I’m sure at some point all merchants and traders have come to look for a way to take card payments and concluded that it’s a bit of a nightmare. So many options, so many devices, so many providers and so many tariffs.  How can something that in principle should be so straight forward actually be so complicated?

The short answer is that in most cases, rather than transparency, the “smoke and mirrors” are there by design, to make prospective merchants feel like they’re getting the best deal when in actual fact they’re not.  They are actually paying more than they need to and often more than they realise.

Very often merchants are attracted to a fantastic headline rate, as they believe the lower the percentage the better the deal.  They may feel proud of themselves for securing a rate of 0.35% or 0.4% but the real story lies behind the headlines and that’s where the smart guys look.

So how can they offer such low rates I hear you ask?

It’s simple … behind the attractive headline rate there are commonly a host of other charges.  These include:

• Merchant Service Charge or “MSC”
• Gateway Fee
• Authorisation or “Auth Fee”
• Terminal Hire
• PCI DSS Compliance Fee
• Setup Fees
• Annual Fee
• Minimum Monthly Service Charge or “MMSC”
  
• Faster Payment Fees
• Incidentals

 Let’s take a quick look at each of these in turn and understand a little more about them …

The Merchant Service Charge

This is the factor that most merchants use when assessing if they’re getting a good deal or not.  It’s expressed as a percentage.  Each and every card payment you take, regardless of value or card type attracts a charge.  Often merchant service providers will lead with an eye-catching low rate, but this rate almost certainly applies to a single card type, with other types of cards having a considerably higher charge.

Charges can also vary significantly for different types of payments, for example a card payment taken over the telephone or online will often be much higher than those taken in person.  Corporate and International cards, as well as specific cards like AMEX, JCB & Diners will also carry a much higher MSC charge.  A smart trader won’t be dazzled by a low percentage, they will understand the full range of charges that apply and that there is more than meets the eye.  Charges should be assessed overall on a pound for pound basis.  For example a trader shouldn’t be paying £1000 in rental charges over the life of a contract when they could own the exact device outright for £150.

The Gateway Fee

These charges really only apply to merchants who want to be able to take payments online.  If you don’t take payments online then you shouldn’t see this charge on your monthly statement, but some providers have been known to add it with the reasoning of “it’s there if you ever needed it”.  Keep a very close eye on you statement!

The Authorisation or “Auth” Fee

This really is the one to watch.  Essentially an “auth” fee is a small monetary value that is added to each credit or debit card transaction taken.  Often auth fees accompany the tantalisingly low percentage rate and can range anywhere from a penny per transaction to 20p.  If you’re a trader that takes high volumes of low value transactions then the auth fee could very well end up stinging.  A 7p auth fee on an average transaction value of just £2.50 will cost you an additional £28 for every £1000 you take, and that will be in addition to the headline percentage and the myriad of other charges that could be bundled in.  Another way to look at it is: if you’re paying 0.5% + 5p auth fee & you sell a can of coke for £1 your actual rate is 5.5% & that’s before rental & other charges are factored in.

The Card Machine Hire

Renting or leasing small, low value items of equipment will work out considerably more expensive over the lifetime of the item compared to buying it outright.  Sometimes the savings can be hundreds of pounds.

Many operators don’t know what their business will look like in 3 or 4 years time and they’re reluctant to enter into a long-term lease/rental agreement.  Not only that, but outright ownership means that the merchant is free of on-going monthly rental bills.  Purchasing your terminal means that the technology belongs to you immediately and is an asset of the business rather than a millstone around it’s neck.  Don’t be dazzled by the promise of a low MSC if you’re being snared in to a 3 or 4 year rental contract.  Often these rental agreements come with high penalty charges for early termination if you want to leave the contract before it expires.

These monthly charges were a source of concern and frustration for many traders and merchants during the recent extended COVID 19 lockdown, as while businesses weren’t able to trade and make money they were still committed to pay a monthly charge for rental of a card reader that couldn’t be used.  Some were also being hit with a Minimum Monthly Service Charge.

Always look at the TOC (Total Ownership Cost) … The average life of a card terminal is 3 years.  If you rent a terminal at £20 per month then you’ll have paid £720 in rental fees alone over the life of the device & that’s before the range of other charges are added in on top.  You could have the exact same device & own it outright for an absolute fraction of what you’ll pay if you rent it.

The PCI DSS Compliance Fee

This stands for Payment Card Industry Data Security Standard.  Not all companies charge this but many do. They will charge it either monthly or annually.  Again, it’s better to check if you’ll be charged this before entering any form of contract.  With some providers, if you’re not PCI compliant they will hit you with a recurring monthly penalty and that charge can be made without notification.  Be aware that many traders find PCI compliance quite complicated and a headache.  Card payment providers know this, so many of those providers will offer a service to guarantee compliance but there will be an additional fee for this service.

The Set Up Fee

Not all providers charge this but some may try.  If the provider really wants your business then push them to do away with it & if you push hard enough they probably will.

The Annual Fee

Again, some providers may try to levy this charge on the merchant but again, be firm, stand your ground & there a good chance that it will be dropped.

The Minimum Monthly Service Charge (MMSC)

This is a mechanism that some providers use to ensure that they extract sufficient profit from the merchant on a monthly basis.  It is often used by those that offer free or low priced terminals.  If your monthly turnover isn’t large enough then the MMSC will kick in.  Avoiding this charge is very important for those engaged in seasonal activities eg mobile/event/festival traders or those based in and around holiday destinations where there are fluctuations in trading activity.

Faster Payment Fees

Again, not charged by all providers but charged by some.  With some providers merchants may have to wait for up to 5 days for their funds to be settled into their account.  If the merchant wants his money to land into his account quicker then they can request fast settlement which will reduce the wait time.  Some providers charge extra for this service.

Other Incidental Charges

Ensure that you’re not being signed up for any free trials or offers.  Some providers will encourage (and even incentivise) their sales reps to sign merchants up for incidental things that they don’t really need.  An example of this is PDQ receipt rolls.  They will offer merchants a couple of months free rolls (a box is sent every month) and they then gamble that the merchant will forget to cancel the “free trial” once it’s expired.  If that happens they get to supply up to 36 months worth of rolls at a premium rate … they may even charge extra for the privilege of having them delivered.

In some form you will receive a monthly statement.  Be mindful that if you receive it on paper through the post some providers will charge you anything up to £5 a month for it.

Always read the small print… For example the marketing of one provider offers “Free Next Day Terminal Replacement” yet their official fee schedule indicates that it can cost up to £400 + VAT per machine for devices that are lost or damaged.

In summary the key is to have your wits about you.  Almost all of the charges detailed above can be avoided.  Don’t get locked into any lengthy contracts, don’t get dazzled by amazing low percentage headline rates … there’ll almost certainly be a sting in the tail.  Don’t get excited about offers offers such as free trails as they’re often Trojan Horses designed to lure you into a contract or rental arrangement.  Some providers offer a “Free Trial” but in reality, for all new merchants, the free trial actually locks you into a minimum 6 month contract.

A further thing to be aware of are the numerous slick looking adverts that appear on social media, showing images of SumUp, Square, Zettle type devices with “Rates from 0.3%” emblazoned across the post. These adverts are essentially click-bait placed by lead generation companies to collect personal details which are then sold on. SumUp have a flat, non negotiable rate of 1.69% with Square & Zettle at 1.75%.

A little about us…

Android EPOS is a leading supplier of EPOS hardware and software, Card Payment and Digital Signage solutions with over 25 years experience helping businesses in the hospitality, retail and leisure sectors.  If you choose a system or device from Android EPOS then you will be dealing directly with us throughout, rather than your details forwarded to a third party “partner company” in exchange for commission.  We supply the hardware, we configure the system (based upon customer specification), we implement, we train & we support.  We take this approach because we can … many can’t, they are merely sales operations masquerading as experts.

We don’t have commission hungry sales reps or hit & run self-employed agents with targets to meet.  We offer honest, open, professional and transparent advice combined with some of the keenest pricing around.

If you’re setting up a business, looking to refresh tired old equipment or devices, or if you’re just looking to reduce your overheads by seeking a more attractive arrangement then we can almost certainly assist. We offer a range of POS and card payment solutions and we can help you and your business to navigate the minefield of merchant services thus avoiding those unnecessary hidden charges.

With card payments through Android EPOS there is…

•  No contract
•  No monthly fees EVER
•  No “auth fees”
•  No PCI compliance fees
•  No additional gateway fee

What you get…

•  Outright ownership … you only pay for the sales you make
•  Flat blended rate of 0.99% for standard consumer debit & credit cards (1.25% for ROI)
•  Track all incoming payments in real-time through your mobile app
•  Instant settlement of received funds
•  FREE Merchant Account with business Visa card
•  Choose from a range of the very latest terminals starting from as little as £20
•  FREE for life 4g network agnostic data SIM or connect via WiFi
•  Cash register software with cloud based inventory management
•  App Market with a wide range of business applications
•  Contactless Tap & Go
•  Take payments anywhere
•  All major cards accepted Create “Pay Now” buttons for online sales
•  Send payment requests via email or SMS

Card readers are in stock and ready for next day delivery.

We offer a range of different terminals to suit all operations and all budgets.  From low-priced entry level solutions, through to the very latest, state-of -the-art payment technology, including ruggedised, shock/splash proof IP rated terminals with in-built printing and scanning that are perfect for business on-the-go or trading outdoors.

So, as you see, it is truly possible to avoid all of those charges detailed above.  Contact Android EPOS and let us help you to RETAIN MORE OF YOUR PROFIT and ONLY PAY FOR THE SALES YOU MAKE!

www.androidepos.co.uk

[email protected]

Tel: 02475 311254