5 Payment Gateways with Low Processing Fees
When running a business, it’s essential to have as much of an understanding of your cash flow as possible. One big part of this is knowing about which transaction fees are taking place when making a sale.
Payment gateways thrive thanks to service fees, and it can often be tricky to find meaningful comparisons for merchants, due mostly to how customer cases vary.
Here, we’re able to take a look at typical processing fees as well as the level of service that comes with each merchant. We can also use these figures to work out how much money a business keeps if its processing £1,000 per month and £10,000 per month.
With a processing fee of 3.4% (+20p) for both debit card and credit card transactions in the UK, PayPal is one of the pricier payment gateways to use for businesses.
However, PayPal is always an appealing choice for both business owners and customers alike due to its brand power. With over 244 million active PayPal accounts in the UK, businesses know they’re teaming up with the most recognizable payment brand online.
The transaction fee is further offset by an absence of a monthly usage fee, and there’s no contract required.
PayPal also sells card readers to enable in-store purchases at an additional cost of £69.95. While they specialize in online transactions, businesses using PayPal are also able to take payments over the phone as an optional addition to their account.
Looking at PayPal’s transaction fees alone. Merchant Machine calculates that businesses that bring in £1,000 per month can expect to keep £946 for themselves (calculation based on 100 £10 transactions), likewise, if they take in £10,000, a business can see £9,560 in their bank (based on 1,000 £10 transactions).
With processing fees of 2.2% for debit cards and 2.4% for credit cards (along with a further 20p per transaction), Shopify forms a cheaper alternative to PayPal; less so if you’re running a company selling prestigious goods that may encourage more credit purchases.
However, with monthly fees from $9 per month, this difference is negated somewhat.
Much like PayPal and other processors on this list, Shopify is a huge player in payment gateways, and with esteemed brands like RedBull, Tesla, The Economist and Budweiser utilizing the merchant, it’s fair to say that customers will find your trust in them appealing.
Furthermore, there’s no contract required, and you’re able to accept payments in-person with Shopify as well as online — although this feature is an optional extra fee.
Through using Shopify, businesses earning £1,000 per month (100x £10 transactions can expect to take £956 (based on a basic account), and earners of £10,000 would be looking at £9,640 (1,000x £10 sales – with an advanced account).
With 1,000 businesses signing up to iZettle every day, it’s fair to say that the new kids on the block are making some big waves.
This is surely helped in part by the payment gateway’s flat 1.75% processing fees for both debit and credit cards.
Even better is that iZettle requires no monthly fees and no contracts to sign up with.
Business owners are able to accept payments both in-person and online seamlessly — and can even enable transactions to be made over the phone as part of an optional, premium, service.
iZettle’s processing fees mean that businesses making £1,000 per month would take home £982.50 (based on 100x £10 purchases), while £10,000 profiting companies would see £9,825 (1,000x £10 transactions).
Having been in business since 2011, Stripe is another relatively new, yet thriving, company on the payment gateway scene. As such, their transaction fees stand at a competitive 1.4% (+20p) rate, regardless of whether the customer is using a credit or debit card.
No contracts are required using the service, and there are no monthly fees to be paid either.
Stripe is comfortably the most consistently competitively priced company in our list, in terms of processing fees, which may be due to the merchant compensating for their lack of brand power in the faces of the overwhelmingly popular PayPal and Shopify.
One drawback of the service, however, is Stripe’s lack of compatibility for businesses that are looking to make sales face-to-face with customers. There’s also no option for payments to be made over the phone.
If you’re an online business, this could be seen as something of an advantage, provided that you have no plans to launch a brick and mortar store in the foreseeable future.
Businesses using Stripe can expect to take £966 from £1,000 worth of £10 transactions each month. While stores making £10,000 per month (100x £10 sales) would be looking at £9,660 after processing fees are taken out of the equation).
Netpay is a huge company in the payment gateway industry, but due to the scalability of their services, it’s hard to pin down the figures that businesses can expect as a processing fee.
These super low processing fees could be tempting for smaller-scale businesses that they’re intended to serve — so much so that the monthly charge for usage, which starts at £15, seems surmountable.
Standard transactions can be conducted online, in-person and over the phone with Netpay, but users are expected to sign a contract before getting to grips with the services offered by the payment gateway.
The amount businesses will be able to take home after a month of earning £1,000 depends on a few variables, but taking into consideration Netpay’s most basic transaction fees, £985 from 100x £10 sales is the best estimate. Likewise, for a month of earning £10,000 (1,000x £10 purchases) the profit margin stands at £9,936. It’s worth noting that extra fees will apply to Netpay’s services, which these estimates can’t take into account due to the varying levels of Subscription available.