How to Take Credit Card Payments in 4 Simple Steps

Credit and debit cards are used for the majority of consumer payments in the UK. So, if your business doesn’t accept cards via a card machine (or online for non-card present payments) you’re likely missing out on sales.

Getting started with accepting card payments can seem like a daunting process with a lot of fees and not a lot of transparency. However, it’s actually quite easy to sign up for a merchant account, get the card processing equipment you need, and start taking payments.

In this guide, we’ll break down how to take card payments in the UK into four simple steps.

Key Takeaways

• To take credit card payments, you need to sign up for a merchant account, choose a point-of-sale system or PDQ machine, set up an online payment gateway, and set up a virtual terminal.
• When choosing a merchant account provider for your business, it’s important to consider pricing, whether a long-term contract is required, what card processing equipment is available, and customer service.
• Most businesses in the UK use a point-of-sale system connected to one or more PDQ machines. You can choose from countertop, portable, and mobile PDQ machines.
• An online payment gateway enables you to process payments on your website. A virtual terminal enables you to take credit card payments over the phone.

How To Take Card Payments – 4 Steps To Follow

Step 1: Sign up for a Merchant Account

Before you can accept credit card payments, you must set up a merchant account.

Your merchant account provider acts as an intermediary between your business and the bank that issued your customer’s credit card, transmitting information about a purchase so the transaction can be authorised. Your merchant account provider is also responsible for ensuring your business gets paid quickly (usually within a day or two) after a customer makes a card purchase.

The merchant account provider you choose is very important as they set many of the fees you’ll pay for processing credit and debit card transactions. In addition, different merchant account providers offer different credit card processing equipment, which can impact how your business operates.

Here are a few key factors to consider when choosing a merchant account provider.

Pricing

Merchant account providers offer several different pricing models for card processing. Some charge flat-rate fees for each transaction, while others offer percentage-based pricing that varies with the size of the transaction.

Percentage-based pricing is usually cheaper if your business processes a lot of small transactions, while flat-rate pricing may be better if your business processes a smaller number of large transactions.

You should also consider non-processing fees, such as setup fees and monthly account fees. These can add up to a significant amount of money over time.

Contracts

Some merchant account providers require long-term contracts and charge steep fees if you want to get out of your contract early—for example, if you want to switch to a different provider or if your business closes. However, providers with contracts may charge reduced fees for credit card processing since they can count on long-term income from your business.

Carefully consider whether you can meet the terms of a long-term contract before signing one.

Card Processing Equipment

Most merchant account providers offer card processing equipment like point-of-sale (POS) systems and PDQ machines that you can buy or lease. We’ll explain more about choosing a POS system or PDQ machine in the next step, but be sure to evaluate what equipment is available from a merchant account provider before signing up.

In addition, if you already own a POS system or PDQ machine, ensure that it will be compatible with the merchant account provider’s systems. Many merchant account providers put limitations on the types of processing equipment you can use.

Customer Service

When an issue arises with processing card payments or getting paid for your sales, it’s crucial to get support right away. Look for a merchant account provider with 24/7 customer service and a strong reputation among business owners.

Step 2: Choose a Point-Of-Sale System or PDQ Machine

Once you’ve signed up with a merchant account provider, you need to think about the type of equipment you need to process card payments. Most businesses in the UK use a combination of a POS system and PDQ machines.

POS systems are tablet-like devices that function as an all-in-one till and command centre for your business. They may include software for scheduling employees to work, inventory management, accounting, and invoicing. Most POS systems have a built-in card reader but can also connect to separate PDQ machines.

PDQ machines, also known as card readers, are smaller credit card processing devices that are typically used in conjunction with a POS system. There are three main types of PDQ machines:

• Countertop PDQ machines are designed to remain at your till and connect directly to your POS system.
• Portable PDQ machines are smaller and can connect to a POS system over Wi-Fi or Bluetooth.
• Mobile PDQ machines are small card readers that plug into smartphones or tablets, effectively turning mobile devices into miniature POS systems.

Which type of PDQ machine is right for your business depends on where you typically make sales. A countertop PDQ machine is ideal for retail stores that have a checkout counter, while portable PDQ machines work well for restaurants where waiters need to carry the card reader to customers’ tables. Mobile card readers work best for businesses that need to process payments on the go, like at festivals or expos.

Whatever type of PDQ machine you need, we recommend choosing machines that support contactless payments. In 2023, 91% of card payments in the UK were contactless, so it’s important to offer tap-to-pay as an option for customers. Contactless card readers can also accept payments from mobile wallets, which are increasingly popular in the UK.

Most merchant account providers offer POS systems and PDQ machines you can buy or lease. In most cases, we recommend buying since leasing can end up being expensive in the long run. However, leasing can be a good option if your business doesn’t have the funds to pay for a POS system or PDQ machines upfront.

Step 3: Set up an Online Payment Gateway

POS systems and PDQ machines will enable you to take card payments in person. But if you want to sell online, you’ll also need an online payment gateway.

An online payment gateway is essentially a secure checkout page for your website. If you created your website with a builder like Wix or Squarespace, you likely already have a gateway built in. However, if you created your website on your own, you’ll need to connect a payment gateway from your merchant account provider.

Most merchant account providers offer an online payment gateway at no extra charge, although they may charge more for processing online card purchases than for in-person card purchases. This is because keyed-in card transactions require additional security checks since they’re more prone to fraud than transactions where the card is present.

If your merchant account provider doesn’t offer a payment gateway, there are plenty of free payment gateways instead. Note that while the gateway itself is free, gateway providers and credit card networks still charge transaction fees for every card payment you accept through your website.

You can add your payment gateway to your website simply by copying and pasting some code. Your merchant account or payment gateway provider can also help set up your gateway if you run into any problems.

Step 4: Set up a Virtual Terminal

A virtual terminal lets you take credit card payments over the phone by manually entering a customer’s credit card details on a webpage through your merchant account.

Almost all major merchant account providers in the UK offer a virtual terminal for free. However, like with online payments, you’ll typically pay higher credit card processing fees for keyed-in card transactions than for in-person transactions.

Setting up a virtual terminal requires little work. It’s basically a secure webpage in your merchant account dashboard. Simply log in to enter a customer’s card information and process a payment.

Keeping Your Card Payments Secure

You’re now ready to start processing credit and debit card payments in person, online, and over the phone. But before you begin taking card payments, it’s important to consider how you’ll keep your payments and your customers’ card information secure.

Here are a few tips.

Dip or Tap, Don’t Swipe

Most credit and debit cards today have an EMV chip or support tap-to-pay. Both of these payment methods are more secure than traditional magnetic strips, which are relatively easy to spoof. Whenever possible, require customers to dip or tap their card rather than swipe to minimise the risk of fraud.

Keep Receipts Secure

If you print receipts for card transactions, lock the receipts away in your till or shred them before throwing them out. That way, customers’ card details aren’t floating around for anyone to look at.

Don’t Store Card Information

PDQ machines, payment gateways, and virtual terminals are all designed so that, by default, they don’t store customers’ card details. If you want to process a customer’s card again, you need to dip or tap it again or re-enter the card number.

While this can occasionally be a hassle, it’s much more secure than storing customers’ card information. In today’s era of hacks and data leaks, it’s all too easy to accidentally expose customers’ sensitive card details if you have them on your system. A leak like that could ruin your business’ reputation with customers, so it’s simply not worth the risk.

Require Card or ID for In-Store Pickup

If a customer makes a purchase online and requests in-store pickup, always check their credit card or ID before handing over their product. This is an easy way to ensure you don’t fall prey to online credit card fraud and avoid costly chargebacks.