If a small business or sole trader wishes to take card payments in person they need a credit card reader. It used to be the case that you needed a merchant account to process payments with a card reader, however recent changes in technology have changed that. These changes open the door for millions of small businesses and sole traders in Europe to accept card payments.
The technology I am referring to is a new style of credit card reader which works with a smart phone or tablet to process payments. The technology was pioneered by Square in the US in 2009 and has been brought to Europe by companies including iZettle, Payleven and Sumup.
The card readers offered by these companies are compact and lightweight. They connect to the mobile device by Bluetooth or the phone’s headphone socket and payments are processed via an app on the mobile device which connects to the bank via the mobile signal. At no point in the transaction are the card details on the phone/ tablet, they are encrypted by the card reader.
Currently the the card readers rely on a chip and signature or swipe and sign though chip and PIN readers will be available in the UK within the next 6 months. The signature is done on the screen of the mobile device at present. This is a feature Visa are not entirely satisfied with so Visa payments require further verification.
The great thing about these devices for small business owners is they are available cheaply, no merchant account needs to be set up and a flat transaction rate is charged. Typically, this is around 2.5-3%. The UK market is still very young and a clear market leader has yet to emerge. Currently Sumup and iZettle probably have the best offerings, however Payleven is soon to release a chip and PIN device.
Businesses and individuals can sign up for accounts and get a device so it really has opened card payments up even for the smallest business. There are many new small businesses in the UK and many small businesses are under pressure so hopefully this will help increase sales.