Almost every sale now goes through a card machine or an online checkout. In a café, takeaway or convenience store, that can mean thousands of small payments a week, and every one carries a fee. Those fees add up faster than most owners realise.
Most business owners accept card fees as a cost of doing business. A lot of accountants do too. They’ll prepare your VAT returns and year-end accounts, but rarely look at your merchant statements or your payment provider’s contract to check you’re on the right deal.
Moving from 1.75% to 0.75% is worth £10,000 a year.
What to check on your merchant statement
Card processing is rarely one simple percentage. A typical statement can include:
- a percentage of each payment, which often differs for debit, credit, business and overseas cards
- a fixed charge on every transaction
- terminal rental
- monthly service fees or minimum charges
- extras such as PCI compliance fees and chargeback fees
Contracts signed when the business was smaller often stay in place long after takings have grown, so you can end up paying start-up rates on a much bigger turnover.
A recent example
A Manchester café group I started working with last year was trading well but losing money every month on an old card processing contract. I reviewed the statements and the contract, renegotiated with the provider and made a few practical changes. The result was a saving of £4,800 a year, straight back into the business. That money made a real difference to them.
Card fees are one line of many
I review transaction costs alongside your other cost lines, such as wages, supplier terms and margins. A proper review of your profit and loss often finds savings nobody has had the time to chase.
If your accountant has never talked to you about card fees, it may be time for a fresh pair of eyes. I’m happy to have a no-pressure chat about your transaction fees, or to arrange a cost-saving review of your whole P&L.