YOUR BUSINESS SUMMER 2018 - 82

Finance solutions

companies not set up to take card
payment - but we do," says Griﬃths.
Aside from the possibility of some
rogue operators preferring a less
traceable form of income, Griﬃths
says the most common reason for
remaining cash-only is concern over
fees and contracts. Banks require
businesses to set up merchant
accounts to receive card payments and
these come with a range of charges.
"Your processing rate per transaction
could be 1%, for example, then an
authorisation fee might be ﬁxed at 2p.
So a £100 card sale would cost the
business £1.02," says Griﬃths. A bank
will also have a minimum monthly
charge that may be above what some
small ﬁrms would otherwise spend
on their account. "It might only be
£20, but a small business might
only spend £5 on transactions."

Feel fee

Mike Cherry, national chairman of
the Federation of Small Businesses,
says the fees make it hard for some
ﬁrms to make card payments work
for them. "This challenge becomes
particularly acute in sectors where
high volumes of low-value transactions
are the norm," he says. "High-street
convenience stores are one example."
A law passed at the start of this
year banning companies from passing
on the costs of card transactions to
customers has added another hurdle.
"The change means that accepting card
payments for low-value transactions,
or high-value transactions where
margins are ﬁne, can mean
incurring losses," Cherry says.
Some small ﬁrms choose to set
minimum-spend limits for card
payments to avoid this. Cherry advises
business owners to shop around for
card facility equipment. Firms like
Wireless Terminal Solutions lease
the physical card terminals out on a
ﬁxed contract where the monthly fee
often comes down for longer deals.

Fully charged

Griﬃths says that understanding
all the charges involved, and how
to get the best arrangement for

82

"It's critical to
understand all
the charges
involved"
your particular circumstances, is
critical to making card payments
work for your business.
"If a company is turning over
£1m, we might use one merchant
bank while for a smaller ﬁrm we
could look to use another to reduce
the minimum monthly charge

signiﬁcantly even if it means higher
transaction fees," says Griﬃths.
There are also diﬀerent types of
card terminal on the market. "You
can have ﬁxed terminals like you see
at the till in the supermarket or GPRS
devices for, say, mobile mechanics
who take payments wherever they
are. These can be less reliable because
they rely on data service, but they
are good for mobile businesses,
trading at events and so on."
Beyond this are electronic point of
sale, or EPOS systems, where the card
terminal is linked to the till, so it works
as part of a multi-function programme.
"These pretty much run your
business," says Griﬃths. "They do
proﬁt and loss, stock taking, ordering.
They might cost £100 per month
instead of £25, but you can see what
each member of staﬀ is doing - if
they are starting on time, how many
orders they are taking. As such, it
can save the business money and
be a worthwhile investment."

Go plastic free

Cherry says that although plastic
is currently in vogue, its run at the
top of the table may be short-lived.
"The payment world is innovating
rapidly," he says. "With the onset
of open banking, you now have
lenders looking at how bank
transfers can be used more widely
in the consumer space. We could
well be heading for an environment
where the credit and debit card
middlemen are increasingly cut out."

,
Credit where it s due
Another way
retail businesses
can encourage
customers to pay is
to offer point-of-sale
payments on credit.
Companies offer
immediate loans
worth thousands of
pounds, with interest
rates starting at 0%

and sometimes no
deposit needed,
which allows
customers to spread
their payment.
Because you're
collecting customer
information, this can
also lead to useful
data analytics and
revenue trending.
YOUR BUSINESS SUMMER 2018

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