Choosing a merchant services provider

Choosing a merchant service account is probably the most important decision you’ll make when it comes to accepting credit cards. Because your merchant account is separate from your other business accounts, there’s no need to go automatically to your normal bank - you can shop around and find the service that best suits your needs and your budget.

Your merchant account is your connection to the credit card network. When you accept a card payment, the transaction details are sent to your merchant bank. They then collect the money from the customer’s card provider and credit your account. The card scheme (usually Visa or Mastercard) sits between the merchant bank and the customer’s card bank and transmits the transaction data between them.

Most major banks offer merchant account services, either under their own name or a different brand name and there are also a number of dedicated merchant account providers, including some that specialise in the needs of online businesses.

In order to compare the prices and services of merchant providers, you'll need to think about the following questions:

  • How many transactions per month do you expect to make?
  • What do you expect the average transaction value to be?
  • Will you be selling to customers in person, via phone, online or a combination of all three? If you’re selling online, don’t forget to read our article about online payments.{LINK}
  • If you’re taking face-to-face transactions, do you need a fixed terminal, or a number of portable terminal? (e.g. restaurant taking payments at tables).
  • How many terminals do you need?
  • Do you take payments away from your main site? (e.g. if you’re a mobile business or if you occasionally travel to other places such as markets or exhibitions).
  • Do you need to accept American Express or Diner’s Club?


Merchant account providers generally charge three fees:

1)    Account set-up fee

2)    A fixed monthly fee

3)    Transaction fees (usually between 0.5% and 3% of the value. Some of this fee goes to the card scheme for their interchange fees, so it may vary for the different card types).

There are a number of comparison websites available for merchant account services, so once you’ve worked out your likely card sales volumes, you’ll be able to plug the numbers into one of these sites to get a range of quotes.


Most small retailers rent their card payment terminals from their merchant acquirer for a monthly fee, which includes software updates and technical support. You can also buy your own terminals, but you should check with your merchant acquirer about which models are compatible, particularly if you need mobile or portable terminals.