How to accept card card payments: a step-by-step guide for small business owners

These days, card payments are an essential tool for any modern business. In fact, according to an exclusive takepayments survey, 1 in 3 consumers admit that they never carry cash on them. This shift towards an increasingly cashless society means businesses must adapt or risk turning away potential customers.

Whether you're running a café, a retail shop, or an online store, offering customers the convenience of paying by card can make a big difference.

In this guide, we'll walk you through everything you need to know about accepting card payments — from setting up your system to ensuring your payments are secure and compliant with UK legal requirements.

Why should you accept card payments?

Card payments have become the new normal for business transactions. These payments cover any purchases made using credit or debit cards, offering greater flexibility for customers.

For small businesses, accepting card payments is more than just a matter of convenience; it's essential to staying competitive. According to UK Finance, over half of all payments in the UK were made using cards in 2023, with an estimated 66% of all transactions being made via card by 2033. By not offering card payments, businesses risk missing out on these transactions and potential sales.

Card payments also provide businesses with a secure way to process transactions, reducing the risks associated with handling cash — such as theft or human error. Card payments can also help protect businesses and customers from fraud thanks to their advanced secure payment measures — including requiring authorisation before processing a transaction via a PIN or face-recognition when using a digital wallet — allowing customers to keep their account safe and banks to monitor suspicious activity carefully.

What do you need to take a card payment?

To start accepting card payments, you'll first need a few things. 

Merchant account

As a merchant — which is any business or individual that takes card payments in exchange for goods or services — you'll need to set up a merchant account with a payment provider. This account allows you to process card transactions and receive funds directly into your bank account without any fuss. You’ll also need a separate internet merchant account for ecommerce activities.

Merchant ID

Once you set up your merchant account, you'll be given a Merchant ID (MID). This unique 15-digit identification number is assigned by your payment provider and is vital for tracking and managing your transactions, similar to a regular bank account number. Your Merchant ID tells banks and other financial services where your money is going. With a MID, you’ll also be able to process your card payments or keep track of how many transactions you've received.

Payment provider

Of course, it goes without saying that choosing the right payment provider is also crucial. A payment provider, sometimes known as a payment processor, handles transactions between your business and your customers' bank, making sure payments are processed quickly and securely. A good provider will offer reliable service and support, making your day-to-day operations smoother. 

What card payment methods can I accept?

In-person payments

You'll need a card machine terminal to accept card payments in person. These machines allow you to process chip and pin and contactless payments, as well as mobile payment methods like Apple Pay or Google Pay.

Chip and PIN

This payment method was once the most common way to use a card to make a purchase. Chip and PIN payments require the customer to enter their card into the machine and input their 4-digit security PIN in order to authorise the transaction with their bank.

Contactless

Contactless payments have become a far more common way to pay in recent years. For this method, a customer needs to tap directly onto or hold their card slightly above the terminal, which will then automatically process the transaction without them needing to even touch the machine itself.

Digital payments

A digital payment works in the same way as a contactless payment, except that the customer doesn’t need their physical card. Instead, these payments use a digital wallet system on their mobile phone — such as Apple Pay for iPhone users or Google Pay for Android phones.

Be wary of ‘fallback’

While taking card payments via a machine is usually straightforward, occasionally, technical issues or connectivity problems may lead to a 'fallback'. This refers to a situation where a card transaction cannot be processed through the usual electronic terminal and instead falls back to a different method or system. A fallback is useful to have in place as it can help you complete a sale when other methods fail.

Online payments

An online payment refers to the process of transferring funds electronically via the Internet. These have a wide range of benefits for businesses, from the convenience of accepting payments 24/7 to providing customers with a faster way to make recurring payments — direct debits.

Businesses require a payment gateway installed on their website to accept card payments online. These essential portals allow customers to input their card or bank details in order to authorise a one-time or recurring payment. To set up a payment, you'll first need to choose a payment provider that offers a payment gateway.

Over-the-phone payments

Most card terminals allow you to process credit and debit card payments over the phone by manually entering the customer's card details into a secure web page. This method is helpful for businesses that take orders or book appointments over the phone — such as takeaway restaurants and hairdressers.

When taking an over-the-phone payment, it's important to follow security best practices, such as verifying the customer's identity by asking for additional information, using secure connections to ensure your internet connection is encrypted, and limiting access to the virtual terminal to authorised personnel only.

How to set up, accept and manage your card payments

1. Getting started

To start accepting card payments, the first step is to choose a payment provider. Research and compare different providers to find one that meets your business needs in terms of features, fees, and support. It's important to think about your needs now and in the future. 

For example, if you have a physical shop but plan to expand online in the next six months, it makes sense to choose a provider that can handle both. Once you've chosen a provider, follow their instructions to set up your merchant account. 

The next steps will vary depending on the types of payments you’re planning to accept.

In-person and phone payments:

For in-person or over-the-phone payments, you’ll need a card machine or ‘Point of Service’ (POS) terminal that suits your business setup. Once you’ve chosen a machine, your payment provider will then guide you through the setup process. This usually involves connecting the card machine to your network and ensuring it’s integrated with your existing POS system if you have one.

Online payments:

Setting up your business to accept online payments requires integrating a payment gateway with your online platform. A payment gateway can be integrated seamlessly into your site using plugins or APIs and turns your business into an online store where customers can browse and safely make purchases. 

2. Security and compliance

Maintaining security and compliance is crucial when handling card payments. 

PCI compliance is a critical factor to keep in mind when it comes to ensuring your card payments are secure. This refers to the standards set by the Payment Card Industry Data Security Standard (PCI DSS). These regulations are designed to protect customers' card information during and after a transaction, helping to safeguard your business and your customers from data breaches and fraud. 

All businesses registered in the UK must adhere to these guidelines, and there are strict penalties if you are found to not be compliant. If you need support with meeting these requirements, our dedicated PCI compliance team are on hand to help.

For in-person payments, the guidelines require businesses to:

• Ensure your card machines comply with PCI standards, including encryption of card data during transactions. 
• Protect card machines from tampering or unauthorised access. 
• Keep software on card machines updated to address security vulnerabilities.

For online payments, businesses are required to:

• Use PCI-compliant payment gateways that offer robust encryption and secure transmission of card data. 
• Ensure that card data is encrypted during transmission and storage. 
• Implement tools to detect and prevent fraudulent transactions, such as 3D Secure.

Finally, the compliance procedure for phone payments includes:

• Using PCI-compliant virtual terminals for processing payments over the phone. 
• Avoiding storing card data; if necessary, ensure it is encrypted and access is restricted. 
• If calls are recorded, ensuring any sensitive card data is not captured or that recordings are handled according to PCI standards.

3. Costs and fees

Several fees are associated with card payments, which you'll need to understand before you implement them in your business. 

The first is transaction fees, which are charges paid to your chosen payment provider in exchange for processing your card payments. These fees can vary depending on your provider, typically ranging from 1.5% to 3.5% per transaction. 

The other types of fees businesses incur may include: 

• Monthly fees for using the payment service
• One-time setup fees for establishing the account

When shopping for a payment provider, it's important to compare the overall cost, not just the per-transaction fee, to find the best deal. As you review contract terms, pay attention to minimum monthly fees, which can quickly add up if your transaction volume is low. 

3 benefits of accepting card payments

1. Improved cash flow

Taking card payments can significantly boost your business's cash flow by making funds available almost instantly after a transaction. This quick processing time means you don't have to wait for the money to clear, which in turn makes managing expenses easier and ensures you always have cash on hand for daily operations. An Intuit survey found that 83% of small businesses that accepted credit cards saw increased sales, and customers often spend more when using cards, so it’s a sensible decision if you’re hoping to increase your cash flow in the long term.

2. Customer convenience

Accepting card payments is a more convenient way for your customers to pay. It gives them multiple payment options, making their shopping experience smoother and encouraging them to come back in the future. Whether they prefer to pay with a debit card, credit card, or mobile payment — you've got them covered. 

This can even lead to higher sales, as customers are more likely to make impulse purchases and spend more when they can easily pay by card, which is great for your revenue. Research conducted by Forbes has shown that 58% of consumers feel that businesses offering card payments are more likely to make them spend the most money, with over double the likelihood of impulse spending in comparison to cash payments.

3. Access to financial services

Accepting card payments also opens the door to handy financial services, such as:

Merchant Cash Advance (MCA)

The Merchant Cash Advance (MCA) is a type of financing that provides quick access to capital based on card sales. Instead of a traditional loan, an MCA is an advance on future revenue, typically repaid through a percentage of daily credit and debit card transactions. This flexible funding option is useful for covering short-term expenses, managing cash flow, or investing in business growth without a lengthy approval process. MCAs are especially beneficial for businesses with fluctuating sales, as repayments adjust according to daily sales volume. 

Here at takepayments, we can provide a MCA to give your business a fast and flexible funding opportunity. Learn more about Advance+ here.

Transaction reports

Card payment providers also supply detailed transaction reports, giving you valuable insights into sales patterns and customer behaviour. These reports can include a variety of information, such as the total number of transactions, average transaction value, peak sales times, and the most popular products or services. You can also see customer demographics, payment methods used, and transaction locations. This data helps businesses better understand their customers' purchasing habits, identify trends, and spot opportunities for upselling or marketing.

Accept card payments with ease with takepayments

Taking card payments is a smart move for any small business. 

At takepayments, we make accepting card payments easy — from finding the right card machine to all-in-one POS systems. Our expert team is always available to help you at every step of the way, from ensuring you're compliant with legal requirements to keeping your payment terminals in top condition.

Contact us today to learn more about how we can help keep your business running smoothly.

Bryony Pearce

Copywriter