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Merchant Accounts For Small Business


What is a Merchant Account ?

A merchant account is similar to a bank account, but it is specifically for businesses only. It allows a business to accept credit and debit card payments online and over the phone. Business can get a merchant accounts through their bank or a merchant aquirer such as Worldpay, Sagepay or Global Payments.



How does a merchant account work?

When a customer uses his credit or debit card to buy something, a payment request passes through the payment gateway to the bank. The bank then sends the request to credit or debit card schemes, i.e. Visa or MasterCard for authorisation. If the request is approved, then the bank account holder can complete the purchase.



Who are the best UK Merchant Account Providers?

Merchant service providers give businesses the necessary tools to accept debit and credit card as a payment method for their product or services. There are many leading merchant account providers in the UK such as Worldpay, Streamline, PaymentSense and Barclays Card Services.


How do I apply for a Merchant Account?

For any business applying for a merchant account there are several options that we would advise. Firstly, and the route a lot of start-up companies use is to apply for a merchant account via a payment services provider such as Worldpay, Sagepay or Paypal. The other popular option is applying for a merchant account through your bank however expect fees charged by banks to be significantly higher than independent payment provider or ISO’s. Most providers do not advertise their fees so it is important that you shop around and compare several providers to find the best deal for your business.



For start-ups applying for a merchant account, it is not always a given that your business will be granted a merchant account. Because banks view granting a merchant account status as an extension of credit. They will evaluate your business and will not grant you a merchant account if you have poor credit.



We now live in a society where people no longer carry around cash. Most customers automatically assume that any business they want to make a purchase from accepts card payments especially with the rise of contactless as a favoured payment method. It is important that your business accept card payments in order to avoid the risk of losing customers.




Merchant account services enable a business to accept payments through a secure channel by using the customer’s debit or credit card. The term merchant services covers a broad range of service options:



Credit & Debit Cards Processing Services

Paying through debit and credit cards is the most popular payment option among customers. Accepting card payments will allow customers to pay for products or services provided by your business in person, online or over the phone.



What is a Payment Gateway?

Internet Payment Gateway/ Virtual Terminal processes payments from customers who are shopping online through a merchant’s website. This allows businesses to receive the necessary authorisation required to complete the transaction.


Loyalty Programs

It is a smart way for merchant account holder to build and maintain a good relationship with its customers by offering loyalty programs. The programs rewards repeat buyers by giving them club card points or exclusive discounts for being loyal customer to their business.


Mobile Payments

With the advancements in contactless payment mobile payments is a popular option for many small businesses. Businesses can take payments on iPhones, Android’s, Tablets and other popular mobile devices. Customers will just have to tap their device over the payment terminal to make a contactless payment. For purchases over £30 they would have to enter a pin.


Point of Sale (POS)

POS is commonly known as the check-out point in retail stores. Point of sale includes all the software and hardware that is required to accept payments through credit card terminals or cash registers. Most of these have touch screens which allow the cashier to get accurate product and price information to complete a transaction efficiently.



There numerous providers in the payment processing industry in the UK. Each of them provides a variety of services with their features and fee structures. Following are the key players in the payment processing industry:

  1. Worldpay allows you to take payment securely online, over the phone or in person using a card machine. They are a global leader in the payment processing industry and enable their merchant to take payments anywhere in the world across multiple channels.


2. Izettle offers a commerce platform that allows small businesses to take payments and grow. Its an ideal platform for entruepeneurs who need to accept card payments.




3. First Data is one of the leading card payment aquirers in the UK. They cater for both small and large businesses need card payment and POS solutions.



4. Another leader in the payment processing industry. Card Cutters provide both online and instore card payment solutions to businesses.


5. Secure Trading specialise in providing online payment gateways. They offer a cost efficient online payment solution for merchants in the UK who need to accept payments online.


6. Part of the Worldpay Group – StreamlineUK offers portable, countertop and mobile card machines.



7.Paypal offers online merchant services to businesses. They also have entered the mobile payment market through their paypal here contactless chip & pin card reader.Handepay


8. Handepay is a great payment option for independant businesses. They provide face to face, online and phone payment solutions.


9. Cardsave is part of the Worldpay group and offer affordable card machines to UK customers


10. Global Payments is one of the biggest worldwide players in the payment market. They offer many financial technology solutions which includes providing merchant account services to businesses of all sizes.


11. Elavon merchant service cater for small businesses in the UK .  They have solutions that allow companies to accept all credit card payment. Options include services that all businesses to implement a loyalty scheme for their customers


12. Llyods Bank Cardnet claim to have card payment solutions that are scalable dependig on your needs. You don’t require a bank account with llyods to sign up for a merchant account with them.



There are various fees involved in opening and using a merchant account. Although fee should not be the only factor to consider when choosing a merchant service provider, it is recommended to get a clear understanding of certain costs before signing the contract.


What is a merchant account Transaction Fee?

This fee is charged per transaction regardless of the fact the payment is approved or rejected. The transaction fee is usually the highest cost of maintaining a merchant account. The average transaction fee for credit cards is somewhere between 0.5% to 4%.


How much is a merchant account Payment Gateway Fee?

Fees are paid to the payment gateway providers to cover the cost of receiving and processing a transaction online. This covers the use of the gateway infrastructure to receive payment information, request bank authorisation and transmit that authorisation to the merchant to facilitate payment.


How much does a merchant accounts cost monthly?

Many merchant account providers charge a monthly or annual fee. These fees can range between £10-£20 per month with most providers depending on your business.


What is the annual fee for a merchant account?

Some merchant account providers may charge an annual fee on top of the regular monthly fee. This is charged to cover the basic use of service. Most providers do not charge an annual fee.


How much is the Early Termination Fee charged by merchant account providers?

Most providers may require and have it stated in the contract that merchants will be charged a cancellation fee if they wish to cancel before the end of their contract.


What companies provide high risk merchant accounts to businesses?

A high-risk business is the one whose cash flow is not steady rather it has a turbulent cashflow. Travel companies, insurance, payday loan, gambling and debt collection agencies for example will often be initially considered as a high risk merchant. Despite the unstable nature of these businesses, there are merchant account providers who supply these businesses with merchant services. High risk merchants will often go through a more thorough background check before being accepted for a merchant account. High risk companies will may also incur higher setup fees, transaction fees as well as be required to make a minimum amount of monthly transactions. Due to their high risk nature payments may also take longer to reach their account than low risk merchants.


If you are rejected for a merchant account with your bank it is not the end of the world. Shop around, talk to different independent payment providers to ensure you find the best provider for your business requirements.

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