Guide to UK mobile card reader providers
The range of mobile card readers available in the UK has increased rapidly over recent years with these devices becoming the go to solution for start ups and small business owners looking for a fast, flexible and cheap solution for accepting card payments. This guide compares the leading UK mobile card reader providers and will help you decide which solution is right for your business.
Over the last few years, paying by debit or credit card, and particularly using contactless payment technology, has become the most popular way for consumers to make payments in the UK and a significant and growing revenue stream for UK small businesses and larger enterprises.
As taking card payments can be a complex and complicated process to understand a relatively new type of card payment company, the Payment Facilitator (or mobile card reader company), has evolved to provide small businesses with a convenient, secure and cost-effective way to set-up and accept card payments.
In this article we provide information on the mobile card readers available in the UK market, compare their features and costs, and help you decide which card reader provider is right for your business.
In this article
What are mobile card readers?
Mobile card reader companies are organisations that excel at providing mobile card payments solutions to businesses. Crucially, from the perspective of a business looking to get up and running with taking card payments very quickly, they are organisations that already have merchant accounts established with acquiring banks.
A merchant account is a specific type of bank account that is both legally and technically required to enable a business to process credit and debit card payments. Your business cannot accept card payments without access to a merchant account. You should note that a merchant account is not the same as your normal business bank account.
Your can either go through the process of setting up your business’s own dedicated merchant account with an Acquiring Bank (directly with an acquiring bank, or via an ISO (Independent Sales Organisation)) or sign up with a mobile card reader provider and immediately operate under their existing ‘master’ merchant account that they have previously set up with an acquiring bank.
If you think that a dedicated merchant account, rather than using a mobile card reader provider, is right for your business then take a look at our article, How to accept card payments, for more information on merchant accounts.
There are five mobile card reader providers, offering merchant account services, in the UK – iZettle, PayPal Here, Square, SumUp Air and Worldpay Reader.
Mobile card readers: Advantages and disadvantages
Mobile card readers have a range of benefits for start ups and small businesses but they do also come with some limitations as set out below.
Advantages of mobile card readers
There are a range of benefits from signing up with a mobile card reader provider:
- The mobile card reader provider has an existing merchant account: This is a significant benefit for a small business with limited time and resources as there is no need to set up a dedicated merchant account specifically for your business. Your business will automatically operate as a ‘sub-merchant’ under the card reader company’s existing master merchant account.
- Set up speed: A mobile card reader account is extremely quick to set up, usually less than 15 minutes.
- Mobility: Mobile card readers are tailor made for card and contactless payments out and about.
- No contract: As long as you have received your mobile card reader you can start accepting card payments and you can stop using the service at any time with no termination costs.
- Fixed fees: Mobile card reader fees are easy to understand and are likely to be more economic for lower value, and/or lower volumes of, transactions.
- American Express (Amex): Amex (which can be time consuming and expensive to arrange directly) is automatically accepted by the majority of mobile card readers.
- PCI compliance: The payment card industry (‘PCI’) is highly regulated particularly around security of data. All organisations that operate in the card payments process must comply with rigorous data protection standards set by the PCI Security Standards Council. Another significant benefit of using a mobile card reader, particularly for a start up or small business, is that the mobile card reader provider looks after all aspects of PCI compliance. You just focus on running your business.
- Card machine cost: The card machine itself is usually bought outright so this should work out cheaper for you in the long run.
Disadvantages of mobile card readers
For a start up or very small businesses there are few negatives about using a mobile card reader. However, as your business grows there can be some downsides:
- Fixed fees: As your business grows and you accept card payments in greater volumes and/or for larger value items, you may well find that having your own merchant account is more cost effective.
- Breadth of services: Some mobile card reader companies do not yet provide a full suite of services covering all card payment methods (e.g. ecommerce or Mail Order/Telephone (‘MOTO’)) and/or you may find that your business needs a more bespoke card payment solution.
If you are interested in a mobile card reader, read on.
Why use a mobile card reader? A case study
Zoe P, a school parent association committee member
“I am on our school’s parents’ association committee. We carry out a range of fund-raising activities for the school like the school fete, second hand uniform sale and quiz night. Until recently we could only take cash and we realised that more and more parents wanted to use credit cards and were carrying less cash with them.
I am not a particularly technical person so was, at first, quite daunted by setting up a card payment service. We looked at a few different card reader options and, following some recommendations, decided on the iZettle.
The iZettle website was extremely easy to understand and the terms & conditions very straightforward. It was surprisingly easy to set up our account and download the app. Really only 5 minutes or so.
The iZettle card reader arrived in 3 days. To set it up was really easy as iZettle not only had an instruction manual but there was a number you could call if you needed help. When I did call the number to double check something, I got through instantly to a representative who was very professional, patient and helpful. It was really reassuring to know there were people at the end of the phone if I needed help.
To be honest I was nervous the first time that I used the card reader at the second-hand uniform sale but it was incredibly simple and everybody seems familiar with them. After the event, checking our account was the same as ordinary online banking and the funds are transferred automatically a few days after we make a sale which is really helpful and saves time.
For what we need it is absolutely perfect and I would highly recommend this type of service to anyone in our situation.”
Who are the mobile card reader providers?
iZettle is a Swedish payment processing company founded in 2010. It was the first mobile card reader to launch in Europe and has become the UK market leader. The company was bought by PayPal in 2018.
Advantages: The iZettle card reader is easy to set up and use, accepts the widest range of cards of all the mobile card reader providers and is able to integrate with the largest number of EPOS systems making it the most versatile of all the mobile card readers for small businesses.
Disadvantages: It does not have a MOTO platform and telephone support is not available on weekday evenings nor on weekends.
PayPal Here is part of PayPal the US based global online payments company founded in 1998. PayPal Here was launched in the UK in 2013. Despite its acquisition of iZettle in 2018, PayPal intends to continue to market both iZettle and PayPal Here separately, at least for the foreseeable future.
Advantages: The PayPal Here Card Reader integrates with PayPal’s online and MOTO account offerings, and settles payments almost instantaneously into the PayPal account.
Disadvantages: It has a complicated fee structure and uncompetitive rates.
Square is a US payment processing company co-founded in 2009 by Jack Dorsey one of the founders of Twitter. It was the first mobile card reader in the market although it took slightly longer to launch in Europe.
Advantages: The Square Card Reader is the smallest, most light weight and cheapest mobile card reader to buy. Its app has the most comprehensive features among the competition for managing a business’s sales and logistics, and its virtual terminal and invoicing functionality are included for free.
Disadvantages: As there is no display on the mobile card reader itself the transaction amount can only be viewed by the customer on the Merchant’s phone/tablet’s screen and, if required, PINs have to be entered into the Merchant’s phone/tablet’s touchscreen. Telephone support is not available on weekday evenings nor on weekends.
SumUp is a UK payment processing company and mobile card reader provider founded in 2012 and backed by American Express and a number of venture capital investors.
Advantages: The SumUp Card Reader is easy to set up and is a user-friendly mobile card reader. It has the lowest transaction fees of the UK mobile card readers and it accepts more cards than most of the competition. Telephone support is available on weekday evenings (to 7pm) and on Saturdays.
Disadvantages: It has basic app features and no e-commerce offering. No telephone support on Sundays.
Worldpay is a US based global payment processing and technology company founded in 1971. It launched its Worldpay Card Reader product in 2013 replacing its discontinued WorldPay Zinc reader. The terms set out later in this article are for the pay-as-you-go option. There is a subscription option which includes a card reader rental plan starting at £4.99 + VAT per month and an 18-month contract.
Advantages: Worldpay is one of the leading, global payment processing companies. It provides 24/7 telephone support.
Disadvantages: It is an expensive mobile card reader, has complicated fees and the longest settlement times.
Comparison of mobile card reader commercial terms
The upfront and ongoing transaction costs of using a mobile card reader will always be key points to determine your decision over which card reader provider to choose but there are also a range of other factors and features that will be important to your decision making. We have set out below a summary of the key criteria applicable to each of the leading five UK mobile card reader providers.
- Introductory offer.
- A number of the card reader providers, such as iZettle and SumUp, will negotiate on the fixed fee particularly when your business’s monthly revenues increase. The fee can be reduced to as little as 1%.
- Mail Order/Telephone Order.
- Instantly to your PayPal account – the time to transfer onward to your bank account will depend on your bank.
- Pricing correct as at June 2020.
How to set up and operate a mobile card reader
One of the key attractions for a start up or small business of using mobile card readers are that they are easy to set up and operate. We have set out below an outline of how to go about setting up and using a card reader. These steps may vary slightly according to which mobile card reader provider you have selected.
Note that for occasional card reader users there are a number of shortcuts in the set-up process, for instance you could just set up one ‘product’ for all your transactions rather than specifying each of your products (see Step 2 point 4 below). However, for growing businesses that will want to understand and analyse their card payment patterns in detail and/or integrate with third party apps (e.g. such as EPOS systems) we would highly recommend spending more time on the set-up phase.
Step 1: Create your account
- Most card readers allow you to create your account online on their website or through their free POS (‘Point of Sale’) app which can be downloaded on to your phone and/or tablet from the mobile card reader’s website, the Apple App Store or Google Play.
- Enter your details to set up your account including your business email address, business and personal information and your business’s bank account information.
- If you have not already done so, download the free POS app to your phone/tablet.
- Order your hardware (e.g. your card reader and any accessories that you may require such as receipt printer). This may take up to 5 days to arrive.
Step 2: Set up your shop/account dashboard
- Set up account security if you have not already done so during account creation.
- Add locations and addresses where you will be selling.
- Customise receipts.
- Create categories and add each of the product items that you wish to sell.
- Set up VAT.
- If required/available from your card reader provider, set up inventory, dining options, create discounts etc.
- Set up your team members and team permissions.
Step 3: Connect your hardware
- Charge your card reader using the enclosed USB cable.
- Sign into your app and connect your card reader to your phone/tablet wirelessly via Bluetooth as instructed in the card reader’s Settings.
- Connect peripherals e.g. standalone receipt printer.
Step 4: Take payments
- Your phone or tablet will need to be connected to a 3G, 4G or WiFi network in order to accept transactions.
- In the app choose the correct product(s) or enter the appropriate amount and tap the charge button.
- For Chip & PIN or swipe transactions ask your customer to:
- Insert, swipe or tap their cards as appropriate.
- Follow the instructions on the card reader or phone/tablet screen – such as ‘Enter PIN’ or ‘Sign’ to approve the payment.
- For contactless payments the customer must hold the card or device within 5 centimetres of the reader display.
- Send the receipt to the customer via email/text message or print it if you have a printer connected.
Step 5: Manage your business
- Access your dashboard to generate transaction history, summaries and reports to assess how your business is performing.
- Manage your customer information (if this functionality is provided by your card reader solution).
- Connect with third party apps (such as EPOS providers).