Taking card payments
There is no doubt that accepting cards can improve your practice’s sales and it is an increasingly preferred means of payment for your customers. But with so many solutions and providers, how do you decide what is best for your practice? There are a number of "Pay As You Go" options on the market, but to determine if these are better for you than a traditional bank hired terminal, there are two basic considerations.
What is my monthly card turnover?
For years, it was prohibitively expensive for small businesses to accept cards. Hiring a traditional card terminal from a bank costs from £14 - £17 (plus VAT) per month. Banks also impose a "minimum monthly service charge" of around £20 per month, which is charged if you don’t carry out a certain level of transactions. So, before you even take a transaction your monthly fixed costs are £34 - £37 per month, and if you only do a handful of card transactions then the cost per transaction could be as high as £7 per transaction. Or to put it another way, around 15% of the cost of a treatment.
Pay As You Go card payment solutions have no monthly terminal hire or minimum monthly service charge costs, so the monthly cost is cheaper for low volume users. They do require an upfront purchase of a device (ranging from £19 - £79) and the "per transaction" charges can be higher at around 0.99% - 1.75% for all transactions. But once you purchase the device, your only cost is the per transaction cost.
The devices come in several forms - there are "dongles" which plug into the earphone of a smartphone, a portable terminal which pairs via Bluetooth with a smartphone/tablet, or standalone portable terminals. You can review and compare the features of a selection of the most popular devices here.
Pay As You Go devices are not suitable for larger practices. Whilst they have no monthly fixed costs, their higher transaction costs make their overall costs more expensive than a traditional terminal solution above a card level of approximately £2,000 per month. If your practice accepts more than £2,000 per month in cards then your cheapest option is to hire a traditional terminal. You will incur the monthly terminal hire and minimum monthly service charge but the lower transaction charges will more than compensate. Transaction costs are typically around 0.4% for debit cards and 0.8% for credit cards.
How do I take cards?
Most businesses accept cards:
- face to face from a customer who is physically present
- over the phone (known as "card not present")
- online through your website.
With a traditional terminal you can accept cards from customers who are present or not present. Customer present transactions use chip & pin, whilst with a customer not present transaction you will enter details provided by your customer, over the phone, into the terminal - their 16 digit card number together with the CVV2 (3 digits on the reverse of the card) and other security measures like address verification.
Pay As You Go solutions can be more limited in that whilst all solutions will accept card present transactions, not all solutions accept card not present transactions, so do check any particular model you are interested in.
Another useful way to accept cards is known as "Pay by link". This is particularly useful for a practice that allows patients to have credit, and perhaps bills them the balance on their account on a monthly basis. Normally you would have to wait for a cheque to clear or for the customer to provide card details over the phone. With Pay by link you send your customer a website link in an email enclosing their monthly invoice. When the customer clicks on the link it takes them to a “Payment page” into which they enter their card details. It is a very effective way to accept card payments and can reduce both the time taken for customers to settle their bills and the time wasted by you in chasing unpaid invoices. A high proportion of customers will make payment as soon as the email arrives – all you have to do is make it easy for them.
Pay by Link solutions are included in some accounting software packages (eg Sage) or virtual terminal/payment gateway products. These products require a fixed monthly fee of upwards of £20 so are often not cost effective for small practices.
The Payatrader solution is one of the few, if not the only Pay As You Go solutions that includes a Pay by Link. For an upfront fee of £99, it allows you to take card present payments, card not present transactions and online transactions from a website it also includes Pay by Link.
About the author
Stephen Hart is the founder of Cardswitcher.co.uk, the UK’s only price comparison website for card processing and merchant services. Cardswitcher provides instant quotes from a range of suppliers without the need for sales calls.