How to take card payments
Whichever way your small business needs to process card transactions – whether in person, online, via email, or over the phone – our dedicated guide will show you how
No matter the size or stature of your business, being able to accept card payments is fast becoming a non-negotiable necessity. The UK is continuing to turn away from cash as a preferred payment method, with its popularity drastically decreasing in a short space of time.
The UK Payment Markets Summary 2019 published by UK Finance found that customers in the UK made 15.1bn debit card payments in 2018, making it the most frequently used payment method. Cash payments were in second place, at 11.0bn – down a startling 16% from 13.1bn in 2017.
If you’re aware of the need to accept card payments in your business, but find yourself thinking ‘how can I take card payments?’, then worry no more – we’ll provide you with a step-by-step guide to help you get started.
You can read the full guide for a complete overview of the card payment process. Alternatively, if there’s a particular stage or aspect that you want to find out more about, just click the link to jump to that section.
And if you’re ready to compare quotes for merchant accounts straight away, simply complete the form at the top of the page.
How to take card payments: Step by step
- “How can I reach more customers, and potentially maximise sales?”
- “How can I manage cash flow more efficiently?”
- “Why do I spend so much time chasing payments?”
- “How can I save time and money in the payments process?”
If you find yourself asking these questions, your business could benefit from accepting card payments. But how do you go about the process? Here, we offer a step-by-step guide to taking card payments.
Step 1: Decide how you want to take card payments
A card payment transaction works by connecting the following aspects:
- The customer (cardholder)
- The company (merchant)
- The merchant service provider
- The customer’s card scheme
- The customer’s bank
It’s possible to take card payments, mainly either in person, online, over the phone, or by email. Mail order is also another, less common option. Certain methods may be a better match for your business’ needs, so make sure you give this some thought.
Merchant accounts are required for all card payments. As well as a merchant account, you’ll need at least one of the following items to accept card payments:
- A card payment terminal – required for in-person transactions; commonly found in shops, food and drink businesses, and other retail outlets
- A payment gateway – for payments via phone, mail order, or email/online
- A mobile card payment method – for online purchases made through internet businesses, or using additional ecommerce functions provided by a bricks-and-mortar shop
- Integrated payments – this is an additional element which allows your card machine and cash register to interact, keeping all payments unified for your records
While virtual terminals are mainly used by mail and telephone order businesses, shops and restaurants could also operate virtual terminals as an additional way to take card payments. They can also be used in office environments to make sales.
Card machines are available in three forms: countertop, mobile, or portable.
In addition to accepting payments, card machines or virtual payment terminals will also generally offer:
- Refund processes
- Accounting for total daily card sales
Step 2: Research merchant account providers
In order to accept card payments, you’ll need to have a merchant account. Essentially, a merchant account provider acts as a middle ground for holding and sending funds between your customers’ bank and your business’ bank.
Ensure that you meet the application requirements, such as providing credit history and financial information, and are able to pay the charges. These include fees for setting up or cancelling an account, and the ongoing monthly payments for the services, or in some cases, renting a card machine.
You’ll need to factor in the following costs:
The device – the price of buying the card machine. Some suppliers will provide a terminal, while other packages will let you use your own device (such as an iPad).
The contract – some providers offer set periods, e.g. 12 or 18 months, while others offer a no-contract commitment.
The transaction fees – either a set amount (usually in pence) or a percentage per transaction. Note that the quoted fees are often based on a UK card used in a UK store, as opposed to international cards, which may incur higher charges. Be sure to check which cards the provider accepts, along with whether you pay your fee before or after you receive payment.
Fees will also depend on the volume and value of the transactions your business processes. Additional factors, such as your business turnover and risk (e.g. the type of industry you operate in), can also contribute to the amount you’ll pay.
Merchant accounts are available from a variety of providers, including high street banks and specialist providers. There are varying plans available, depending on the volume and frequency of card sales your business expects to process.
Read our article on the UK’s best merchant service providers for more inspiration.
Or, for a quick side-by-side comparison, take a look at the table below that details the top three merchant providers on the market today:
|Provider||Best for||Transaction charge|
|Worldpay||Flexibility||Pay as you go – 2.75% + £0.20 (for both credit and debit cards)
Pay monthly – £19.95 + 2.75% for credit cards or 0.75% for debit cards
|PayPal||Instant settlement||PayPal Here – 1%
Standard – 2.90% + £0.30
Pro – 3.40% + £0.20, plus a £20 monthly fee
|Barclaycard||Focus on service||Contact provider|
Nicole Olbe, managing director of partnerships at Barclaycard Payments, says: “As a nation, we are moving towards a more diverse payments landscape. Today’s consumers expect to be able to use card, cash, mobile, and contactless payment options, so businesses must ensure they can meet this demand to avoid missing out on sales.
“One advantage of accepting card and contactless payments is that the process can be integrated seamlessly into your wider operations, bringing together the various work-streams of running a hospitality business into one central platform. One example of this technology is Barclaycard partner TouchBistro, an iPad-based ePOS solution, built to simplify all aspects of running a pub or restaurant – from sending orders straight from the table to the kitchen, to offering a payments system that allows waiters to automatically split the bill.
“With consumer demand for card and digital payments on the rise, and technology now able to provide a one-stop-shop for all operational and payments needs, being able to accept various payment options is vital for hospitality businesses.”
Step 3: Set up the equipment
The equipment you need to take card payments is usually provided by the acquirer, though it’s also possible to source the equipment separately.
If you opt for a card machine, these take around two to three days to set up, while a payment gateway method can be up and running in about 24 hours.
The best card machines for small businesses include:
|Card machine||Best for||Transaction charge||Device cost (excl. VAT)|
|SumUp||Cheap transaction fees||1.69%||£29|
|iZettle||Best all-rounder||1.75% for card transactions; 2.5% for ecommerce card transactions||£29|
|Square||Fullness of features||1.75%||£19|
For a tailor-made quote, be sure to use the form at the top of the page. With minimal fuss, we’ll help you find the perfect merchant account provider for your business.
Card processing fees
Each time a card is used as a payment method, you’ll be charged a small fee (find out more about credit card processing fees here). In January 2018, EU legislation came into effect in the UK which banned companies from passing on these card processing fees to customers.
The price you pay for a card transaction includes:
- The processing cost
- Additional charges if required (e.g. international cards)
- Authorisation fee (variable, depending on provider)
Step 4: Start accepting card payments
Once you’ve chosen your preferred provider, it’s time to get set up. You’ll need to order a card machine, and arrange a merchant account if you don’t already have one.
You’ll have a number of days to complete the application process, during which you’ll be asked a number of questions about your business. You’ll need to explain what it is you do, how you sell your wares, and what your finance and tax situations are like.
Once your application has been approved and you’ve sorted the necessary equipment and services, you’re now ready to take card payments!
If you have a card machine, the process should be:
- Your customer presents their card at the card terminal
- The customer/cardholder authenticates the transaction, either by entering their PIN, swiping their contactless card, or signing for it
- The card details are sent from the card terminal to the acquirer
- The acquirer sends the details to the card issuer – the issuer authorises the transaction and sends it back to the acquirer, providing the necessary funds are available
- The terminal prints two copies of the receipt: one for you and one for your customer
- The customer takes the purchased items and the customer copy of the receipt
- The merchant copy of the receipt is kept by you for your business’ records
- The transactions are processed and deposited into your merchant bank account within set timeframes (see below)
For those using a virtual terminal, you’ll need to access it online – so be sure you have a secure, reliable internet connection and a web browser. You’ll need to follow these rough steps:
- Log in to your virtual terminal payment portal
- Enter the customer’s payment information
- Submit the transaction to be processed
Whichever way you take card payments, the process itself only takes a matter of seconds. This offers you the opportunity to serve more customers in the same period of time that you would spend taking cash payments. As well as this, the card payment technology helps to reduce the margin for error that you could otherwise experience from cash payments, such as misplacing notes and coins or giving customers the wrong change.
Step 5: Receive funds in your bank account
After a card payment has been processed, you should eventually receive the funds in your bank account. How long this takes will depend on how long you take to send the transaction information to the provider. Most businesses usually send this information within 1-2 days of a payment. After that, you can generally expect to receive the funds up to three days afterwards.
What equipment do you need to accept card payments?
Here, we outline the equipment your business will need in order to take card payments.
Card machine (or chip and pin machine)
Offering a fast, secure, and convenient way to pay, card machines with chip and pin functionality are an ideal way to process payment cards. As they’re widely accepted, you can be sure to find a machine that suits your business needs, and accepts credit and/or debit cards.
Using the smart chip in the card and the pin number your customer enters, you can process payments at the pay desk, out on the floor, or wherever there is a mobile signal. This will depend on the type of machine that you use, or the kind of business you run.
It’s also possible for customers using some types of cards to make payments via swipe and sign. While not best practice in the UK, this way of authorising payments is still popular in the US, although it’s gradually being phased out there too. So if your business relies on tourists – such as a bed and breakfast or a travel agency – it’s worth considering accepting cards to cater for overseas customers.
Mobile card readers
This type of device connects to your compatible smartphone or tablet via an internet connection.
These devices are ideal for small businesses that don’t have a traditional store or physical location, but still want to take card payments. Offering chip and pin and contactless payments, mobile card readers work in a similar way to traditional card machines, except that they’re portable and use wireless technology.
Payment cards can be accepted in a variety of ways. Depending on your business needs, you may opt for a countertop terminal, a mobile card reader, or a portable machine.
Think about how quickly and easily you’ll be able to access the service. Do you need to download the app after signing up, and/or order a card machine or another device?
For example, with a traditional card machine, you’ll need to purchase the device and have it sent to you. Alternatively, if you opt for a mobile card reader, you may need to download the app and use your existing smartphone or other compatible device.
PDQ (chip and pin machine) and mobile card reader: A comparison
|PDQ (chip and pin machine)||Mobile card reader|
|- Requires a phone line (ideally separate from the main phone line, so payments and phone calls can be made at the same time)|
- Linked to a physical location
- Can use wireless technology to be operated away from the base system
- One part of a pay point/till system
|- Requires an app
- Operated from a smartphone or compatible tablet (with an internet connection)
- Doesn’t require a till or other pay point
- Only requires the app, the device, and an internet connection to function
Note that the actual card payments are processed in the same way regardless of the type of device used.
To help you decide on a device, you should consider the following aspects:
- Connection type e.g. wireless or phone line
- The cards accepted
- Starting up time (i.e. how long it takes to go from off to on)
- How long the battery life is
- Security features – are they available throughout the process, or only before a sale?
- Purpose – general use, or specifically designed for a particular industry (e.g. hospitality, retail)
- Complexity (i.e. the level of functionality required)
- Additional features (e.g. data analysis, reporting)
- Training – will you or staff require any particular training? And if so, how is this provided?
- Support – how much support is offered, and how can it be accessed?
- PCI compliance – does the supplier offer PCI testing support?
How to let your customers know you’re accepting card payments
- Display card logos in your shop front
- Update your website and online payment platforms with card logos
- Share on social media and via email, as well as other ways you might connect with your customers
Be sure to confirm if you need permission to do so.
What types of card payments can you accept?
Customers could present several different types of cards. Although this doesn’t alter the way they’re processed, it’s useful to understand how they differ.
- Linked to a customer’s current account
- Spending is limited by amount of funds in the account
- May have an overdraft facility attached
- Can be used for in-person, online, or phone payments
- The amount of credit available to the customer is pre-agreed with the credit card issuer
- Not linked to a bank account, meaning no overdraft facilities
- Customers can only access the amount of money on the card
- Funds loaded onto the card in advance
- Can be used for payments in the same way as a debit card
Offering payment services to the card issuer, Visa’s role is to check, confirm, and process the details necessary for a transaction to take place. Visa is accepted in more than 200 countries and territories globally, making it one of the most popular card types.
What are the different ways of accepting Visa payments?
In addition to the standard credit, debit, and prepaid types of cards, Visa also offers the following payment methods:
Visa and Apple Pay – Customers can use their compatible Apple device, along with their Visa card, to create a mobile wallet for making payments.
By accepting Visa cards in this way, you can stay up-to-date with the latest technological trends, and customers can still pay even if they’ve left their wallets at home. Plus, it allows contactless payments above the usual £30 threshold.
Visa and PayPal – Also accepted by PayPal, Visa cards can be processed in this way using a business account.
You can accept payments online, or in person with the PayPal Here card reader. PayPal is internationally recognised, and offers an alternative way to process card payments.
Whichever device or platform your business uses, one of the most important details is the Visa debit card number or the Visa credit card number. This key piece of information allows the transaction to take place.
Visa: A summary
Here are some key points to remember:
- Visa is one of the most well-known card payment types in the world
- Visa debit cards and Visa credit cards are commonly issued and accepted in the UK
- Visa cards are also compatible with Apple Pay and PayPal
Next, let’s take a look at Mastercard, another popular payment choice.
What are the types of Mastercards?
Much like Visa, Mastercard customers can present a credit, debit or prepaid card, which can all be processed in the same way.
Is there anything else you should know?
- Mastercard is part of Cirrus, a global ATM network
- PayPal offers a Mastercard debit card for businesses
What about other types of cards?
While Visa, Maestro, and Mastercard are some of the most common card issuers in the UK, other options are indeed available, such as American Express or Diner’s Club cards.
While other card schemes deal solely with the card (i.e. the merchant account and issuer are overseen by different organisations), American Express and Diner’s Club both perform all three aspects of the card payment process: they can function as acquirers, issuers, and card schemes.
In addition, other types of cards include:
- Samsung Pay and G Pay – Android digital payments services
- JCB – Japanese credit cards that are accepted internationally
- UnionPay – Chinese credit and debit cards that are used globally
If you take a lot of foreign currency payments, you might want to offer Dynamic Currency Conversion (DCC) so that you can offer your customers the choice of which currency they’d prefer to pay in.
What are the potential benefits of taking card payments for your business?
By accepting card payments, your business could experience:
Wider customer appeal – As more and more consumers turn away from cash purchases, the ability to take card payments – especially those powered by from some of the biggest providers in the world – is something your business needs to offer sooner rather than later.
By adding more ways to pay, you can also reach more customers and make your business offering available to more people, further increasing its appeal.
And while it’s impossible to predict profits, if your business has a wider customer base to draw from, then there’s serious potential for a higher income, too.
Increased payment options – Card payments make your business more flexible in how it can take and receive money. Whether it’s online, in-person, or over the phone, cardholders expect to be able to pay in a variety of ways.
Card payments also cut down the amount of time it takes for you to serve customers. And given the rise of portable machines and mobile card readers, processing card payments is becoming easier and easier.
Enhanced security – Verified by Visa and Mastercard SecureCode are just two examples of how online payments are properly protected. As a small business owner, you can be confident that the purchases and orders which come in via card have been checked properly and are safe from external threats.
When processing card payments, it’s essential that you comply with the Payment Card Industry Data Security Standard (PCI DSS). These are a set of 12 requirements which are used globally to manage card data security.
In summary, here are the main benefits that accepting card payments could bring to your business:
- Improved reach
- Varied and flexible payment options
- Payment security
Business case study: Paul Swaffield, founder of Bestens Brewery
- Why does your business accept card payments?
“Selling directly to the public is a vital revenue stream for small breweries like ours. The margins for selling our beers through our retail outlets at the Brewery and regular pop-up bars are much higher than those that we receive from our trade customers. From our experience over the last few years, approximately 75% of all our retail sales are made via card or smartphone.”
- Which form of taking card payments does your business accept (e.g. in person, online, phone), and why?
“Currently, we accept payments in person at the Brewery or at our pop-up bars. We are also able to take payment over the phone, but this is not a key area of our business.
“What will become a growing market for us is our web shop, which is expected to launch in the coming weeks. More and more of our contemporaries are offering beer sales and delivery directly to the public through their websites – this is an area that we need to be strong in, and card sales will be vital to the success of this venture.”
- What are the benefits of accepting card payments?
“The POS system we use is fully integrated with our bookkeeping software, making life very easy when it comes to the accounts. We are only charged a small transaction fee, and have an elegant-looking and intuitive card payment system and app on our tablet.
“If we did not accept card payments, we would be turning away a lot of sales, as we find that a lot of our customers do not carry cash – and here at the Brewery, the nearest cashpoint is a 15-minute drive away.”
- What advice would you offer to other small business/startup founders who are thinking about taking card payments?
“Do not hesitate in setting up a card payment system – it’s essential for almost every modern business. Some of our trade customers (i.e. bars and shops) have spoken to us about their interest in changing to card-only payments, as it makes their life so much easier. I, for one, would not miss queueing at the bank on a Monday morning to pay in cash takings, if we ever move to card only payments!”
- Are there any myths about accepting card payments that you’d like to bust?
“The lie we were often told was that you had to pay high rentals for card payment systems – this simply isn’t true. The software exists now that makes card payments so straightforward, you’d be foolish not to start taking them straight away.”
– Paul Swaffield, founder of Bestens Brewery
Tips for taking card payments
In this section, we answer some of the most common payment-related queries, and offer key tips for accepting card payments.
Which type of card machine is best for your business?
- Countertop terminal – providing a central point of payment, these fixed machines are ideal for corner shops and petrol stations
- Mobile card reader – offering flexibility and wifi connectivity, this type of machine suits on-the-go or pop-up businesses, such as market stalls
- Portable machine – making the most of your business space, portable machines allow you to take the payment point to the customer, which is ideal for restaurants and other hospitality businesses
How do you take card payments over the phone?
Once you have a virtual terminal, follow these steps to start taking payments over the phone:
- Log into your payment provider account and select the “Virtual Terminal”.
- Use the on-screen instructions and enter the long card number, card expiration date, and card security code.
- Provide additional security information, which is usually:
- The cardholder name as it appears on the card
- The cardholder’s postcode
- Use the ‘Submit’ or ‘Complete Transaction’ button to process the payment. Remember to keep the customer on the line while the transaction is being processed.
- Once complete, remember to write ‘paid by phone’ on your copy of the receipt, in case you need to refer to it at a later time.
How do you take card payments over email?
You’ll need to send a secure generated link from your online terminal to take card payments via email. All your customers need to do is click it and enter their card details.
Which is the best merchant account provider?
This depends on your individual business needs. PayPal is great for high volume transactions, whereas Stripe is brilliant for both efficiency and payment protection. Take a look at our page detailing the best merchant service providers for more information.
What is the best card machine for small business?
Again, this depends on the nature of your business. If you want smooth, sleek design at a good price, then Square is the one for you. If it’s brand recognition you’re looking for, Worldpay or PayPal might be a better option.
From reading this guide, you’ve learned what the necessary elements are for taking card payments. This includes the different ways to collect payments by card and what equipment you’ll need, along with a step-by-step guide to setting up card payments for your startup.
Next, explore our credit card processing section to learn more.
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