With less than 20% of payments in the UK now made with cash, it’s more essential than ever for businesses to have the ability to accept credit card payments online, in person, and over the phone.

But how do you get started?

In this article, I will discuss the different ways your business can take card payments. I will also cover some of the benefits, such as increased sales, improved cash flow, and reduced fraud risk.

Take card payments

» MORE Read our full article on The Best Card Machines for Businesses

How to Accept Card Payments Online

To take card payments on your website, you need to sign up with a payment processing software provider like Stripe or PayPal. Most of these companies supply an integrated “merchant account” – a place where the money goes first before moving to your usual business account. Other times, they send the money straight to your bank account.

Here are the steps to getting set up:

1. Choose a Payment Processor: This is a service, like Stripe or Paypal, that handles card transactions for you. It makes sure that when a customer pays with a card, the money is moved safely from their account to yours. Each payment processor charges fees, typically a percentage of each transaction plus a small fixed fee.

Read our full piece on the best payment gateways

2. Connect the Payment Processor to Your Website: You’ll need to set up an account with your chosen payment processor and link it to your website or e-commerce platform. In most cases, this is easily done via integrating a simple plugin or APP with only minimal developer assistance required.

4. Make Sure it’s Secure: Most payment processors take care of the major security concerns, but you should also make sure your website is secure. An SSL certificate, which encrypts data sent to and from your website, is one way to do this.

5. Test Before You Start Selling: Before you let customers start buying, you should test the payment system to make sure everything works correctly. Try paying like a customer using different cards to see if there are any problems.

6. Start Selling and Keep an Eye on Transactions: Once everything is set up and working, you’re ready to start selling. It’s a good idea to regularly check your sales and make sure there are no unexpected issues.

In summary, to accept card payments online, you’ll need to pick a service that can process payments, use an e-commerce platform if you’re selling products, connect everything together, ensure it’s secure, test it, and then start selling.

What Happens When You Take a Card Payment

How to Accept Card Payments in Person (with a Card Machine)

Accepting card payments in person requires a combination of hardware and services tailored to your business’s needs. The process involves several key steps:

1. Select a Payment Processor: When taking card payments, choosing the card processing company is going to be your most important choice. These companies are either banks like Natwest, Lloyds or Barclays or specialist card processing companies like Square, Elavon or Worldpay.

Each processor offers its own card machines and terms. The things to hone in on are: how much they will charge? what type of contact will you be tied into, and what is the functionality of the card machines they’re offering?

2. Set up a Merchant Account (if necessary): Although most processors provide integrated merchant accounts, there are instances where you might need to set one up separately. A merchant account is a type of bank account specifically designed to allow businesses to accept payments by debit or credit cards. It acts as an intermediary, holding the funds from card transactions temporarily before they are transferred to the business’s regular bank account.

For most small businesses accepting card payments for the first time, setting up a separate merchant account is unlikely to be necessary.

You might need a separate merchant account if:

  • You have a lot of sales: If your business makes a lot of sales, you could save money by working out lower fees with a bank or a specific merchant account provider.
  • Your business is unique: If your business has special needs, a specialized merchant account provider might offer better services for you.
  • You like traditional banks: Some businesses prefer to use their regular bank for all their financial services because they trust them more or already have other accounts there.

3. Choose the Right Card Reader: Because of the security requirements in processing customer data, payment processors are legally required to compel merchants to use their own proprietary card readers. This means that if you’re changing card processors, you’ll need to change your card machine too. When choosing a processor, make sure their card machines offer the functionality you’ll need, such as:

  • Compatibility with various payment types (chip cards, contactless payments like Apple Pay, etc.)
  • Ability to process transactions offline and sync when connectivity is restored
  • Sufficient battery life to last a full day of business
  • 4G connectivity or other wireless options to enable mobility

4. Integrate with Your POS System: If you already have a POS system, the card reader needs to work with it. Some payment processors provide POS systems designed to work seamlessly with their hardware, making transactions smoother.

5. Ensure Compliance with PCI DSS: Security is paramount. Compliance with the Payment Card Industry Data Security Standard (PCI DSS) protects your customers’ data and your business from fraud. Choosing a PCI-compliant processor simplifies adherence to these standards.

6. Train Your Staff: It’s essential that your staff is familiar with the new system. They should know how to process payments, issue refunds, and handle any card payment issues that arise.

7. Test Your Setup: Conduct thorough tests to ensure your system works correctly. Process transactions as if you were a customer to identify any issues before you start selling.

8. Start Accepting Payments: With everything in place, tested, and your team trained, you’re ready to accept card payments from your customers.

Card machines are essential for in-person transactions, particularly in retail and hospitality settings. They can accept payments via chip and pin, contactless, or mobile wallets like Apple Pay.

How to Accept Credit Card Payments over the Phone

To accept credit card payments by phone in the UK, follow these simplified steps:

  1. Choose a Payment Processing Company: Pick a company that supports “Card Not Present” (CNP) transactions. Most major card machine providers include this functionality. Note that very simple card readers, like those offered by Tide or Revolut for pop-ups and market traders, do not support this feature.
  2. Use a Virtual Terminal: A virtual terminal is an online tool provided by your payment processing company. It allows you to enter and process credit card information received over the phone securely.
  3. Implement Security Measures: Ensure you comply with the Payment Card Industry Data Security Standard (PCI DSS) to protect your customers’ information.
  4. Train Your Staff: Make sure your staff knows how to use the virtual terminal and understands the importance of data security. They should be trained to handle credit card information securely.
  5. Process Payments: Input the customer’s credit card details into the virtual terminal, including card number, expiry date, CVV code, and billing address.
  6. Confirm and Issue Receipts: After the payment is processed, confirm the transaction with the customer and provide a receipt via email or post, based on their preference.
  7. Maintain Records: Keep records of transactions for accounting purposes and in case of disputes. Ensure these records are stored in compliance with PCI DSS and do not keep sensitive cardholder data unless it’s necessary and secure.
  8. Review Transactions Regularly: Monitor transactions for any unusual activity to prevent fraud. Regular reviews can help identify and mitigate fraudulent transactions.

What Happens When You Take a Card Payment?

Before diving into the technical setup, it’s important to understand the mechanics of a card payment transaction. Here’s the card payment process in action

  1. Initiation: The customer presents a debit or credit card for payment.
  2. Authorization: Your card reader contacts the customer’s bank via your merchant account to ensure the card is valid and has sufficient funds.
  3. Approval: Upon verification, the customer’s bank reserves the payment amount. The card reader then approves the transaction.
  4. Batching: All approved transactions are stored in a batch file sent to the acquiring bank at the end of the business day.
  5. Settlement: The acquiring bank processes the batch file and transfers the funds to your business bank account, typically within 1-3 business days.

Taking Card Payments with a Virtual Terminal

Virtual terminals are web-based systems that allow you to enter customer card details manually, ideal for businesses that take payments over the phone or via email. They are classified as “card-not-present” transactions, which may attract higher fees.

To use a virtual terminal, you will need to:

  1. Choose a virtual terminal provider. There are many different providers available, so be sure to compare their fees and features before making a decision.
  2. Set up an account and comply with PCI DSS requirements. PCI DSS is a set of security standards that all businesses that process credit card data must follow. Failure to comply can result in fines and penalties.
  3. Access the virtual terminal. Once your account is set up, you can access the virtual terminal through a web browser.
  4. Enter the customer’s card information. This typically includes the card number, expiration date, and CVV code.
  5. Review the transaction details and confirm the payment. Once you have entered the customer’s card information, you will be able to review the transaction details and confirm the payment.
  6. Receive a confirmation receipt. Once the payment is processed, you will receive a confirmation receipt. This receipt should be kept for your records.

What’s the Best way for Small Businesses to Take Card Payments?

The “best” method for accepting card payments will vary depending on your business type, the volume of transactions, and customer preferences. Here are some guidelines to help you decide:

  • Retail Businesses: Physical card machines are often the most straightforward and efficient method for high-volume, face-to-face transactions.
  • E-commerce Businesses: A reliable payment gateway integrated with your online platform is essential. Make sure it complies with Payment Card Industry (PCI) standards for security. In fact, most major e-commerce platforms have this well organised. WooCommerce frequently integrates with Stripe and PayPal, while Magento users often opt for Authorize.net due to its robust feature set. Shopify offers a comprehensive solution, Shopify Payments, which covers all aspects of transaction processing, eliminating the need for third-party gateways.
  • Service Providers: If you’re in a business where you send invoices or take payments over the phone, a virtual terminal or a payment gateway that supports invoicing could be your best option.

If you’re looking for a simple all-in-one solution, here are some more useful examples that are affordable for small businesses:

SquareIn-person payments, online payments, over the phone payments, mobile app, no long-term contracts or hidden fees2.75% + £0.30 per swipe, 2.9% + £0.30 per online transaction
PayPalIn-person payments, online payments, over the phone payments, buyer protection, fraud prevention, no long-term contracts or hidden fees2.9% + £0.30 per online transaction
StripeIn-person payments, online payments, over the phone payments2.9% + £0.30 per online transaction, 3.5% + 10p per in-person transaction
Zettle by PayPalMobile card reader specifically designed for small businesses, easy to set up and use, competitive rates, in-app reporting and customer loyalty programs1.75% + £0.20 per swipe, 2.49% + £0.20 per online transaction
SumUpMobile card reader popular with small businesses, easy to set up and use, competitive rates, in-app reporting and customer loyalty programs2.9% + £0.10 per swipe, 2.9% + £0.25 per online transaction

How to Take Card Payments Without a Credit Card Machine?

Accepting card payments without a physical credit card machine is entirely feasible and can be the right move for certain business models. Here are some methods you might consider:

  • Virtual terminals are an online version of a physical credit card terminal. To process a payment, you would log into a secure interface and manually enter the customer’s credit card details. This is particularly useful for phone or mail orders. However, it is vital to comply with Payment Card Industry (PCI) standards to ensure secure handling of sensitive information.
  • Mobile payment apps enable you to accept card payments via a smartphone or tablet. By entering the card details into the app, or by using an additional card reader that connects to the device, you can facilitate transactions. Some popular mobile payment apps in the UK include Square, PayPal, and SumUp.
  • E-commerce platforms like Shopify or WooCommerce provide integrated payment gateways that facilitate card payments. These platforms are generally easy to set up and manage, and they offer the advantage of seamless integration with your online store.
  • Invoice with payment link is a method where you generate invoices that include a clickable payment link. Services like QuickBooks and FreshBooks allow you to send digital invoices where clients can click to pay via credit or debit card instantly.
  • Direct bank transfer is an alternative electronic payment method that does not involve credit cards. By providing your business bank details, you can receive payments directly into your account. Some businesses prefer this method for its lower transaction fees.
  • Payment Service Provider (PSP) API integration allows you to integrate a PSP’s API directly into your existing systems. This will allow you to customize the payment experience while adhering to secure transaction protocols.

How Much does it Cost to Take Card Payments?

Credit card processing fees in the UK can vary depending on a number of factors, including the type of card, the volume of transactions, and the merchant’s business model. However, some typical fees you might encounter include:

  • Transaction fees: This is the most common type of fee, and it is typically charged as a percentage of the transaction amount. The percentage rate can range from 0.2% to 3.5%, depending on the type of card and the merchant’s contract terms.
  • Monthly fees: Some providers charge a monthly fee for their services, regardless of the number of transactions processed. This fee can range from £10 to £30 per month.
  • Terminal rental fees: If you rent a physical credit card terminal, you will be charged a monthly rental fee. This fee can range from £15 to £30 per month.
  • Setup fees: Some providers charge an initial setup fee when you sign up for their services. This fee can range from £50 to £100.
  • Payment gateway fees: If you accept payments online, you may also be charged a payment gateway fee. This fee is typically charged as a percentage of the transaction amount, and it can range from 0.5% to 2%.
  • Miscellaneous fees: There may be other miscellaneous fees associated with credit card processing, such as chargeback fees, non-compliance fees, and early termination fees.

How Secure are Card Payments?

It is important to shop around and compare different providers before choosing a credit card processing solution. You should also be sure to understand all of the fees involved so that you can choose a plan that is right for your business.

Card payments are generally considered to be a secure form of transaction, thanks to rigorous industry standards and multiple layers of security measures. Here are some key aspects that contribute to the security of card payments:

  • Encryption and tokenization: Modern payment systems encrypt sensitive data at the point of capture and transform it into a unique token, which is then securely transmitted for processing. This technique, known as tokenization, ensures that even if a data breach occurs, the information obtained would be meaningless.
  • PCI DSS compliance: Payment Card Industry Data Security Standards (PCI DSS) is a set of requirements designed to ensure that all companies that process, store, or transmit credit card information maintain a secure environment. Compliance with PCI DSS is mandatory for any business accepting card payments, and non-compliance can result in hefty fines.
  • Two-factor authentication (2FA): Two-factor authentication adds an additional layer of security by requiring two forms of verification before a transaction can be completed. This is becoming increasingly common in online transactions and enhances security significantly. For example, you might be asked to enter your password and then also provide a code sent to your phone.
  • Chip and PIN technology: The widespread adoption of chip and PIN technology in the UK has significantly reduced the incidence of card fraud associated with face-to-face transactions. The embedded chip creates a unique transaction code that cannot be used again, making it far more secure than magnetic stripe cards.
  • Secure Customer Authentication (SCA): New European regulation has introduced Secure Customer Authentication (SCA), a process that requires online shoppers to undergo additional verification steps during the purchase process, thus increasing transaction security. For example, you might be asked to enter your password and then also provide a code sent to your phone, or to authenticate the transaction using a biometric identifier such as your fingerprint.
  • Monitoring and alerts: Many card providers offer real-time monitoring and alerts for suspicious activity. This allows for immediate action in the event of any irregularities, further reducing the risk of fraudulent transactions.

Why should I take credit/debit card payments?

  1. You’re losing business from customers who don’t carry cash. Many consumers now prefer the convenience of paying with credit or debit cards, and not offering this option may lead them to shop elsewhere.
  2. You’re limiting your sales potential. Credit and debit card users tend to spend more per transaction, potentially boosting your average sale amount.
  3. You’re holding too much cash on-site. This increases the risk of theft and can complicate your cash management.
  4. You’re making your business seem outdated. In an era where digital payments are becoming the norm, not accepting cards can make your business appear behind the times.
  5. You’re missing out on online sales. If you’re selling online, credit and debit cards are essential for completing transactions.
  6. You’re facing slower transaction times. Cash transactions can be slower than card payments, especially when customers need change.
  7. You’re complicating your accounting process. Managing cash flow can be more challenging with cash transactions, as they require more effort to track and reconcile.
  8. You’re not offering the security that comes with card payments. Credit and debit card payments offer both the business and the customers added security against fraud.

Card Payment FAQs

What Are the Basic Requirements for Taking Card Payments in My Business?

Is a Merchant Account Essential for Accepting Card Payments?

What Types of Card Payments Can I Accept?

How Do I Handle Online and In-Person Card Payments Simultaneously?

What Are the Typical Costs Involved in Accepting Card Payments?

What’s the cheapest way to take card payments