With Christmas just around the corner and card payments increasingly replacing cash payments, a mobile card reader could be key to boosting your sales.
It really pays for small and micro enterprises to keep up with the times and have card machines at the ready to take payments – or else you risk losing custom during the peak trading season.
However, accepting payments through traditional card terminals can be costly – with monthly terminal hire alone costing up to £40. The good news though is the advent of mobile card readers has reduced costs.
Featured on our list of the best four mobile card readers in market are iZettle, Square, SumUp Air and PayPal Here
They do away with the monthly charge and can be purchased for an upfront cost of as little as £29.
They’re pretty nifty too – offering a way of trading on the go by allowing businesses to take payments immediately and securely via Wifi or mobile data, without having to handle cash.
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It can also be argued they make a business seem more professional and credible to customers.
But with so many gadgets now available, each boasting unique features and charging structures, it can be tricky to work out which may suit your businesses.
To help you on your way, This is Money has teamed up Stephen Hart, chief executive of price comparison website for credit/debit card processing costs Cardswitcher, and Emma Jones, founder of small business support group Enterprise Nation, to create a list of the best card readers on the market. Here’s how they compare.
This list is in no particular order. Scroll down for a comparison table of the card readers.
The iZettle card reader cost £29 and levies transaction fee of 1.75 per cent
You can get your hands on an iZettle reader for £29 (plus VAT) until the end of November. The price reverts back to £59 plus VAT thereafter. When it comes to transaction costs, the firm levies a flat fee of 1.75 per cent on each instance.
There is no contract with iZettle and customers can change their pricing plan that covers extra services (see below) at any time.
iZettle offers a range of paid-for commerce tools from access to capital with iZettle Advance to an invoicing service. Here are some of the most noteworthy extras:
iZettle Advance: iZettle offers credit to its customers in the form of advances, to be repaid with each card transaction.
iZettle Go: A free point-of-sale app that allows customers to manage their sales and labour.
iZettle Pro:An electronic point-of-sale app designed specifically for the hospitality industry.
The iZettle reader is a solid choice. Its transaction fee is one of the cheapest on market, and payments are deposited into users’ accounts within two business days.
The highs: The device most notably accepts a vast array of cards – more than the others in the list – and comes with a range of add-ons to grow your business.
The lows: The iZettle readers can’t accept payments when the card is not present – so you can’t take payments over the phone – and the device can’t be used abroad.
‘We charge for ice cream at festivals with our iZettle card reader’
Henry Milroy, and Rob Huysinga, both 23, are the co-founders of Pan-n-Ice, which makes ice-cream instantly on frozen plates.
Henry Milroy, right, and Rob Huysinga use the iZettle Reader for their ice cram business
The business operates from stalls in the Westfield Stratford shopping centre in London, Selfridges in Manchester and Birmingham, as well as events and festivals on occasions.
It uses the iZettle reader to take card payments. Milroy, said: ‘We first started the business taking cash payments at different festivals. We didn’t know that there was a way of taking card payments when you are out and about.
‘Having one has been vital for our business and has undoubtedly contributed to a rise in sales.
‘Our readers have a good back of house system that allows us to track peak sales times, what we made at different events and what the best selling product was. We use this information to make sure that there are enough members of staff to maximise sales during the busiest periods.’
The experience has not been plain sailing however. Milroy said he has encountered issues with the reader and other card readers he has used in the past when trading in remote locations – at festivals, for example – as well as events where mobile signal is hard to come by because of the sheer amount of revellers using their phones.
The PayPal Here device allows customers to add a tip directly on the card reader
There is a one-off charge of £35 (incl VAT) for the card reader until 30 November, after which time it will revert to the normal selling price of £75 (incl VAT). And the cost per transaction ranges from 2.75 per cent to as low as 1.5 per cent (when monthly transactions amount to £15,000 or more). The charge is 3.4 per cent + 20p for transactions where the card is not present.
PayPal Here also offers integrated software tailored to specific industries including retail, transport, trade and health and beauty. For example, its range of partner accessories includes the ‘Complete Cab’ bundle – a TfL-approved payment system for mini-cabs.
PayPal may be one of the best-known payment processing brands but its mobile card reader is expensive compared to the others – and that’s before the £35 promo price jumps to the normal £75 price. The 2.75 per cent transaction fee is steep too – although it does fall to 1.5 per cent if your monthly transactions are greater than £15,000.
The highs: PayPal is an instantly recognisable and a trusted brand, therefore, the reader may make merchant seem more credible. The device can be used to trade overseas, so long as its customer services team is informed in advance. It also allows customers to add a tip directly on the card reader, which could be of particular benefit for businesses in the hospitality industry.
The lows: Many SMEs are likely to be burnt by the higher transaction fee band. In addition, while PayPal can credit funds to your PayPal account instantly, there can be restrictions on accessing these funds depending on your business and its activities. This could cause cashflow problems. It also does not accept as many cards as the others – but as with all of the readers included in the top four, it accepts Visa, MasterCard and Amex.
WHY I USE PAYPAL HERE
Gareth Walton of campervan accessories firm OLPRO uses the PayPal Here card reader at roadshows
Gareth Walton, 38, is the operations manager at campervan accessories firm OLPRO. While the firm’s online store is its main source of revenue, Gareth and his colleagues travel around the country to set up shop at industry roadshows.
He and his colleagues use PayPal Here to take card payments at these events.
Walton claims using a mobile card reader has been a boon for business – offering a preferred alternative to cash payments. ‘We used to take substantial amounts of cash to roadshows back in the day but now we take card reader too – which is probably the safer thing to do.’
He added: ‘People often complain that these devices do not offer paper receipts but this not necessarily a big deal. People aren’t as bothered about not being given a tangible receipt with their purchase. Besides, if you really want to offer paper receipts, you can buy a printer separately.’
Payments made via Square are transferred to the merchant’s bank account within two days
The Square card machine costs £39 plus VAT, while a 1.75 per cent fee is applied on transactions using the card reader.
For transactions made over the phone, online or through invoicing and other instances where the card is not present, the charge is 2.5 per cent.
Those operating larger businesses can purchase additional features such as employee management for £3 a month.
You can buy a charging dock for the Square Reader for £19 plus VAT.
Square is a good all rounder. It’s cheap – with transaction fees levied at 1.75 per cent – can be used when a card is not present and users can make around 500 payments before the battery depletes.
The highs: Quick deposits is a notable feature of Square. Funds are transferred to the merchant’s bank account within one or two business days as default. The battery life is also a plus point.
The lows: The device is notable for not having a dedicated PIN pad on the reader, so customers are required to enter their PIN on the smartphone or tablet running the Square app. UK customers are not used to such a system and may not trust it. Also, the machine can’t be used abroad.
Sum Up Air boasts the cheapest transaction cost of all four card readers at 1.69 per cent
The reader itself costs £59 plus VAT. Transaction costs where payment is taken off a physical card are levied at 1.69 per cent, while virtual terminal and SMS payment transactions are charged at 2.95 per cent plus 25p.
SumUp also offers a complete point of sale solution, which, if you opt for it, will incur a fixed monthly cost. It includes a re-configured iPad, an iPad stand, a receipt printer, a cash drawer and a Wi-Fi router.
Sum Up Air boasts the cheapest transaction cost of 1.69 per cent compared to the rest of the top four card readers listed but you have to purchase another add on for a more extensive point of sale solution.
The highs: The reader can take payments where the card is not present, be used abroad if customer services is notified beforehand and make 500 transactions before the battery dies.
The lows: The cost of the device is £59 plus VAT – more than double that of iZettle. It lacks add-on products that extend the usefulness of the reader. And it can take up to two or three business days for payments to be deposited.
The table below offers a brief summary of the key features of all four card readers.
|iZettle||PayPal Here||Square||Sum Up Air|
|Solution Type||Wireless Chip & PIN reader, contactless + mobile app||Wireless Chip & PIN reader, contactless + mobile app||Wireless Chip & PIN reader, contactless + mobile app||Wireless Chip & PIN reader, contactless + mobile app|
|Device cost||From £29 + VAT until 30 November 2017. £59 + VAT thereafter||£35 until 30 November 2017. £62.50 + VAT thereafter||£39 + VAT||£59 + VAT|
|Cost per transaction||1.75%||2.75% to as low as 1.5% (when monthly transactions £15,000 or more).|
3.4% + 20p where card is not present
|1.75%. Where the card is not present, the charge is 2.5%.||1.69%. Where the card is not present, the charge is 2.95% + 25p|
|Transaction limits||£1 minimum and £200,000 per day max, with a £5,000 transaction limit per card and transaction||Minimum £1 and maximum £5,500 per card and transaction||Up to £25,000||£1 minimum. Maximum varies individually|
|Payment methods (touch, swipe, chip and pin)||PIN, contactless tap and swipe||PIN, contactless tap and swipe||PIN, contactless tap and swipe||PIN, contactless tap and swipe|
|Transaction settlement delay||Within 1-2 business days||Within seconds to a PayPal account||1-2 days||Up to 2-3 business days|
|Supported cards||MasterCard, Visa, American Express, Maestro, V pay, Visa Electron, JCB, Diners Club, China Union Pay||Visa, MasterCard, Discover and American Express||Visa, MasterCard, American Express, Maestro, Visa Electron or Vpay||Visa, Visa Electron, V Pay, MasterCard, Maestro, American Express|
|Keyed transactions (when card is not present)||No||Yes||Yes||Yes|
|Receipts||Email, SMS or print||Email, SMS or print||Email, SMS or print||Email, SMS or print|
|Battery life||Eight-hour battery life (100 transactions||Up to 7 days (on standby) or up to 100 transactions||Users can make around 500 payments before the battery depletes||Users can make around 500 payments before the battery depletes|
|Connection||Bluetooth to smartphone/tablet with 3G/4G/Wifi||Bluetooth to smartphone/tablet with 3G/4G/Wifi||Bluetooth to smartphone/tablet with 3G/4G/Wifi||Bluetooth to smartphone/tablet with 3G/4G/Wifi|
|Use abroad||No||Can be activated if customer services is informed in advance||No||Can be activated if customer services is informed in advance|
Which one should I get?
Of course, the most suitable card reader varies from business to business, but there are key metrics to consider to help you determine which one that is.
Cost is a key consideration, and the differences are clear to see. PayPal Here is the most expensive overall.
While all four featured readers have no fixed contract or monthly fees and no required transaction volumes, the transaction fees range from 1.69 per cent to 2.75 per cent. The figures are even higher for payments where the card is not present.
Meanwhile, the device cost is between £39 plus VAT for Square and £62.50 plus VAT for PayPal Here (once the iZettle and PayPal Here promotions expire at the end of November).
That said, cost isn’t everything. It is important to look under the bonnet of each proposition to find out whether they align to the needs of your business.
All four devices accept Visa, MasterCard and Amex cards but it is worth double checking if there are other card types you think you need to accept, according to Stephen Hart from Cardswitcher.
You also need to check if the device is compatible with your smartphone/tablet, and, crucially, how long it takes before the card payments you take will be transferred into your accounts.
Emma Jones from Enterprise Nation says: ‘In the early days of card readers, the money took many days or even a week to trickle into you bank account.
‘Today there is no need to wait more than a day, two tops. This is also helpful for cash flow. It also saves you having to take a lot of cash home with you and then count it into bundles and bags and take it to the bank when it opens the next day.’
In addition, it is probably worth paying that little bit extra on a device that not only facilitates card payments but boasts features that can help drive up sales.
Hart adds: ‘The biggest difference between devices is probably the reporting/ analytics tools on offer to help you run your business – these are now very sophisticated but do vary so check what’s on offer from each for your business needs.
‘All the websites have great videos showcasing their functionality. Finally, there’s integration – some devices seamlessly integrate with popular accounting packages such as Xero.’
Traditional card terminals could still be the best solution
While mobile card readers have been a positive addition to the payment options available to merchants, traditional terminals should not be overlooked.
Yes devices are still pretty pricey. Terminal hire is typically levied between £15 and £20 a month – but can be up to £40 – and you can face another a minimum monthly charge if your transaction volume isn’t high enough.
So for the smallest of merchants who take occasional take card payments, they may well be too expensive. But transaction rates have reduced significantly in the past 18 months, Hart says, adding: ‘While the cheapest card reader option will charge a 1.69 per cent transaction fee, a traditional terminal package could be as low as 0.3 per cent for debit cards and 0.8 per cent for credit cards.
‘When we do the maths, we estimate that the traditional terminals start to become cheaper overall at a monthly transaction volume of around £2,200 (£26,400 per year), which isn’t that high.
‘So even if a mobile card reader is best for your business now, keep an eye on the costs as your business grows – at card payment turnover of around £50,000 per year, the mobile card readers are twice as expensive as traditional terminals.’