Small businesses can no longer ignore credit or debit card payments. The introduction of contactless payment technology has made petty cash payments less relevant. But business owners are still often afraid of installation, subscription, transaction and maintenance costs.
Benefits of PDQ machines for small businesses
Before breaking down the cost options, small businesses should consider the benefits of installing a credit card processing solution.
1) Society is becoming cashless, not cash-starved
It is estimated that 90% of the UK population carry at least one credit or debit card. Conversely, less than a third of Brits report carrying £20 in cash on them. This trend is accelerated by the introduction of contactless payment cards, which most banks now offer by default to all their customers, therefore driving a very high adoption rate.
2) Impulse purchases are golden opportunities
With e-commerce becoming more and more prominent, impulse purchases are more and more often the only reason why customers would buy something in a high-street shop. And in fact, customers are reported to spend 20% more with their cards than with their cash.
3) Added security with PDQ machines for small businesses
Multiplying card payments reduce the risk of theft from staff, cuts down on counting errors. With no cash in the drawer, and therefore no reason for criminal attacks, the shop becomes more secure.
4) Instant approval
Payment is instantly approved, and with contactless payment, customers don’t even need to enter their pin for small purchases. Transaction times are getting close to immediacy.
Renting or buying?
The choice between renting and buying a PDQ machine should be carefully considered.
1) Costs and benefits of rental
PDQ machines can be rented directly from the manufacturer, or from major banks, as is more common. Benefits include:
• reasonable usage costs, which can be as low as £20 a month,
• maintenance and assistance is included in the package,
• free replacement with a more recent model when technology evolves.
2) Costs and benefits of acquisition
Purchasing a PDQ machine can be less expensive than small business owners would think.
• New machines cost anywhere between £200 and £800, depending on whether they are countertop, portable or mobile. If many transactions are made, the initial cost can be offset quite quickly.
• Banks may charge less in transaction fees,
• Customers are not as tied up with their banks as they would be if they were renting the machine
Merchant accounts, the main source of PDQ machines for small businesses
Most PDQ machines for small businesses are obtained from high-street banks, as part of a package to record and process credit card transactions of the business owner, who keeps a business account in the same bank. This has all the advantages of a hassle-free solution, but high usage costs may tempt business owners to look at newer, alternative options.
1) Merchant accounts at major banks
Merchant accounts offered by traditional banks offer all a business owner needs to process card payments:
• PDQ terminal,
• Maintenance and updates,
• Payment data collection, and immediate funding of seller’s bank account
However, costs may climb up quickly:
• Some banks charge up to £30 a month for PDQ machine rental, plus transaction fees that can be as high as 5%,
• Banks which do not charge for equipment rental will charge even higher transaction fees
Financial and technological innovation has allowed some new, purely online players to enter the market and propose cheaper packages, including a PDQ machine, directly aimed at small businesses. Savings can be considerable.
Also, as pure players like PayPal or even Apple are now in effect building a banking business, they are now issuing their own types of payment terminals, which can read credit or debit cards.