Chip and pin payments in the UK have grown by 255% and for a small business, being able to accept secure payments is essential for business. There are many chip and pin solutions to choose from, so which is best?
With over 100 million chip and pin cards in circulation in the UK, consumer expectations are that they will be able to pay with their card, both contactless and with a pin.
About chip & pin
The concept of paying by card is a lot older than people think. But it was the advent of the microchip that drove credit and debit cards to be the secure and reliable forms of payment that they are today.
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The first card machine was invented in 1967, with the four-digit pin becoming a staple. Originally, they were six digits, but a friend of the inventor persuaded him that a four-digit Personal Information Number (PIN) would be more memorable.
As banks developed their products, they took advantage of technology and by 1987, the first debit card was launched. But the chip and pin was not widely accepted until 2003. Customers could take money out of cash machines and they could pay for goods of all kinds in retailers.
But these advantages didn’t spread to all businesses. Small businesses found the technology and equipment they needed to be expensive. But several years on, chip and pin solutions are now accessible for businesses of all shapes and sizes. In fact, the recent health crisis has reduced the frequency of handling cash and with cheques also rarely used, the future for small business is to have the facilities to accept payments via chip and pin readers.
Different types of chip and pin readers
There are pros and cons of chip and pin readers for small businesses.
Benefits of a chip and pin card machine
Secure payments – whether you are accepting payments online or processing them in your store, card payments are secure. Technology is advancing all the time and so concerns around payment fraud are reducing as a result.
Speed & convenience – payments made through chip and pin are instantaneous. In other words, when a customer makes a payment the money instantly shows in your account. It is an accessible technology too that customers with chip and pin cards can use. It is rare in the UK for debit and credit cards not to have a PIN and increasingly, merchants can now accept contactless payments. This is even more convenient for customers. Under £45 and customers simply swipe their card to pay.
Customer expectations – customers expect to be able to pay by card, whether that it is a shop, restaurant or another venue, such as a fair or show. The equipment for accepting card payments is much improved and with secure Wi-Fi virtually everywhere, there is no reason why a small business can’t access the technology.
Reduces cash on-site – large stores of cash on-site present a security headache. Business insurance rarely covers cash and with theft also an issue, with a chip and pin reader, retailers and merchants don’t have to worry about fraud or theft.
Affordable – chip and pin readers usually require a one-off payment although it is possible to hire a reader. A transaction fee also applies in most cases although some providers charge a fixed monthly fee. Either way, there is plenty of choice when it comes to provider and packages, meaning there will be something within budget.
| But are there disadvantages to some chip and pin solutions? |
|---|
| Cost – to process a card payment, a small business will need to invest in equipment and the services offered by a card processing company. This is an additional overhead and, at one time, could be prohibitive to some small businesses. That said, if you are using banking services less, such as paying in less cash and cheques over the counter at your bank, you won’t be incurring fees. In other words, the fees you were paying every time you banked at a branch will cover the costs of the equipment and processing. Internet connection – many chip and pin readers rely on a secure and stable internet connection. Some newer processing companies rely on wireless connections and that means it needs to be reliable at all time. |
There are different chip and pin readers – some are wired, others mobile and others that rely on specific software to operate efficiently – but they all present different solutions. And that means there is a reader that is right for your business.
Different chip and pin retailers and options
Finding the right card machine for a small business means understanding what’s on offer, including costs.
In most cases, equipment is purchased outright, and a transaction fee paid each time it is used. This is why it is important to check the small print before signing any contract.
Providers of chip and pin readers and merchants who process the payment on your behalf operate in a competitive marketplace and so that means there are offers and deal available from a range of card processing retailers.
When it comes to choosing a chip and pin reader and payment processer, look for:
- Quality of the reader – is it made for heavy or light use? Readers are often categorised as countertop, mobile or portable chip and pin readers.
- Wired or wireless chip and pin terminal – a wired machine means customers have to visit a specific area in your store but with a wireless, you can go to them. A wireless card and pin reader is great for off-site payments, such as at trade shows.
- Cost – as well as the cost of buying the reader, you also need to take into account transaction fees and whether there is a monthly fee as well. Merchants will often have scaled fees meaning that for small businesses, the packages are more affordable.
- Guarantees – check out what warranties and guarantees are available on the equipment and whether they offer a rapid replacement scheme.
- Help & support – should your reader malfunction, you’ll want accessible help and support. This especially helpful in the case of queries about the app being used with the device.
Chip & Pin card readers compared
| Card machine & provider | Chip and pin reader price | Ideal for… |
|---|---|---|
| iZettle | £59 | A great choice for small businesses. Simple to use and equipment that is modern and minimal. Provides a full range of features and is widely regarded by small and larger businesses across a range of industries. As well as chip and pin, it will also accept Samsun Pay, Google Pay, Apple Pay, VISA, Mastercard and more. |
| SumUp Air | £29 | If you are looking for simplicity then this is a great option. Widely regarded as one of the most economical app-based car machines currently on offer in the UK. Accepts contactless and chip and pin. |
| Square Reader | £19 | Has some of the best free point of sales and payment features. The white equipment is ordered first, followed by a bank account verification process. Working via Bluetooth technology, these small readers will accept contactless and chip and pin. |
| PayPal Here | £45 | PayPal has led the way in secure online payments and so it makes sense that they now offer merchants the opportunity to take card payments in person too. You’ll need a PayPal account as it integrates with your account. Familiar technology that works well. |
| Worldpay Reader | £69 | Sign up online and you’ll receive a quote on fees. But you’ll need to check the small print because they have compliance issues which you need to be aware of. Fall foul of these and you’ll pay more. |
| MyPOS | Starts from £29 | Their top machine is £299 not including VAT but is widely regarded as being a good all-round machine. Complete with colourful LCD display, the chip and pin reader is robust and comes with a powerful battery, Ideal for heavy-use. |
| SmartTrade App | Transaction fees | Aimed at tradespeople, there are three different payment options: face to face, over the phone or pay via emailed links. You use the app on your smartphone and various transaction fee rates apply, depending on whether you are a sole trader, business or an enterprise. You can cancel anytime and the first 30 days are free. |
| Barclaycard Anywhere | £29 | There are no monthly fees with this chip and pin reader. It uses 3G or WiFi to process payments and has a low % transaction rate. You can also send email receipts with this too. Track payments vis the app too. |
| Shopify | £29 | Looks remarkably similar to Barclaycard Anywhere. Great for when you want to accept face-to-face payments. Also automatically calculates taxes. Simple and effective. |
| SimplyPayMe | No card reader needed | Pay per transaction fee (does vary, so check the small print). Comes with a free 30-day trial and will accept payments via email, in person and over the phone. Monthly fees on a sliding scale from sole trader to Enterprise. Great for small businesses and startups with less than £30k sales a month. |
Equipment prices are minus VAT and may change.
For a small business, being able to take card payment for goods and services means offering convenient and accessible payment options for customers. The range and scale of chip and pin solutions from wired car readers to app-based software is such that there is an affordable solution for every business.
FAQ
It is possible to hire chip and pin readers which in some instances, can be preferable over buying one of your own. If, for example, you are taking part in an event such as a trade show, hiring a reader makes financial sense. As a long term solution, hiring card reader also means that when new machines come on the market, you can easily upgrade. If they malfunction or the battery stops holding its charge, the company you hire the piece of kit from with replace it.
That said, when you buy a chip and pin machines for your business, they are a cost-effective investment which can also be upgraded when new machines come on the market.
Whether you choose to hire or buy chip and pin terminals for your business, you and your customer will enjoy the convenience.
A card reader completes payments in three easy steps:
1. Insert the card – when the customer is ready to make a payment, they insert their debit or credit card and follow the prompts on the screen.
2. Enter their PIN – the customer enters their four-digit pin into the machine.
3. Approval – the reader then ‘dials’ into the network – some do these via a wired internet connection and others use secure WIFI – and requests approval from the customer’s bank or credit card provider to make payment. The data passes through the system at lightning speed and will give approval (or decline the payment) within seconds.
Chip and pin refers to the chip that was added to debit and credit cards to store information. The pin refers to the four-digit unique code that the customers had. The development of the chip and pin card allowed for payments to be made instantaneous rather creating a paper trail from merchant to a bank to the customers and so on. Chip and pin in the UK started in 2003. By 2019, the sophistication of chips is such that customers can now make contactless payments, without the need for a pin, when paying for transaction up to £45 in value.
The data sent from chip to card reader to processing merchants and banks are encrypted but with the correct information in place, payment is taken. For the customer, the money is debited almost immediately from their bank account or is accounted for, at least. For retailers and merchants, payments are processed in 3 to 5 days.
Chip and pin machine providers offer a range of packages and pricing options. A card reader can be bought for as little as £28 with larger, more robust machines retailing for several hundred pounds.