which can happen.
Are some providers better suited to the hospitality space than others?
All providers offer a full range of services to all sectors, but some card terminals, like the Clover Mini and Flex, are well suited to hospitality. The Clover Mini is a full point-of-sale system, and the Flex is a compact version that even allows you to take payments on the move, if you’re doing a Saturday market stall for example.
How does the pricing model usually work?
Most pricing is per transaction and your monthly fee usually includes free servicing, so you don’t need to fix it if something goes wrong. Also, most providers offer round-the-clock assistance.
How long should you lock into a contract for?
You can rent for the very short term but as this is usually pricey, it’s only a good option if you need a card machine just for a day, weekend or up to a month.
Usually, the best deals are unlocked when you fix a 48-month contract. Rental costs fall between £10 and £30 a month.
Does sales volume matter when you’re making your decision?
They do matter. We recommend a price scheme called Interchange ++. This separates out the costs the bank charges (the interchange), from the margin for the acquirer (the company you rent the terminal from), so no hidden increases can be passed on, and you know exactly what you’re paying for, and where the costs are going.