Credit Card Processing : The Cost of Not Accepting Card Payments

By Rob Binns | Senior Writer

In this digital age it appears there aren’t many things that can’t be done with a tap of your smartphone. Accessing the tube, retail transactions and e-commerce payments are literally all at our fingertips, yet according to research by Worldpay, 1/10 businesses still fail to accept card payments, let alone accept digital payments like Apple Pay.


SMEs account for 99% of all UK businesses, which means that around 549,000 businesses are potentially alienating a lot of business by failing to accept card payments.

Why Accept Card Payments

We decided to crunch the numbers and find out how much not accepting card payments could actually be affecting a business’s bottom line. A lot, it turns out.

Cash and Card Payments in 2015

2015 data from Payments UK shows the split between cash and card payments. When looking solely at credit card, debit card and cash payments, cash payments account for 58% of transactions and card payments 42%. Statista data reveals that the average SME earns £223,000 profit annually, thus amassing, on average, £93,660 from card payments alone. Factor in that ¼ of UK consumers avoid cash only businesses, and that leaves a whopping £23,145 of unaccounted for, potential revenue. And that’s just the tip of the iceberg.

▶ Read more: Costs of a PDQ machine

revenue loss

Cash and Card Payments in 2025

2025 projections see a huge shift in payment patterns, with card payments swelling to equate to 65% of transactions, and cash payments slipping to account for just 35%. This means that by 2025 businesses could be jeopardising £35,680 annually by failing to accept card payments.

The Evolution of Contactless Payments

The domination of the digital app has seen a huge flux in the way people choose to pay, particularly with the introduction of contactless payments, allowing fluid transactions in minimal time. For the millennial generation, digital payment apps for smartphones ensure you don’t even need to carry a card in order to complete a transaction, let alone carry cash.

contactless payments

The Payment Split: 2015 vs 2025

Reseach by Worldpay found that ⅔ of 24-34 year olds prefer not to carry cash, instead opting to use credit or debit transactions, which further enforces these projections. Contactless payments are also dramatically increasing year on year. 2015 saw contactless payments rise by 330% from 2014, accounting for 8% of all card transactions. By 2025 this number is expected to proliferate to a massive 47% of card transactions.

cash and card payments

In order to remain competitive in the digital space cash-only businesses will be forced to adapt their payment options, or risk the future of their business.

credit card processing

How Do Credit Card Payments Work?

In order to accept credit card payments, business owners must first have a merchant account. This is the account where the credit is actually transferred to.

The process of transferring the funds takes places over a payment service provider (PSP). The PSP sends a customer's bank details to a business's merchant account and it is during this process that the payment is either accepted or declined. The PSP then sends the result back to the merchant who either finalises the sale or refuses it.

Point of Sale software will show the result of the transaction and will print out a copy for both the customer and the retailer. The Point of Sale for credit card transactions is the terminal into which the customer enters their PIN code. This can either be fixed to a cash register or work wirelessly, i.e. be carried to the customer within the business premises.

How Much Do Banks Charge for Credit Card Processing?

Offering customers the opportunity to pay by debit or credit card is a great way for businesses to increase their sales and provide their customers with flexible payment options suited to their preferences.

However, in order to process these payments, fees must be paid by businesses to the processor (most often a bank). Credit card processing charges depend on a number of factors including the volume of sales that are processed each month.

When you sign up with a merchant account, you will be provided with a number of package options, and a number of these will include monthly fees in addition to the transaction fee. There are also different package types depending on whether you conduct your business face to face, online or over the phone and through mail order.

Barclays for example chooses to offer its customers the opportunity to take credit card payments online for a monthly fee, rather than per transaction. This fee is around £45 a month and is all inclusive of all of the relevant services.

This service applies for up to 350 transactions whereas any more than this will incur a £1.10 transaction charge, making it a great solution for small businesses.

Lloyd’s TSB’s CardNet service offers an initial joining fee which covers a 12 month agreement, in addition to a transaction charges for credit cards that lowers as your sales increase whereas their debit card charges remain static.

It’s important to note than banks are not the only providers of credit card processing and you should compare other sources in order to get the best deal.

Read: HSBC's payment gateway costs

Despite the transaction fees for processing credit cards, offering this option for your customers is still going to be a more profitable option for your business than by limiting their payment options.

The more sales that are processed through credit card payments, the lower the transaction charge will be and so the sooner you start to use this service, the better off your business will be financially.

Online Credit Card Processing

In today's online business environment, having the ability to take online credit card processing and debit card payments is an absolute must. It may be tempting to dispense with the fees and only accept PayPal but this can be a quick way to lose customers for the sake of saving a little money.

Taking payment online from credit and debit cards is not as straightforward as it may appear from the customer's point of view. A merchant account is required first and until recently these were offered only by offline businesses.

In addition to this, you need a payment processing provider. i.e. a system that processes the transaction and sends the details to your merchant account. Traditionally, you would have two different providers for each service, and that is still a viable way to operate. These days, however, you also have the option to choose providers that offer all in one solutions – a rolled together Internet Merchant Account (IMA) and payment processing.

Credit Card Processing Companies With No Monthly Fee

Sage Pay

Sage Pay is a well-known provider of merchant accounts, who allow businesses to accept payments from providers including Visa, MasterCard and American Express.

Their service is very simple to set up and provides traders with everything that the need to get set up to accept credit card payments. Their transaction charges are competitive and are based on the volume of payments processed each month, rather than offering a monthly fee.

As there are no long term contracts, users are able to stop using the service at their convenience, which makes it a great solution for those who are only occasional users of merchant account services.

There are different account types for those dealing with online payments, telephone and mail order payments and in store payments using PDQ readers. Sage Pay is used by a number of businesses including Krispy Kreme, Europcar, Pinstripe and Pearls and EasyJet Plus.

Web Merchant

Web Merchant offer flexible services for businesses to take card payments from customers and clients.

One of their lowest priced options is for their mobile credit card packages which allow businesses to take payments using their mobile phones, without the need for additional terminals. They charge a one off fee and then charge 1.95% per transaction, with no monthly fees.

Easy to use and set up, Web Merchant also provide customers with technical support should anything go wrong and is a great option for tradespeople and those who don’t operate in a single location, although it great for use by shops and other businesses too.


NoChex can provide services for businesses who are looking to combine their merchant accounts with services such as payment gateways in order to operate their businesses online.

Accepting payments from both the UK and abroad, NoChex are ideal for businesses who deal solely online who want the freedom to suspend the service as they wish, rather than being bound by monthly or annual fees.

With low transaction fees, they offer the chance for small businesses as well as large businesses to offer online payments and even including their PCI compliance services as part of the package.

With a number of clients all over the UK including FitSense, Trunk, Value Flora and others, they are a recommended merchant account provider for businesses.

The companies listed above are just some of the credit card processing companies who offer their services with no monthly fees.

Having a monthly cost to pay as well as a transaction fee for every purchase made can be a deterrent for businesses from accepting card payments, however their benefits certainly outweigh these as allowing customers to pay in this method offers them greater flexibility when paying for goods or services.

How to Get the Best Deal?

As we have seen, even the smallest difference in percentage fee for card transactions can have serious financial implications in the long run. Therefore, businesses must be prepared to shop around for the best deal. Do not simply rely on your trusted bank to give you the best deal – look at independent organisations as well.

Interestingly, your merchant account provider and PSP can be different companies so make sure you receive quotes for both services individually as well as a package. Ultimately, the fees associated with your merchant services could spell the difference between your business floundering or succeeding.

We’ve reviewed some of the top card payment machines that will help to keep businesses competitive through the digital curve.

Top Card Payment Providers


Worldpay are the leading supplier of merchant accounts across the UK, offering countertop, portable, mobile and contactless credit card machines. They ensure fast, reliable transactions and secure payments, with flexible pricing plans.

First Data

First Data put fraud prevention at the forefront of their technology, ensuring their card terminals and POS machines are the height of security. They offer mobile and wireless card payment terminals.


Handepay cut costs wherever they can, offering no joining fees, no premiums, no authorisation fees and no minimum monthly service charge. Their countertop, portable and mobile card machines allow for contactless payments, including Apple Pay as standard.

Next Steps

Compare credit card processing suppliers by filling in the form at the top of the page.

Rob Binns Expert Market
Rob Binns Senior Writer

Rob writes mainly about the payments industry, but also brings industry-specific knowledge of CRM software, social media monitoring, and invoice finance. When not exasperating his editor with bad puns, he can be found relaxing in a sunny corner, with a beer and a battered copy of Dostoevsky.

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