All About Card Payments

Paying by debit cards and credit cards, especially using contactless payments, is becoming the norm. Increasingly people are no longer carrying cash and relying on their cards to pay for everything, even for less expensive items such as purchasing a cup of coffee.

Research by the British Retail Consortium at the end of 2017, found that nearly 3 million of Britain’s small businesses still did not accept cards, but with 60% of shoppers saying they would shop more at small businesses in their local area if they could pay by card, these businesses are missing out.

It can be a little confusing when it comes to selecting a card machine as there is a wide choice of solutions and considerations to be made. This website is designed to help you make your selection. The information below is provided to help you understand the overall process involved in taking card payments.

Who is involved with taking card payments?

Debit and credit cards are provided (usually by banks) to consumers and business customers, they are known as issuers. An acquiring bank (also known simply as an acquirer) is a bank or financial institution that processes credit or debit card payments on behalf of a merchant.

Card payments are processed when the consumer who wishes to make the purchase has their payment routed through to the acquiring bank via a payment service provider and often following the sign-up by an ISO (Independent Sales Organisation) which is an organisation accredited by the card schemes to provide services from acquiring banks to merchants.

There are roughly 15 notable ISOs in the UK market who resell services through 5 main acquiring banks. The acquiring part of the process is the banking aspect of the payments service.

When the payment is processed the transaction it is passed through to an acquiring bank for the credit or debit card transaction to be processed. This is essentially the same whether it is an online transaction or a face to face transaction, but the flow of a transaction will vary slightly if the customer is paying online or using a physical payment terminal (face to face payment).

How does it usually work?

Merchants (the business taking the money) usually opt to lease or rent a card payment machine or set up a virtual terminal to take online payments. In either instance the merchant will be assessed by the acquiring bank for suitability to get access to the merchant account. If approved the merchant will be awarded a merchant identification number (MID). There are a few business types that for varying reasons, may not be accepted.

In addition to monthly service costs the merchant will need to pay a minimum monthly service change, authorisation fees and transaction charges. Merchants also need to become PCI compliant to avoid the potential of fines. PCI compliance is best practice and shows a merchant is acting responsibly with the data supplied to them by their customer.

What are the benefits of card payments?

  • Increased sales
  • Convenience for customers
  • Meeting customers’ expectations – especially among the younger demographic
  • Increased security
  • Less risk of theft
  • Reduced queues and faster service (no worrying about giving the correct change)