Card Machine Costs
Card machine charges have come down in recent years, but it can still be complicated to work out the relevant costs and find the best deal for your business. There are several factors you need to weigh up to get the cheapest rates, including the pricing structure, contract details, and any additional costs.
We look at the different options for card machine costs and how pricing typically breaks down.
Should you rent or buy a card machine?
The first thing to consider is whether you should rent or buy a card machine. Most small businesses lease card machines from a merchant account provider and pay a fixed monthly fee for each terminal. Transaction fees are agreed with the payment processor and will tend to vary by the card used.
Alternatively, you can buy credit card machines outright from a payment facilitator and pay fixed transaction fees.
You can see the main differences between buying a card machine from a payment facilitator and leasing one from a merchant account provider below.
The best option will depend on your type of business, average monthly or annual card turnover, and typical transaction size.
As a rule of thumb, if you believe you will take over £25K in card payment annually, leasing a card machine is normally the better option. You will save money on transaction fees and get a better card machine.
You can often reduce rental costs by committing to a longer contract. The transaction rates are a more important consideration, as they add up over the long term and can make a machine that seems initially cheap become more expensive overall.
How much does it cost to buy a card machine?
If you opt to buy a card machine outright, there are different types to choose from depending on your needs. Mobile point of service (mPOS) card readers from payment facilitators like Square, SumUp, and PayPal that work with a mobile app cost around £15- £30 plus VAT.
Some payment facilitators (payfacs) also offer standalone mobile or wireless card readers. If they feature mobile connectively, they have a SIM card with data. These card readers cost around £100 – £200 excluding VAT.
Traditional card machines from manufacturers like Verifone or Ingenico can range between £200 – £800 but it very rare for these to be bought outright – these are the machines that are leased out.
You can compare the types and costs of credit card machines here.
How much does it cost to hire a card machine?
Monthly card machine rental costs can range between £10 – £30 excluding VAT, depending on the model of the machine.
If you opt to rent a card machine from your payment processor, you’ll typically sign up for a contract of around 12-36 months. Some providers offer month-to-month or six-month contracts, and others offer long-term contracts of up to five years.
Countertop card machines are cheaper than portable machines that use WiFi, while mobile card readers that use a SIM card tend to be more expensive. Mobile terminals often include a data allowance in the monthly rental charge.
Transaction fees
Whether you buy or rent a card machine, you’ll need to pay fees to process each payment you take from customers. These fees depend on your transaction volumes, the length of the contract, your business type, and the types of payment cards you accept. You can get custom quotes from various providers to compare before choosing one to sign up with.
Fees are lower for transactions made with domestic debit and credit cards from Visa and Mastercard, and higher for premium domestic cards like American Express and cards issued in other countries. You will pay currency conversion charges for payments made with international cards.
| Card machine From Merchant Account Provider | Card Machine bought outright From Payment Facilitator | |
|---|---|---|
| Payment charges | 0.2% – 3.5% + 5p-60p (depending on card type) 0.5%-2.5% for currency conversion | 1.69% -1.75% |
| Refunds | £1.50+ | 0% – 1.75% |
| Chargebacks | £0 – £30 | £0 – £10 |
What are the fee structures for card machines?
Payment processors offer different types of pricing that will affect your overall chip and pin machine cost. There are three main options: Interchange++, blended, and flat rate.
Interchange++
Interchange (IC) fees are processing costs that a merchant’s acquiring bank pays to a customer’s debit or credit card issuer to handle the transaction. IC++ pricing is based on the fees charged by the card schemes (such as Visa and Mastercard), the cost of processing the payment, plus a markup.
Depending on the type of card, a transaction could incur these charges:
- Interchange fee: 0.20%-2.25%
- Card scheme fee: 3p-10p + 0.01%-1%
- Markup fee: 20p-60p
Interchange++ fees are relatively transparent, making it easy to compare offers from providers. However, most businesses will not quality for IC++ pricing. 95% of merchants are on blended pricing and IC+ and IC++ will typically only be offered to large merchants with over £10M in annual card turnover.
Blended
Blended pricing combines the IC fees, card scheme costs, and markup charges into single rates for various transaction and card types. This simplified cost structure results in more predictable fees, although it may not work out to be the cheapest.
Blended fees for rented card machines can range between 0.4% – 3.5% + 5p – 25p, depending on the card used for payment and your business type.
We look at the main differences between blended pricing vs interchange plus in this guide.
Flat rate
While blended fees can vary by transaction type, flat rate pricing charges every transaction the same percentage plus a small fee.
Flat rate pricing is the easiest to understand, but businesses with high volumes of small transactions could end up paying more than businesses with smaller volumes of high-value transactions. To compare whether flat rate pricing would be cheaper for your business than IC++ or blended pricing, you’ll need to know your average transaction size and the average percentage you would pay.
How much does it cost to run a card machine?
In addition to the cost of renting or buying a card machine and the transaction fees your payment processor will charge, keep in mind that there can be a slew of extra charges — from setup costs to PCI compliance and early account termination. Some are one-off fees, and others are recurring charges per month or per use.
| Card Machine Costs | Typical fee |
|---|---|
| Account setup | £150 |
| Merchant account fee | £0 – £15 per month |
| Online reports | £0 – £5 |
| Paper statements | Varies |
| Monthly minimum service charge (MMSC) | £5 – £25 per month |
| Batch payouts to bank account | £0 – £1.50 |
| PCI DSS compliance | £2 – £20 per month |
| PCI DSS non-compliance | 0.3% |
| Terminal replacement and servicing | £0 – £150 |
| Other equipment costs (receipt paper, software integrations) | Varies |
| Early termination | Varies |
How to choose a card machine
As we have seen, the right card machine deal for your business will depend on the nature of your transactions and the features you need to take payments from your customers efficiently. The factors you need to consider include:
- Predictability of sales. If you tend to bring in similar amounts of card payments each month, a long-term contract with an early termination fee will be more suitable than if your card payments vary widely.
- Sales volumes. Businesses with lower transaction volumes can save money with a low-cost card machine, whereas transaction fees for businesses with higher transaction volumes can add up, in which case a traditional terminal rental contract can represent a better deal.
- Growth rate. If your business is growing and you expect card transaction volumes to increase over time, a package that allows you to adjust the transaction fees as the sales scale up will be more suitable. Alternatively, you can buy a low-cost card reader and then switch to a terminal rental contract when sales stabilise and become more predictable.
- Type of card machine. Would a mobile/portable or countertop machine be a better fit for your business? Will you have a fixed payment desk or do you want customers to be able to pay from anywhere in your store? You can save money by opting for an MPOS system over a traditional card machine. Also, look at how the card machine model you choose is connected to the terminal, and if it is mobile or wireless, whether it has a good signal for payments by the till, around the store, and on the move.
Which card machine is cheapest for my business?
For most businesses, renting a card machine will be cheaper overall than buying a low cost card reader outright. This is because the difference in transaction fees will be significant.
The fees you are charged by your merchant account provider payment will be effected by your business type, card turnover, requirements, and contract length.
While fixed-rate transaction pricing can be attractive as it is straightforward with no surprise fees or long contract commitments, it can cost more than blended or IC++ pricing for businesses with higher transaction volumes.
When negotiating with a payment processor, make sure to read the fine print of any contract they offer and be wary of pushy sales representatives
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