If you’re a business owner thinking about how to accept card payments, you’ve likely stumbled upon the term “merchant service provider” (MSP). MSPs are the middlemen between you, the banks, and your customers. They help you process card payments smoothly so you can focus on running your business.
But what makes one MSP better than another? It’s not just about the fees. You also need to consider the contract terms, customer service, and whether the MSP is a good fit for your specific business needs. Many of them supply hardware, like card readers, too.
My comprehensive guide will walk you through everything you need to know about MSPs, from choosing the right one to understanding the nitty-gritty of contracts and customer service.
The Best Merchant Service and Credit Card Processing Companies for Small Business
As a business payments expert, I’ve spent a lot of time analysing the merchant service companies best suited for UK businesses to accept card payments. This means going deeply into what they offer, their costs and contractual requirements, and then actively testing their units.
Overall, Square gets my vote as the best merchant services provider with its well-designed, affordable hardware, sophisticated App, and no contract pricing. The app has over 10 million downloads and a 4.7-star rating on Google Play.
At the low-to-mid level, I like brands like Takepayments, Yuma POS and Barclaycard. These brands offer a decent blend of contract length, hardware and software functionality combined with fair pricing.
For larger retail or hospitality businesses, including those with chains, I think Lightspeed is a great solution. It’s highly customisable and has impressive functionality to streamline major operations.
If you’re a high-volume merchant or in any kind of higher-risk category, Manchester Fintech Total Processing would be a top choice. Their efficiency, customer service and technical acumen, combined with an incredible breadth of payment options, really make them stand out.
| Company | Best For | Review Score | Payment Plan |
|---|---|---|---|
| Square | Large Retail Businesses & On-the-Go Sales | 4.9★ | Pay-as-you-go |
| Total Processing | Customer Service. High Risk | 4.8★ | Contract-based |
| Worldpay | High Volume & Scalable Operations | 4.7★ | Both |
| Stripe | Online Stores & Subscription Services | 4.2★ | Pay-as-you-go |
| SumUp | Quick Deposits for Small Retailers | 4.1★ | Pay-as-you-go |
| Smartpay Anywhere | Companies Valuing Brand Recognition | 3.2★ | Both |
| Clover | Restaurants & Specialty Retail Needs | 4.0★ | Contract-based |
| Elavon Payment Processing | Global Operations & Multi-Currency Support | 3.9★ | Subscription-based |
| Barclaycard | UK-Based Large Enterprises | 3.8★ | Contract-based |
| TakePayments | UK-Based Medium to Large Retailers | 4.8★ | Pay-as-you-go |
What Are Merchant Service Providers?
A merchant services provider helps your business take electronic payment transactions.
Merchant service providers enable versatile payment acceptance, covering various methods such as cards, contactless and digital wallets. These providers deliver essential tools, including Point of Sale (POS) systems for physical transactions and payment gateways for online payments.
Merchant service providers also help to protect the security and legitimacy of transactions, implementing measures to mitigate fraud risks. They prioritise compliance with industry regulations, including the Payment Card Industry Data Security Standard (PCI DSS), to uphold the highest security standards.
In addition, they manage the financial flow between businesses and customers, offering reporting tools and analytics for effective financial oversight. Customer support services are provided to assist companies in navigating payment operations seamlessly.
Merchant services include:
- Credit Card Processing Providers: This involves the handling of credit card transactions, enabling businesses to accept payments via credit, debit, and prepaid cards. The service includes authorisation of transactions, capturing funds, and secure transmission of payment data. It’s designed to facilitate seamless and swift payment experiences for both the merchant and their customers.
- Payment Gateway Providers: These providers are essential for online transactions. They act as a bridge between a merchant’s website and the payment processing network. This service encrypts sensitive payment information, ensuring secure data transfer during online transactions. Payment gateways are integral for e-commerce businesses, providing a secure pathway for payment processing.
- Online Transaction Processing: Refers to the system that manages and processes online payments. This service ensures real-time processing of transactions, which is critical for the efficiency of e-commerce operations. It involves various checks for validation and authorisation, ensuring that online transactions are processed accurately and securely.
- Point of Sale Systems: These systems encompass hardware and software that manage sales transactions. POS systems can range from simple card readers to complex systems integrating inventory management, customer data, and sales reporting. They are pivotal in streamlining in-store transaction processes.
Top Merchant Service & Card Payment Providers in the UK
Square: Best Merchant Account Overall (Large Retail Businesses)
Square is an ideal merchant account provider for large restaurants and businesses that want for taking payments.
It’s easy to use, affordable, and packed with useful features. Set up a Square account online, add a card reader if you need one, and start accepting payments without the encumbrance of long-term contracts or setup fees.
With a transparent pricing model, Square levies a flat rate per transaction for both credit and debit card payments, eliminating monthly fees or concealed charges.
Features:
- Best Budget Card Reader: The Square reader costs just £19 and has no contract, meaning any business can take card payments quickly and with no hassle whatsoever.
- Point-of-sale (POS) system: Square’s flagship POS system is easy to use and can be used on mobile devices, making it a good option for businesses on the go.
- Invoicing and online payments: Square allows businesses to create and send invoices easily, and it offers e-commerce solutions to help businesses sell online.
- Inventory management: Square includes basic inventory tracking features to help businesses keep track of their stock.
Pros:
- User-friendly interface: Square’s system is designed to be intuitive and easy to use, even for businesses with no prior experience in payment processing or inventory management.
- Transparent pricing: Square has a pay-as-you-go pricing model, with no monthly fees and transparent per-transaction fees. This makes it easy for businesses to budget for their payment processing and inventory management costs.
- Flexibility: Square does not require long-term contracts, giving businesses the flexibility to adapt their payment processing and inventory management solutions as their needs change.
Cons:
- Limited advanced features: Square’s POS system and inventory management features are designed for small businesses, and they may not have all of the advanced features that larger enterprises need.
- Transaction limits: Square may have limits on the maximum transaction size, which can be a constraint for some businesses.
Total Processing: Best Merchant Account for Large Businesses
Total Processing is a Manchester-based Fintech aiming to revolutionise the payment processing industry. They boast an extremely wide range of relationships with global banks, meaning there is literally no industry in which they cannot integrate payments. This makes them a superb choice for any unconventional niche which may have struggled to get approval elsewhere.
Total Processing stress, however, that it’s not just the high-risk areas they excel in, but are perfect for any business which needs to take online payments at some volume. They’re not for new or smaller businesses, but if your volume is £50,000 per month or above, you may find their rates extremely competitive.
They are also very tech-savvy with a broad suite of integrations, including 198+ alternative payments available at the checkout worldwide. To my knowledge, this is the broadest variety offered by any provider at the moment.
Features
- Diverse Payment Options: They support a wide array of payment methods, including a vast range of alternative payment methods and all major credit and debit cards.
- Customizable Solutions: Their services are adaptable, providing tailored solutions ranging from simple virtual terminals to complex, fully integrated payment gateways.
- Fraud and Risk Management: Robust security features are included in their payment gateway to ensure transaction safety and reduce the risk of chargebacks.
- Ease of Integration: They offer easy integration with various e-commerce platforms and support several popular development languages.
- Global Reach and Multi-Currency Support: The platform supports over 180 currencies, enabling businesses to cater to a global market.
- PCI Compliance: They maintain high standards of data security, complying with PCI DSS regulations, which is essential for customer trust and legal compliance.
- Customer-Centric Approach: A strong focus on enhancing the payment process and customer experience, aiming to be a customer-focused payment company.
Pros
- Knowledgeable and Approachable Staff: The team is known for their expertise and helpfulness.
- Positive Reputation: Minimal complaints and predominantly positive reviews about their services.
- Diverse Payment Methods: Offers a wide array of payment options, including over 198 alternative methods and major credit and debit cards.
- Customizable Solutions: Tailored services to suit businesses of all sizes.
- Robust Security Features: Strong focus on fraud and risk management.
- Easy Integration: Seamless compatibility with various e-commerce platforms.
Cons
- Lack of Upfront Information: They dont publish details upfront regarding pricing, fees, contracts, and terms.
- Potential Complexity for Smaller Businesses: Some features may be overly complex for small-scale operations.
- Higher Costs: Customized solutions might come with a higher price tag.
- Learning Curve: Utilizing all the features effectively may require time and training.
Stripe: Best Payment Gateway for Subscription Services
Stripe is a global technology company that provides a powerful and flexible online payment processing platform for businesses of all sizes. It offers a suite of financial services including hardware and software solutions aimed at enabling businesses to accept payments, manage subscriptions, and handle other financial transactions. It integrates with virtually any e-commerce platform on the market.
While it’s predominantly an online payments platform, Stripe has recently introduced a few card readers, too. The WisePad 3, priced at an upfront cost of £49 plus VAT, is a mobile card reader that accepts both chip and contactless payments, including Apple Pay and Google Pay. On a full battery charge, it is capable of processing approximately 600 chip-based and 800 contactless transactions.
Conversely, the WisePOS E is available at an upfront cost of £179 plus VAT and functions as both a countertop and mobile card reader. It accepts a broader range of payment types, including chip, contactless, and magnetic swipe transactions.
Features:
- Online payments: Stripe supports various online payment methods, including credit and debit cards, digital wallets, and ACH transfers. It also offers support for subscription payments and recurring billing.
- Developer-friendly: Stripe’s APIs are easy to use and well-documented, making it easy for developers to integrate Stripe payments into their own applications.
- Multi-currency support: Stripe supports payments in over 135 currencies, making it a good option for businesses that operate globally.
Pros:
- Flexibility: Stripe is highly customizable, allowing businesses to tailor their payment solutions to their specific needs.
- Transparent pricing: Stripe’s pricing is transparent and straightforward, with no hidden fees.
- Comprehensive services: Stripe offers a wide range of payment services, including fraud prevention, financial reporting, and dispute resolution.
Cons:
- Complexity: Stripe’s wide range of features can be overwhelming for smaller businesses that may not require such a comprehensive solution.
- Costs: Some advanced features come at an additional cost, which could add up for smaller businesses.
Takepayments: Best Merchant Service Provider for UK-based medium to Large Retailers
Takepayments is a UK-based merchant service provider that offers a range of payment solutions to micro to medium-sized businesses. It is known for its bespoke pricing model and diverse payment options.
Features:
- Virtual terminal: Allows businesses to take payments over the phone or via mail order.
- E-commerce solutions: Provides tools to accept payments online.
- Payment gateways: Facilitates online transactions for e-commerce businesses.
Pros:
- Custom pricing: Offers bespoke pricing based on the specific needs of the business.
- Diverse payment options: Allows for a variety of payment methods, increasing convenience for customers.
- UK-based support: Local customer service that understands the specific needs and challenges of UK businesses.
Cons:
- Contract length: Minimum 12-month contract, which may not be ideal for businesses looking for short-term solutions.
- Customer service: While UK-based, the customer service has received mixed reviews, indicating room for improvement.
Revolut: Best Merchant Service Provider for Cheap Transaction Fees
Revolut is a financial technology company that offers a variety of services, including a merchant acquiring solution targeted at micro businesses. It is known for its multi-currency support, instant settlement, transparent pricing, and operational flexibility.
Features:
- Multi-currency support: Allows businesses to transact in multiple currencies, making it easier to operate internationally.
- Instant settlement: Provides quick access to funds, improving cash flow.
- Advanced analytics: Offers data-driven insights to help businesses understand their sales patterns.
Pros:
- Transparent pricing: Revolut maintains a clear pricing structure, which is particularly useful for smaller businesses monitoring their expenses closely.
- Operational flexibility: With no lock-in contracts, businesses can adapt their payment solutions as needed.
- User-friendly interface: The platform is known for its intuitive design, making it accessible even for those with limited technical expertise.
Cons:
- Limited to micro businesses: Revolut’s merchant services are specifically designed for smaller operations, which may not suit larger enterprises.
- Service scope: While it excels in multi-currency support and instant settlement, it doesn’t offer as broad a range of services as some competitors.
Barclaycard
Barclaycard is a well-established player in the payment processing industry, offering services primarily aimed at medium-sized businesses. It is known for its broad service offering, security, and industry reputation.
Features:
- Virtual terminal: Allows businesses to accept payments without a physical card reader.
- Payment gateway: A secure online portal for processing customer transactions.
- Mobile payments: Offers the ability to accept payments via mobile devices.
Pros:
- Industry reputation: As a well-known name, Barclaycard brings a level of trust and reliability.
- Broad service offering: Provides a wide range of services that can be customized to fit the specific needs of a business.
- Security: Adheres to industry standards such as PCI DSS compliance, ensuring data protection.
Cons:
- Contract terms: Contracts often range from 12 to 36 months, which might be restrictive for some businesses.
- Variable pricing: The pricing model can be complex and may require negotiation, potentially leading to higher costs for smaller businesses.
Retail Merchant Services
Retail Merchant Services (RMS) is a payment processing provider that focuses on medium-sized businesses. It offers a bespoke suite of solutions tailored to meet diverse needs, including online payments, virtual terminals, and EPOS systems.
Features:
- Online payments: Allows businesses to accept payments online through a secure gateway.
- Virtual terminal: Ideal for phone and mail-order businesses, enabling payments without a physical card reader.
- EPOS system: Integrates with electronic point of sale systems for more seamless operations.
Pros:
- Custom solutions: RMS provides tailored payment solutions, which can be a significant advantage for businesses with unique needs.
- Good customer service: Known for its responsive and efficient customer support, available through multiple channels.
- Wide range of services: Offers a comprehensive set of features, from online payments to EPOS systems.
Cons:
- Contract length: Contracts typically last between 12 and 36 months, which may not offer the flexibility some businesses desire.
- Bespoke pricing: While tailored solutions are an advantage, the pricing can be less transparent, requiring negotiation.
Worldpay
Worldpay is a global leader in the payments industry, offering a range of services suitable for medium-sized businesses. It is known for its industry leadership, flexibility in payment types, and strong security protocols.
Features:
- Virtual terminal: Allows for the processing of payments without a physical card terminal.
- Mobile payments: Provides the flexibility to accept payments on the go.
- Multi-currency support: Facilitates international transactions by accepting multiple currencies.
Pros:
- Industry leadership: Worldpay’s extensive experience brings a level of expertise and reliability to its offerings.
- Flexibility in payment types: Accepts a wide range of payment methods, from credit cards to digital wallets.
- Strong security protocols: Complies with industry standards such as PCI DSS to ensure data protection.
Cons:
- Contract duration: Like many established players, Worldpay often requires a 12 to 36-month contract, which may not suit all businesses.
- Variable pricing: The pricing structure can be complex and may involve additional fees that are not immediately transparent.
Lightspeed
Lightspeed is a cloud-based retail and restaurant management platform that offers a suite of integrated solutions, including payment processing, inventory management, point-of-sale (POS), and e-commerce. It is primarily targeted at medium to large retail or restaurant businesses.
Features:
- Inventory management: Comprehensive stock tracking and analysis tools are integrated into the system.
- Point of sale: Includes an advanced POS system to streamline sales and customer management.
- E-commerce capabilities: Allows the integration of online and in-store sales channels.
Pros:
- Multi-faceted solution: Lightspeed’s offerings go beyond just payment processing to provide a holistic retail or restaurant management system.
- Excellent customer service: Offers robust support through various channels, including 24/7 live chat and email.
- Flexible monthly plans: Pricing is straightforward, with monthly plans that allow for scalability.
Cons:
- 12-month contract: The standard contract term is 12 months, which may not be ideal for businesses seeking more flexibility.
- Geared towards specific industries: The solution is highly tailored to retail and restaurant sectors, making it less suitable for other types of businesses.
Clover
Clover is a payment processing and business management solution designed for large enterprises. It offers a variety of hardware and software solutions, including high-end POS systems, employee management tools, and customer engagement features.
Features:
- Point of sale: High-end POS systems that can be customized to suit your business needs.
- Employee management: Includes tools for staff scheduling, performance tracking, and more.
- Customer engagement: Built-in CRM features for enhanced customer relationship management.
Pros:
- High scalability: Designed to grow with your business, offering both hardware and software solutions.
- Excellent customer service: Known for its robust customer support, available through multiple channels.
- Feature-rich: Offers a wide array of features beyond payment processing, making it a comprehensive business management tool.
Cons:
- 24-month contract: Requires a longer-term commitment compared to some other providers.
- Variable pricing: The pricing can be complex, with various plans and potential additional fees.
How to Choose the Right Merchant Service Provider
Choosing the right merchant service provider is crucial for your business’s success and customer experience. The wrong provider can lock you into long contracts with high fees and limited support, so it’s important to make an informed decision.
Start by considering the provider’s reliability. Downtime during peak hours can lead to lost sales and harm your reputation, so choose a provider known for consistent service and minimal outages. Security is also key — ensure the provider complies with PCI DSS standards to protect customer data from breaches.
Evaluate the range of services offered. Beyond payment processing, look for additional options like virtual terminals, mobile payments, and e-commerce solutions. Flexibility and scalability matter too. As your business grows, your provider should offer solutions that adapt to changing needs without requiring a major system overhaul.
Here are the key factors to consider when choosing a merchant service provider:
- Transparent Pricing: Look for clear pricing without hidden fees. Compare setup fees, transaction fees, and ongoing costs.
- Essential Payment Options: The provider should support credit cards, debit cards, and popular digital wallets like Apple Pay and Google Pay.
- Provider Reputation: Choose a provider with high uptime (ideally 99.9%) and fast transaction processing.
- System Compatibility: Ensure the provider’s software integrates seamlessly with your existing business systems (e.g., accounting and CRM).
- Security: PCI DSS compliance and strong encryption are essential to protect customer data.
- Responsive Customer Support: Opt for a provider offering 24/7 support with positive service reviews.
- Clear Contract Terms: Avoid long-term contracts with high termination fees.
- Reporting and Analytics: Access to detailed transaction reports can help you track sales trends and customer behaviour.
- Additional Services: Consider features like fraud protection, loyalty programmes, and marketing tools.
- Budget-Friendly Options: Look at the total cost of ownership, including hardware costs if applicable.
By carefully reviewing these factors, you can select a provider that offers a balance of competitive pricing, reliable service, and flexible features tailored to your business needs.
How Does a Merchant Services Provider Work?
The operational workflow of an MSP is typically as follows:
- Payment Gateway: The payment gateway serves as the first point of contact in the transaction process. It securely captures and transmits card details from the customer to the payment processor.
- Payment Processor: Once the payment gateway captures the information, the payment processor validates the details against the customer’s bank and either approves or declines the transaction.
- Merchant Account: A merchant account is a special type of bank account that temporarily holds funds from card transactions. Once the transaction is approved, the funds are transferred to the merchant’s business bank account, usually within a couple of business days.
Security Measures:
MSPs must implement robust security measures to protect sensitive customer data. This includes adhering to Payment Card Industry Data Security Standards (PCI DSS) and using encryption and tokenization techniques.
Reporting and Analytics:
Most MSPs offer a dashboard that allows merchants to track payments, refunds, and other transaction details. This feature is invaluable for monitoring business performance and making data-driven decisions.
Integration Capabilities:
MSPs typically offer APIs or pre-built plugins for popular software platforms, making it easy to integrate their payment processing solutions with existing systems, such as accounting software or a Customer Relationship Management (CRM) system.
Technical Support:
Reliable technical support is essential for merchants, especially when resolving issues urgently. MSPs should offer support through various channels, such as email, phone, or live chat.
Merchant Services Fee Structures and Contractual Considerations
Selecting a merchant service provider (MSP) is a significant business decision, and it is important to understand the financial and contractual commitments involved. Here are some key points to bear in mind when evaluating fee structures and contracts:
Fees:
- Initial setup and installation fees: MSPs often charge an upfront fee for setting up your merchant account and installing any required hardware. These fees can vary widely, so it is important to compare costs across providers.
- Transaction fees: A critical component of the fee structure is the transaction fee, which is usually a percentage of the transaction amount, sometimes coupled with a flat fee per transaction. This fee can differ depending on the type of payment method used.
- Monthly and annual fees: In addition to transaction fees, MSPs may charge monthly or annual service fees. These fees can cover a range of services, such as data analytics, customer support, and software updates.
- Termination fees: Long-term contracts may include a termination fee for exiting the contract before the agreed period. Carefully review the contractual terms to understand your obligations and potential costs for early termination.
- Additional charges: Some MSPs levy additional charges for services like chargeback handling, international transactions, or advanced reporting features. Be aware of these potential costs when evaluating providers.
Contractual Considerations:
- Transparency and fairness: The MSP should offer a transparent fee structure without hidden costs. Unexpected fees can significantly impact your overall costs and disrupt financial planning.
- Contract flexibility: Consider the contract length and terms of renewal. MSPs that offer flexible contracts enable you to adapt to changing business conditions, rather than locking you into long-term commitments that may not serve your future needs.
- Negotiation possibilities: Lastly, don’t hesitate to negotiate fees and contract terms. MSPs may be willing to offer customized packages or discounts, especially if you anticipate a high volume of transactions.
The Cheapest Merchant Services For Small Businesses
The true ‘cheapest’ merchant services for any business will depend on your turnover, credit history, sector and average transaction value, to name a few of the variables.
It is also true that, for small businesses with lower sales amounts, a pricing structure that initially seems expensive (like Square’s 1.75% blended transaction fee) could work out as more affordable than providers who charge lower transaction fees but have monthly fees. The kind of payment cards accepted and the contract length also affects the overall costs. We recommend Square for businesses turning over £5k per month or less.
Above that threshold, Take Payments ranks as one of the cheapest providers across a variety of scenarios with its bespoke pricing allowing for negotiations based on individual business requirements and transaction volumes.
Yuma POS payments are also very competitive on a per transaction rate, as is Barclaycard Payments and Natwest Tyl.
FAQs
What is an example of a merchant service?
An example of a merchant service is a card payment processing system. This system enables a business to accept credit and debit card payments from customers. It typically involves a combination of hardware (like card readers or POS terminals) and software solutions that process and authorize the card transactions securely. This service is essential for businesses operating in retail, e-commerce, hospitality, and other sectors where non-cash payments are common.
What are the costs associated with merchant service providers?
Businesses should be aware of various costs associated with MSPs, including setup fees, monthly account fees, transaction fees (which may vary by card type and transaction size), and potential additional charges like chargeback fees or PCI compliance fees.
What is the difference between a merchant service provider and a payment gateway?
While a Merchant Service Provider offers a broad range of services including payment processing, hardware, and security compliance, a Payment Gateway is specifically a technology used to capture and transfer payment data from the customer to the acquirer and then to the payment processor.
Can merchant service providers integrate with existing business software?
Many MSPs offer solutions that can integrate with a business’s existing software, such as accounting systems, CRM tools, or e-commerce platforms. This integration streamlines operations by automating payment data entry and providing cohesive financial overviews.
What security standards should I expect from a merchant service provider?
Businesses should expect their MSP to adhere to the Payment Card Industry Data Security Standards (PCI DSS). Additionally, look for features like encryption, tokenization, and fraud detection tools to ensure the highest level of security in your transactions.
How do merchant service providers handle data privacy?
MSPs must comply with data protection regulations such as the General Data Protection Regulation (GDPR) in Europe. They ensure data privacy by implementing strict data handling and storage protocols, using encryption, and providing businesses with guidance on maintaining customer data privacy.
What customer support should I expect from a merchant service provider?
Businesses should expect robust customer support from their MSP, including 24/7 technical support, assistance with setup and troubleshooting, and ongoing support for transaction queries and chargeback management.
