How Much Does it Cost Businesses to Accept Cash Payments?

handful of coins

You may not have thought about it much but, for businesses, accepting payments in cash is not free.

That’s right. There’s a lot of talk about the cost to businesses of taking debit and credit card payments, but not so much about accepting bits of metal and paper instead.

Accepting cash involves a lot of costs, some more obvious than others.

First, businesses typically have to pay to deposit cash with their bank. Here’s a quick look at the fees that banks charge small businesses for doing this:

  • NatWest’s standard tariff: 70p per £100
  • Lloyds: £1 per £100 or 80p per £100 over £1500 per month
  • Royal Bank of Scotland: 70p per £100
  • Barclays Business Current Account – Mixed Payments Plan: 90p per £100

Then there are other costs of handling cash. These include:

  • Theft by staff
  • Time spent counting cash
  • Keeping enough change
  • Physical security
  • Transporting cash to the bank

When all these costs are taken into account, accepting a cash payment can easily cost a small business, on average, 1% or more of the value of that payment. It can conceivably be more expensive for a businesses than accepting a debit or credit card payment.

What do you think? Is cash secretly a rather expensive way to accept payments?

Credit Card Surcharge Ban: Is It Making Things Worse for Consumers?

sunflower with sad face

The new ban on credit card surcharges was supposed to make things better for consumers. In practice, it could be making things worse. Here’s why.

What’s the background to this?

On 13th January 2018 it becomes illegal to charge consumers extra for paying by credit card (or any other consumer payment method).

The idea, presumably, was to make life simpler for consumers by outlawing the annoying ‘surprise’ fees that would get added on just before you completed a purchase online. Also, arguably, it would make things simpler as people wouldn’t have to factor annoying fees into their decision about how to pay.

How could the ban lead to higher prices?

Without the income they were receiving from credit card surcharges, companies will, in the long run, need to recoup that income some other way. So they’ll inevitably put up headline prices to compensate (or introduce new charges). Any savings consumers will enjoy in not paying credit card surcharges will be converted into higher prices for everyone (regardless of how they pay).

As well as this, credit card surcharges have historically deterred some consumers from paying by credit card in at least some cases. The ban will mean businesses can’t charge customers more for using credit cards, so that deterrent will go away. And presumably some purchases will, as a result, shift from cheaper payment methods to credit cards.

Assuming it costs businesses more to process credit card payments than other payments, a shift to more payments being made by credit card will mean an increase in over all payment processing fees for all the competitors in each industry. And that will ultimately end up getting passed on to the consumers in yet higher prices.

So the net result for consumers? Higher prices over all (even after taking the saving on surcharges into account). Not good.

Could the ban be bad for consumers in other ways?


It’s possible that, with the ban, some organisations will decide it doesn’t make sense any longer for them to accept some more expensive forms of payment and will simply stop doing so or introduce a minimum spend for using cards. Indeed, HMRC have already said they’re going to stop taking self-assessment tax payments by credit card from 13 January 2018. And the Iglu travel company will only be accepting bank transfers for many payments.

So another outcome may be that consumers end up with fewer ways to pay. In particular, they may lose protections they’d otherwise get by making purchases by credit card and the flexibility of paying on credit. Again, a poor outcome for consumers.

What are we seeing in practice?

We’re already seeing companies finding (very unpopular!) ways around the ban.

Some companies are following the spirit of the new regulation and, in some cases, are even trying to get some positive coverage for doing so.

It’s still early days, so it’s too early to know exactly what will happen.

What do you think?

And how are you seeing companies respond to the ban?

Credit Card Surcharge Ban: The Companies That are Absorbing the Cost Themselves

hand holding sword aloft

With surcharges for credit and debit card payments being banned in the UK from 13th July 2018, lots of companies are considering introducing new fees or otherwise getting around the ban.

Meanwhile, some companies are using this as an opportunity to ‘do the right thing’ by their customers by simply absorbing the payment processing costs themselves.

Here are the customer-friendly companies we’ve heard about so far (do let us know in the comments if you know of others!)

  • FOODit — an online restaurant booking platform. In a way, FOODit compete with Just Eat who, in contrast, have faced a big backlash over their introduction of a 50p ‘service charge’ on all orders.
  • OK… there must be more… surely…?!


These Companies Are Getting Around the Ban on Credit Card Surcharges (Here’s How)

credit card

As we mentioned earlier, since 13th January 2018, UK businesses are no longer be allowed to charge extra for paying by credit card or debit card.

Inevitably, some businesses have found ways around this.

Here are the ones we’ve heard about so far. (Let us know if you’ve heard about others.)

Just Eat

The popular take away ordering and delivery service made themselves distinctly unpopular by announcing that they’re replacing their 50p credit card surcharge with a 50p ‘service charge’ that will apply to all orders (even those where customers are paying cash on delivery).

Indigo Parking

This parking company have replaced their credit card surcharge with a ‘convenience fee’:

Swansea City Football Club

Since 3rd January, Swansea City have begun charging fans booking fees of £2.50 per ticket for tickets bought in person or via the phone and £1.60 for tickets purchased online.


As reported by The Independent, Online travel agent Iglu was originally going to charge customers a whopping £25 booking fee for booking by card (it’s not clear why they thought this would be okay). They later changed their minds and now, apparently, are going to remove the credit card payment option in a lot of cases. Instead, customers will have to pay by bank transfer.

Unicorn Cinema, Abingdon

According to local taxi driver, Colin, the Unicorn Cinema in Abingdon have replaced their £1.60 credit/debit card processing fee with a booking fee that, according to the cinema’s latest terms and conditions, is “in consideration of providing the online booking facility”.

(Note: we love independent cinemas and we know they face an uphill struggle to exist at all, so go easy on them!)


Ban on Credit Card Surcharges from 13th Jan 2018: All You Need to Know

Person paying by credit card

From Saturday 13th January 2018, it will be illegal for a UK businesses to charge someone extra for paying with a consumer debit card or credit card.

Does this apply to all credit and debit cards?

It applies to all ‘retail payment instruments’, including consumer cards of all flavours. For example:

  • Visa and Mastercard debit cards
  • Visa and Mastercard credit cards
  • American Express cards
  • Diners Club cards
  • Apple Pay
  • Android Pay
  • PayPal

Companies will be allowed to charge extra, however, for paying with commercial debit and credit cards. In those cases, though, they’ll only be allowed to charge enough to cover the costs they incur for using that payment method.

Will it affect payments to councils and public bodies?

Yes, the new rules apply to local councils and public bodies, too.

Does it apply online and offline?

Yes, the rule will apply everywhere in the UK, whether you’re buying a pint of milk at your local corner shop or buying your next TV on

Where has this rule come from?

The new rules are UK law to implement a new regulation agreed at the EU level called ‘PSD2’ (the second Payment Services Directive). Each country can choose exactly how it will implement PSD2. The UK has chosen to go further than specifically required by PSD2 by applying the rule to ‘all retail payment instruments’ rather than just credit and debit cards.

What’s going to happen in practice?

There is lots of speculation about how UK retailers are going to respond to this.

Many people expect retailers to simply increase prices or introduce extra fees in place of the debit and credit card surcharges that are going away. JustEat have already removed their card payment surcharge and introduced a 50p ‘service charge’ in its place. Predictably, customers and the press have been up in arms about it.

At the same time, it’s likely that many smaller retailers won’t have got the message just yet and will illegally continue to charge fees after the deadline. We expect savvy customers to set them straight fairly quickly.

Some organisations will stop accepting credit and debit card payments altogether. HMRC, for example, have announced that, from 13th January 2018, they’ll no longer be allowing people to pay their self-assessment tax bills by credit card. Likewise, online travel agent Iglu will be restricting most customers to paying by bank transfer.

Another option for businesses will be to have a minimum spend for paying by card. It’s something that used to be popular in the past and may make a comeback when the new law comes into effect.

Why did businesses start charging for paying with credit or debit cards anyway?

Businesses have to pay to accept credit and debit cards. It is typically a small percentage of the payment amount, such as about 1%. In the past, some companies have tried to pass this cost on to their customers, often also adding a healthy profit margin on for themselves.

What should you do if you’re still being asked to pay a surcharge (after 13th January 2018)?

If someone is still asking you to pay a surcharge for paying with a consumer credit or debit card on or after 13th January 2018, then here’s what you can do:

  • If you haven’t paid it yet, you can refuse to pay it.
  • If you have paid already, you are entitled to a refund.
  • You may wish to report them to your local Trading Standards. Citizens Advice explain how to do that here.

Further Reading


What else do you want to know about this? Let us know in the comments.


When Credit Card Processing Gets Blocked: 7 Online Services Greeks Could Lose

Greek Flag

Imagine if your credit card was blocked and you couldn’t get another. Gradually the online services you pay for would get shut off.

That’s the situation Greek people and companies are in today. With capital controls in place, Greeks can no longer pay for online services from non-Greek companies. Which services are they missing the most?

Panos Papadopoulos of was so concerned about this issue, he helped set up an organisation called Zerofund to assist Greek startups who are currently unable to pay for their online services.

According to Panos, these are some of the services Greek startups are most concerned about losing:

1. Amazon Web Services

AWS, Amazon’s cloud server infrastructure has been enormously successful. It’s incredible powerful and usually very reliable. As long as you keep up your payments for it…

2. Hetzner

Another web hosting provider, this time based in Germany. Without your web server, an online business can’t do very much.

3. DigitalOcean

DigitalOcean are a large US-based web hosting company. They specialise in low-cost hosting and have become very popular around the world, including — it would seem — in Greece.

4. Google Adwords

Businesses need to promote themselves. And these days there are few marketing channels more popular than Google Adwords. Normally Google Adwords can bring in a steady stream of customers. But if you stop paying for the ads, the customers are no longer going to be able to find you.

5. Facebook Ads

With Facebook’s growth, it too has become a very popular place for businesses to advertise, including businesses based in Greece.

6. Atlassian

Many businesses these days use online collaboration tools to get their work done. Atlassian is one of the most popular of these tools. If you can’t see the status of your project, it’s hard to get much work done.

7. GoDaddy

GoDaddy provides domain name registration services to a huge number of businesses around the world. Domain name registrations have to be renewed on a regular basis. Worryingly, if you can’t pay to renew your registration, you could lose valuable domain names that you’ve been using for years.


These are just seven of the online services that Greeks could be losing access to. But they’re certainly not the only ones. Nature, for example, reports on how Greek scientists are losing access to online scientific journals. Whether Greece stays in the euro or not, we hope this situation gets sorted soon so that Greek credit cards can once again be accepted abroad.


5 Organisations That Shape the UK Payments Industry

Swirl of handsThe payments industry in the UK is big (a whopping £75 trillion big, according to the UK’s Payment Systems Regulator). It’s also critical to our modern economy: not a lot can happen without payments, after all. But aside from the big brands we’ve all heard of, who shapes this industry? What trade and government bodies help steer it?

Here are 5 of the bodies that matter to UK payments.

1. Payment Systems Regulator

Payment Systems Regulator logo

The Payment Systems Regulator (PSR) is the independent regulator for the payment systems industry in the UK. It was launched on 1st April 2015 and is a subsidiary of the Financial Conduct Authority (FCA). It is funded by the payment systems industry but accountable to Parliament.


The PSR’s stated purpose is “to make payment systems work well for those that use them.”

Their objectives are to promote competition and innovation in the payments industry and to ensure that payment systems are developed and operated in ways that are good for their users.

What do they do?

The PSR has a number of powers around standards-setting and to promote competition and innovation, including requiring large players in the industry to provide access to payments systems to smaller players.

2. The UK Cards Association

The UK Cards AssociationThe UK Cards Association logo is the trade organisation for the UK card payments industry. It represents financial institutions that act as card issuers and acquirers.


The organisation’s members include big names such as Barclays, Capital One, HSBC, American Express, RBS, Worldpay, First Data and many more.

3. Payments UK

Payments UK logoPayments UK launched in June 2015 as a replacement to the UK Payments Council. They are a trade body representing a range of payment service providers and other organisations, such as consultancies, with an interest in payments.


Payments UK has two levels of membership: full and associate. Full members include organisations such as American Express, Barclays, HSBC, J.P.Morgan, PayPal, Tesco Bank, and Worldpay. Associate members include the Department for Work and Pensions, KPMG and Experian and a dozen or so more.

4. European Payments Council

European Payments Council logo

The European Payments Council (EPC) is a European trade body representing payment service providers (PSPs). Their stated aim is to promote European payments integration and development, including SEPA (the Single Euro Payments Area), an initiative to develop a set of harmonised payment schemes and frameworks for electronic euro payments.


EPC members include a range of European financial institutions such as Santander, BNP Paribas, the Czech Banking Association, Deutsche Bank, Swedbank, and the Association of Banks in Bulgaria.

5. PCI Security Standards Council

PCI Security Standards Council logo

The PCI Security Standards Council is a global body that sets and promotes security standards for the handling of payments, particularly around dealing with cardholder data.

Notably, the Council is responsible for the PCI Data Security Standard (PCI DSS) which is a framework for handling payment card data in a secure way.

All organisations handling card payment data are generally encouraged by their payment service providers to comply with the PCI DSS standards.


The Council was established by American Express, Discover, JCB, MasterCard, and Visa Inc. who all recognise the PCI DSS framework. It now has a handful of affiliate members and hundreds of participating organisations.


We’ve looked at five of the bodies that matter to the UK payments industry. This should give you an overview of some of the organisations that help to shape the payments world.

What are your views on the organisations we’ve included? Do they really do what they say they do? And what organisations would you add to the list? Let us know in the comments.


How to Accept Payments Using Apple Pay (in the UK)

Apple Pay app showing an HSBC MasterCard card

Are you a UK retailer? You may have heard that Apple Pay is launching in the UK in July. What do you need to do in order to accept Apple Pay payments?

Apple stated in their announcement about Apple Pay that the technology will be accepted in over 250,000 locations across the UK. They mentioned a list of UK retailers that will be accepting Apple Pay, including big players like Boots, Costa Coffee, McDonald’s and Starbucks. And they also mentioned the following:

“Starting in July, iPhone 6, iPhone 6 Plus and Apple Watch users will be able to make purchases anywhere contactless payments are accepted.”

Visa have just published a press release saying something similar:

“Apple Pay can be used with the hundreds of thousands of contactless point of sale terminals which are already used millions of times every day throughout the UK.”


“Apple Pay can be used to touch and pay wherever Visa contactless payment is accepted.”

So to accept Apple Pay payments in-store, all you need is a credit card terminal with contactless technology. With a bit of luck, you may have one of these already.

If you don’t already have a contactless credit card reader, why not speak with your terminal rental company about a possible upgrade? Or if you want a new contactless card terminal together with some really competitive card processing rates, contact one of the credit card processing providers listed here.

If you don’t want to invest in a regular chip and PIN card terminal, another way to accept Apple Pay payments is with iZettle’s recently-announced Card Reader Pro Contactless. With the same contactless technology as in a traditional credit card terminal, iZettle’s device communicates via a smartphone and is available for around £79.

Do you already accept contactless card payments? If so, what do you think about Apple Pay? Will you be encouraging your customers to use it?

[Update: now that Apple Pay has been officially launched in the UK, you might be interested in our infographic on How To Accept Apple Pay.]

Photo courtesy of Apple.

13 Nifty Tips to Save Money on Your Card Processing Fees


Does your business accept card payments? If so, are you paying more than you should for payment processing?

Here are 13 nifty tips to reduce your card processing fees.

1. Ensure you are PCI compliant

Payment processors naturally want you to treat cardholder’s data securely. If you’re not doing that, you might get a brief grace period to get things set up better, but then they’ll start charging you monthly fees for the extra risk your business represents. Become PCI compliant to avoid that extra cost.

2. Negotiate your setup fee

When you’re first talking with a payment processor, they may ask for a setup fee. There are cases where a setup fee can be reasonable, but in many cases card processors will be willing to lower or waive this fee to get you signed up. Definitely something to ask for!

3. Use 3-D Secure

If your business takes payments online, the card processing fees that you’re paying will almost be affected by whether you’re using technology known as 3-D Secure. This is the box that pops up after you’ve entered your card details that asks you for a password to confirm that you are the cardholder. (Visa call their implementation Verified by Visa and MasterCard call theirs MasterCard SecureCode.)

Due to the lower risk of fraud, the card networks charge less for processing payments that have been verified using 3-D secure. Visa, for example, currently charge processing companies 1.30% for unsecured e-commerce payments but only 0.87% for payments secured using Verified by Visa.

4. Get your own merchant account

You may have started your e-commerce business using an all-in-one payment processor such as PayPal. That makes sense to get started, but tends to mean you pay over the odds by the time your card processing volumes get larger. If that sounds like you, look at getting your own merchant account. You’ll typically pay a minimum £20 per month fee to have the account but your card processing fees will almost certainly be lower.

5. Ask your payment processor for a fee review

When did you start trading? If you’ve built up a couple of years of trading history and have had the same payment processor since the start, chances are that they may be able to offer you better rates now. Speak to your account manager to see what they can do for you.

6. Get quotes from other providers

You should always know what the going rate is for card processing at your scale. To find out, get some quotes from other providers to compare to what you’re currently paying. You can find a list of merchant account providers here.

7. Encourage customers to use debit cards rather than credit cards

It tends to be cheaper to take card payments using debit cards rather than credit cards. If your customer has one of each, opt for the debit card if you can to reduce your card processing costs.

8. Reduce fraud with AVS

If some of the payments coming through your website are fraudulent, you could start racking up some large chargeback fees. To reduce these fees, make sure you’re using the Address Verification System (AVS).

With AVS, you require customers to enter a billing address. When their payment is attempted, the payment network checks whether the address they’ve entered matches the address they have on file with their card issuer. If the addresses don’t match, the payment can be rejected. As a fraudster trying to use the card may not know the cardholder’s billing address, this can help reduce fraudulent payments and hence chargebacks.

9. Screen for fraudulent payments

If you’re suffering with lots of fraudulent payments and chargebacks, you’ll want to look at the more comprehensive fraud screening systems offered by some payment processors. These typically allow payments to be scored according to certain rules and then accepted, rejected, or queued for a manual review.

Again, fraud screening can help reduce fraudulent payments and so reduce the number of chargebacks you receive.

10. Offer contactless for small payments

Contactless payments have become hugely popular in the UK now. According to the UK Cards Association, 58 million contactless cards had been issued by December 2014.

For merchants, contactless payments are great for two reasons: they’re quicker so you can serve more customers in less time and they can be slightly cheaper to process. Visa, for example, charges processors 0.65% for contactless payments up to £15 versus 0.77% for chip and PIN payments.

If you’re thinking of replacing an old credit card terminal that doesn’t have contactless support, this is an extra reason to do it now.

11. Encourage customers to use contactless

Following on from the first point, some of your customers no doubt have contactless-capable cards and aren’t yet using them. Why not suggest they start paying that way? They’ll be faster to serve and you’ll save a little money along the way.

12. Review your statement and see where you could be saving

If you’ve been processing card payments for a while, get a detailed breakdown of your charges from your processor. Take a look through and ask them to explain anything you don’t understand. It’s always good to know what you’re paying for different types of payments and you may find simple ways to tweak your business to reduce the card processing fees you’re incurring.

13. If you have a low volume, avoid contracts with monthly minimums

If your business is just getting started and you’re not sure whether it’ll ever really take off, it can be good to keep things simple and avoid signing up for long contracts. Instead, find a credit card processor that doesn’t charge a monthly minimum fee. If you’ve got an online business, Stripe can be a good place to full film Room 2015


We’ve looked at 13 different ways to save money on your credit card processing. Please share this article if you’ve found it useful.

What have I missed? And what other ways have you found to save money on payment processing?

Do share your thoughts in the comments below.

Top #VATMESS Tweets

On January 1st 2015, the EU is introducing changes to the VAT rules that will affect anyone selling digital products to consumers in the EU. As numerous people have pointed out, this is going to add a huge amount of paperwork that will be particularly burdensome for very small businesses.

There are calls for an exemption to the rule for small businesses and that’s an idea I very much support.

Many small businesses have taken to Twitter today to voice their concerns about this issue using hashtag #VATMOSS. Not surprisingly, the hashtag #VATMESS has also been popular. Here are some of the top #VATMESS tweets so far:


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