SUMMARY OF LIKELY COSTS OF TAKING PAYMENTS ONLINE

Broadly speaking there are three areas of charges associated with taking payments from Credit and Debit cards online, they are:

 

Set-up Costs - these are the costs associated with setting-up your account.

 

Transaction Charges - These are the costs associated with each individual transaction processed and can be in either absolute terms (i.e. 39p per transaction) or as a percentage of the overall transaction (e.g. 3% of the transaction value). It is worth noting that in most instances, when the percentage rate is used, it is subject to a minimum charge (i.e. 10p per transaction).

 

Monthly Service Charges - Most Internet Merchant Account providers and Payment Service providers will charge a monthly service charge or a minimum billing fee, if the sum of your transactions don’t accrue to this amount it will be rounded up.

 

The costs of accepting credit and debit cards for your business are highly dependent on your individual business. The costs are highly influenced by the volume and value of the transactions each month, the susceptibility of your business to fraud and charge-backs as well as your overall trading history as assessed by the Merchant Acquiring Banks.

 

Here is a list of the Internet Merchant Account Charges from the major acquiring banks: (please note that these are effectively the standard rates which the banks provide as a guide to charges. In most cases the acquiring banks will vary the rates depending on the volume and value of the transactions, the risk and incidence of chargebacks and how established your business is).

 

Bank	Merchant Account Set-up Fee	Minimum Monthly Service charges	Credit Cards (max)	Debit Cards (max)
Alliance & Leicester Banks	£150	Nil	2.5%	20p
Barclays Merchant Services Banks	£250	£25	5.5%p/t Internet loading charge- <£10000 = 1% >£10000 = 2%	45p
HSBC Banks	£150 - £250	£20	4.99%	55p
HBOS Banks	£150	£15 minimum monthly charge	3%	45p
Lloyds TSB Banks	£150 -£350	£25 minimum monthly charge	3.55% - based on annual turnover of £10000 @£50 per transaction.	43p based on annual turnover of £10000 @£50 per transaction
Streamline Banks	£350		3.5%	60p

 

In addition to the charges from the Internet Merchant Account acquiring bank, you will be charged for the Internet Payment Processing Service.

 

Click here for SECPay's charges.

To fully understand the potential costs for your business we recommend that you build a model of what you expect or know your transactional profile to be. Broadly speaking your profile consists of the following information:

 

How many transactions do you expect to make per month?

What percentage of these will be Credit Card?

What will be the average value of a typical transaction?

 

The Acquiring Banks may also want to see a copy of your business plan and trading history before agreeing to provide you with an internet merchant account, or providing you with details of the costs.

Using these figures it is possible to shop around for a deal or best prices to suit your individual business profile.

In our experience it pays to shop around for your internet merchant account. Most of our clients seem to prefer to use an alternative supplier to their normal bank as this gives them the ability to seek better terms and a more competitive deal, as well as greater business flexibility.

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