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Merchant accounts for small businesses: a quick market review

Merchant accounts are no longer restricted to big businesses processing hundreds of transactions on a daily basis. Various banks now provide merchant accounts for small businesses, but it’s often hard to see clearly which ones really do propose small-business friendly products... at reasonable prices. Here is a quick, non-exhaustive review of what some banks can offer in the UK.

Merchant accounts for small businesses

Popular merchant accounts for small businesses

Third party payment processors allow businesses to accept credit card payments without having to open merchant accounts, or even be tied to a merchant bank in some cases.

Sage Pay merchant account

Popular payment gateway Sage Pay also offers merchant accounts. Transaction fees for credit cards will usually be 2.5% of the transaction a (.10p for debit cards without 3D-Secure security). Users need to add a monthly £10 charge for PCI compliance and the fees for using the provided payment gateway.

A cost estimate for £3,000 in sales over a month, made with 30 credit card and 30 debit card transactions would be around £70.

Worldpay merchant account

First known as Streamline, Worldpay offers a payment gateway for mail and telephone orders at very affordable prices for basic services. With the Pay Page service, customers can pay through the retailer's website and are redirected to Worldpay's servers for secure payment processing. 

Accept cards merchant account

Accept Cards is a very affordable provider, of merchant accounts for small businesses, offering transaction fee rates as low as 1.1% and renting out the equipment for £10,95 per month.

PayPal merchant account

Popular payment gateway PayPal also offers merchant accounts for small businesses in the UK. Their pricing model is a little different, as it is based on monthly turnover. Businesses with a £3,000 monthly turnover should expect to pay 3.4%, plus a flat fee of 20p per transaction. But businesses with a turnover higher than £55,000 per month will only pay 1.4% in transaction fees.


How to keep merchant account fees down

Businesses may use various strategies to keep merchant account fees down.

Seeking membership to the Federation of Small businesses

Many providers of merchant accounts for small businesses will offer discounts to members of the Federation of Small businesses.

These savings can be as high as £250 with some merchant account providers, but bear in mind that membership to the Federation of Small Businesses costs £100.

Choosing different account providers and payment services providers

Another strategy to lower the costs related to a merchant account for small business will be to split the tasks and select different providers for the merchant account and the payment service, which often works out cheaper.

Independent Service Organizations (known as “ISOs”) offer cheaper rates, but their policies may be obfuscated and hard to understand, and their customer service can be a concern. These are risky, adventurous, but sometimes rewarding choices of merchant accounts for small businesses.


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