The terminal which accepts credit and debit card shops is known as a PDQ machine and it is something that almost every retailer will have. Recent figures released by the UK Cards Association has said that last year over 8 billion transactions were made on the devices with a total value of around half a trillion pounds.
Despite these devices being incredibly popular there has been no standardisation of the amount that each machine charges the customer. In fact, many people have criticised the machines for charging a huge range of different fees. In the case of debit cards the charge can be as little as 11p but in other cases the charge might be over 40p.
With credit cards the situation is even worse as the amount charged to the retailer will be as a percentage of the value of the sale. This basically means that the more the customer spends in the store the more the seller is going to have to pay to the bank. The average rate per transaction between the big six providers in the UK is around 20p. The average rate as a percentage is around 1.7% but the most expensive provider charges nearly 5% for every transaction.
Small businesses are finding the charges overwhelming and in the last year all of the six major providers in the UK have increased their rates. In addition to this the billing process is becoming increasingly less transparent and small businesses are finding they are getting bills much higher than they expected.
Jonathan Elliott is the Chief Executive of Make It Cheaper and he has commented, “When retailers are being sold the systems they are being taken for a ride by the providers and they are not allowed time to read the small print. The problem is that this part of the market is not regulated and so the providers can essentially charge whatever they like, they are making a large profit at the cost of small shop owners and this is not the sort of behaviour we want to see in the market.”
There are also additional fees for companies that have not filled out all the required compliance forms and often small retailers are not told how easy these are to complete. In some cases, simply filling out a form online, which takes around half an hour, can save the business 2% off each transaction. For those who own small enterprises in the UK it is very important that they start reading the small print and see what better options there are in the market for reducing their costs.
Mr Elliott continued, “Small businesses find it very difficult to understand all of the details when they sign up to a new system as they simply don’t have the manpower to do everything. These providers are making it as difficult as possible for them so information is hidden from them in huge amount of correspondence.
“There are also barriers to switching company so even when a retailer realises they are paying over the odds they might not be up to change provider without incurring even more additional costs. These include things such as setup fees and supplementary charges, which essentially remove any financial benefit that the retailer might gain from switching in the first place.”