New rules will make it easier for small businesses to shop around for a good deal on card readers.
The new rules make it easier to compare prices and switch; contract lengths have now been capped at 18 months and card reader providers must tell business customers when their contracts are about to expire, so they're not locked into bad deals.
A four-year review of the card acquiring market by the PSR concluded that the market is "not working well" for the 1.1 million small firms that accept card payments in the UK. It found that 92% of small merchants, such as newsagents, restaurants, hairdressers and plumbers, have been with the same payment provider for more than a year, and 66% don't know the fees that they are paying to providers.
Getting the best deal on card readers
Cam Jaques, business expert at money.co.uk said: "Card-acquiring services not only affect the small businesses and retailers that use them, but also the customers using them to pay. The new rules will ensure that businesses are able to easily keep on top of their payments and provide healthy competition between providers so that businesses can continue to get the best deals.
"Card-acquiring services will now need to let clients know that they can shop around for a better deal at the end of their contract, as well as providing a summary of the card fees businesses are charged and an online quote tool of key changes to give them all the tools to make informed choices. Point of Sale (POS) terminal contracts can now not run for more than 18 months, to ensure businesses don't get locked in to a bad deal."
How to save up to £5,400 a year in card fees
The National Federation of Retail Newsagents has estimated that when its members switched acquirers, they saved between £100 and £450 per month on the cost of card acceptance services - potentially a saving of up to £5,400 a year.
New services are emerging that make it easier for small firms to shop around for card readers. Statement is a platform that allows small businesses to compare card payment providers. "We all use our cards without a second thought, but accepting card payments has been frustrating for small business owners for far too long," said Ed Hardy, ceo of Statement. "90% of contracts are still signed through telesales or field sales making it hard to quickly search the market. We're building the technology to create a more transparent payment industry where businesses can compare and board to their chosen provider online, cutting the process of finding the right provider from days down to minutes."
Written by Rachel Miller.
Need a card payment system? We can help.
We have taken the guesswork out of buying a POS system. See our top picks below or read the review on the Money Donut.
Best for start ups
Square | No monthly fee, from 1.75% | Popular and adaptable all-rounder
Best for ecommerce
Shopify | From £19 a month plus 1.7% | Complete ecommerce and payments platform
Best for hospitality
Lightspeed | From £39 a month plus 1.6% | Flexible hardware and powerful integrations
Best for mobile payments
SumUp | No monthly fee, 1.69% | Portable card readers stand out for mobile payments
Best for growth
EPOS Now | From £25 a month plus 1.7% | Sophisticated hardware and integrations