Partner Article

The hidden costs in card payments

By Andy Macauley, Chief Operating Officer, Handepay

When purchasing any item attached to a contract, such as a mobile phone, it is vital to always read the details in full. Contrary to popular belief, these are written to inform customers and not to try and catch them out.

However, so many of us fall foul of the ‘small print’ and get stung for pesky hidden costs.

With the most recent research revealing that small businesses are missing out on an estimated £800m in annual revenues by not taking debit and credit card payments, the argument for accepting cards has never been clearer.

Making the decision to start accepting cards as a business will involve choosing which card terminal to go with and most importantly, which contract suits you best. Part of this process will be which contract is better value for money for your business and being aware of hidden costs can support an informed decision.

Hidden costs to watch out for include:

Exit and ‘re-stocking’ fees - If you give notice as set out in your contract, you can exit at any time. Usually, outstanding amounts on the contract must be paid up, just like a mobile phone contract, but some providers will charge you a fixed fee which could be up to £200 per outlet to close an account, with further charges up to £200 to ‘re-stock’ a terminal (that’s get it from you and get it in shape for their next customer). So if your business has four outlets, each with a terminal, it could cost you up to £1,600 to close your account. Other suppliers don’t charge anything so check before you sign a contract. If you already take cards and are switching supplier, some providers may offer you incentives, such as cashback, to move. You can use this to help cover any exit costs you might face on your previous contract.

Swapout fees – If your terminal breaks, how will it be fixed or replaced? Some suppliers insist on an engineer installing your terminal and will charge you for their time. If something goes wrong, the same engineer must return to fix the problem and you will be charged again, plus a swapout fee for a new terminal. Other suppliers will send you the terminal and you can install it yourself (usually very simple) and it costs you nothing.

Annual fees: PCI DSS (Payment Card Industry Data Security Standard) - This is a mandated requirement by the payment schemes (Visa, MasterCard) that every business accepting, transmitting or storing cardholder data MUST comply with. It’s about the secure storage and processing of important cardholder data to protect against fraud and other financial crime. You need to register your compliance status as quickly as possible. Some companies charge in excess of £70 every month per merchant account if you go wait longer than three months to register yourself as compliant.