Cheapest Ways to Take Card Payments in 2023

Whether you run a brick-and-mortar store, operate mostly online, or even offer a combination of both, it's naturally vital to be able to accept card payments from your customers — both for giving them a convenient experience and generally growing your customer base.

Having said that, the transition from cash to card tends to be a pretty daunting prospect for small business owners and start-ups, whether that's down to concerns about transaction fees and other associated costs or just a general lack of confidence around how to set card machines up.

So, throughout this article, we'll be exploring some of the most cost-effective ways your business can accept payments from cards — as well as providing some insight into the various methods you can use to do this.

From contactless payments to online purchases, we've got you covered, but let's start by breaking down some of the fundamentals of the card payment process.

Understanding the Basics of Card Payments

Put simply, whenever any of your customers pay for things with their debit or credit cards, the funds get transferred from their bank account or credit limit straight into your merchant account.

Generally speaking, this kind of process involves a few different components, so let's explore each of them in more detail now:

Payment Processors: These are sometimes known as payment service providers, and these are basically the intermediaries that facilitate any of the card transactions you make by connecting your point-of-sale (POS) system (or maybe even your online store) to the customer's bank account, meaning the funds can be exchanged smoothly.

Merchant Accounts: This is a specialised kind of bank account that essentially allows businesses like yours to properly accept card payments. Once the customer has paid, all of the funds from their card transaction are held here temporarily before being transferred to your personal bank account.

Transaction Fees: Payment service providers tend to charge some kind of fee to cover all of the various costs associated with processing payments and providing general security measures.

The specific amount of fees you'll end up being charged usually varies depending on the method of payment you choose, but things like transaction volume and the provider you have can make a difference, too.

1. Online Payments

For any businesses out there that sell the bulk of their products/services online, it's naturally important that you're able to accept card payments.

Fortunately, though, there are actually quite a few cost-effective ways you can do this without spending too much. Let's start by covering some of the most common examples:

Payment Service Providers

We introduced the general topic of payment service providers earlier, but let's get specific with a few major options you can choose from PayPal, Stripe, or Square, for instance — all of which offer a really intuitive way of accepting online card payments.

While the difficulty of setting card payment methods up normally turns business owners off altogether, these providers, in particular, actually have very straightforward options when it comes to integration, meaning you don't exactly need a wealth of technical expertise to get them up and running.

Aside from their ease of setup, they're especially attractive for any start-ups or small businesses since they don't overdo it on the transaction fees, offering you incredibly competitive rates, all things considered — typically a percentage of the overall transaction amount plus a fairly minor flat fee.

Furthermore, payment service providers, PayPal, to be specific, are known for being flexible when it comes to the range of card types you're able to accept, from credit cards and debit cards all the way to online payment methods like Apple Pay and Google Pay.

Online Purchases

Now, to actually accept card payments for any online purchases one of your customers might make, the majority of businesses, specifically ones that build eCommerce websites, tend to integrate some form of payment gateway into their website.

In fact, many kinds of website builders and eCommerce platforms (the most popular options being sites like Shopify and WooCommerce) offer some built-in options that let you accept card payments, ultimately simplifying the whole setup process and allowing your customers to have an easy checkout experience.

Aside from setting it up for you, these platforms also give you some tools that you can use for managing inventory, processing orders, and even tracking sales. Of course, the range and quality of tools you'll have at your disposal might come behind a paywall, but the majority of them are actually free, which makes them incredibly valuable businesses looking to cut costs.

As mentioned, Shopify and WooCommerce are generally your best bet when it comes to online payment solutions, but it's still essential to properly research each of them and ultimately choose a platform that best aligns with whatever your specific needs and budget are.

2. Face-to-Face Payments

Moving on from the online side of running your business, card payments are still an incredibly cost-effective way of doing business, even if you primarily conduct sales from your physical store — not to mention how essential it can be in terms of customer convenience and overall satisfaction.

Card Machine

Starting off with card machines, these are commonly referred to as point-of-sale (POS) terminals and generally tend to be a pretty popular choice when it comes to making face-to-face transactions with your customers.

From the traditional kind of terminal that sits on top of your counter to a mobile card reader, these usually come in various forms, and it's something all of your customers will be familiar with and know how to use.

To get specific, certain providers, like Square and SumUp, offer card machines at a pretty affordable price, and some options don't even have any monthly fees, naturally making them some of the most attractive options for small businesses, in particular with fewer resources.

Whether it's traditional chip and PIN transactions or the more commonly used contactless payments (Apple Pay and Google Pay, for example), these terminals ultimately allow you to accept a fairly wide range of card payments.

Given how portable and versatile they are, too, these modern card machines aren't just useful for small businesses; they have a place in companies of all sizes.

Contactless Payments

As we touched on just before, contactless payments are actually one of the more popular ways customers like to pay for things — especially in recent years since the wake of COVID-19, where customers were opting for touch-free options anywhere they could find them.

It's not only convenient for the customers, either, as encouraging contactless payments is also one of the most cost-effective ways you can accept payments as a business.

Generally speaking, contactless payments typically involve much lower transaction fees compared to some of the more traditional card transactions, not to mention their overall speed and efficiency, which lets you serve customers far more quickly as a whole.

3. Debit Card Transactions

Similarly to contactless payments, debit cards are another payment method that a lot of customers like to use, given how convenient they are. The same goes for business owners, too, since you typically have instant access to all of the funds.

Still, to actually accept debit card payments for your business without straining your budget, you'll need to open a merchant account:

Merchant Accounts

In essence, you're going to need a merchant account that has competitive rates for all of the fees associated with debit card transactions.

Now, these rates aren't exactly set in stone, and they usually vary depending on a few different factors — transaction volume and the specific provider you end up choosing, for instance. As such, you need to make sure you shop around for a few different options so that you're able to compare transaction fees and find the best deal out there.

4. Reducing Transaction Fees

Lastly, one of the most obvious ways you can cut a lot of the expenses associated with card payments is by simply reducing the amount that you're paying in transaction fees:

Monitor Credit Limits

If you plan on accepting credit card payments in your shop, whether it's online or in-person, you've got to be mindful of your credit limit. As you'll likely already know, exceeding your credit limit can result in a few different issues, whether it's additional fees, interest charges, or just general disruptions to your payment processing.

So, make sure you're doing all you can to manage your credit card account responsibly and stay within your approved credit limit to avoid any of these issues.

Furthermore, it can help if you make a habit of regularly reviewing your credit card statements and generally monitoring your usage so you can avoid any unexpected over-limit fees.

Some businesses out there might require a higher credit limit in order to accommodate card transactions, so if that's the case with your business, it might be worth reaching out to your credit card provider so you can discuss potential adjustments based on your evolving needs.

Payment Card Types

This is a slightly more left-field suggestion, but try to keep an eye on the various types of payment cards that your customers are using the most so that you're able to tailor your payment processing setup and ultimately minimise fees.

For example, different card types, credit cards vs debit cards, often have varying transaction fee structures, so you'll want to have an idea of your customer demographics and payment preferences to understand which payment card types you actually need to prioritise in your business.

If, for instance, you find out that the majority of your customers use debit cards, it might be worth choosing a payment service provider that offers the best rates towards debit card transactions in particular.

Related Guides:

• Can I get a Business Credit Card for Personal Use?
• How Many Business Credit Cards Should I Have?
• What is a Business Charge Card?
• Best Merchant Accounts with No Credit Check