No monthly fee on a card machine, and the turnover that decides it

Two card machine quotes, one with a monthly charge and one without, and the one without is not automatically the cheaper deal.

The phrase no monthly fee is doing real work in this market, and it is worth being precise about what it covers. It is a statement about one part of the bill. There are parts of the bill it says nothing about, and there is a single number that tells you which side of the trade you belong on.

Why the phrase exists at all

This is not a marketing invention. It describes a genuine split in how card acceptance is sold in the UK.

When the Payment Systems Regulator ran its market review into card acquiring services, it set the difference out plainly. At paragraph 4.20 it records that some acquirers have a minimum monthly service charge, applying when what a merchant pays falls below a set level, and that acquirers also typically charge a monthly fee for PCI DSS compliance services and a monthly fixed fee for hiring a terminal. In the same paragraph it records that payment facilitators serving mainly face to face merchants do not have non transactional fees, so those merchants pay only when they accept a card transaction.

Two different shapes, both legitimate. The same report found, at paragraph 1.15, that this "makes it difficult for a merchant to compare prices for ISOs, acquirers and payment facilitators". Which of those two markets your turnover puts you in is a question we took apart separately.

The number that decides it

Most providers publish one side of the trade. SumUp publishes both, which makes the arithmetic easy to do honestly.

On its published pricing, the pay as you go plan charges 1.69 per cent per transaction and carries no monthly fixed cost. The Payments Plus plan charges 0.99 per cent per transaction plus £19 a month.

So £19 a month is buying a reduction of 0.70 percentage points. 1.69 minus 0.99 is 0.70. The turnover at which that £19 stops being a cost and starts being a saving is £19 divided by 0.0070, which is £2,714.29 of card takings a month.

Below roughly £2,714 a month, the plan with no monthly fee is the cheaper one. Above it, paying the monthly charge is cheaper, and the gap widens with every pound you take.

Run it on a site taking £10,000 a month on cards.

• 1.69 per cent of £10,000 is £169.00
• 0.99 per cent of £10,000 is £99.00, plus the £19 monthly charge, so £118.00
• The difference is £51.00 a month, which is £612.00 a year

Same provider, same reader, same transactions. The plan advertised as having no monthly fee costs that business £612 a year more.

What the phrase does not cover, part one: the software

No monthly fee describes the payment account. It does not describe the system you run the business on.

Square states on its pricing page that its free plan costs £0 a month, with no setup fees or monthly fees, and that you only pay when you take a payment, at 1.75 per cent for UK cards in person. The same page then prices the things a working venue tends to need: the Plus plan at £29 a month, a Kitchen Display System from £15 per device per month, Square Kiosk at £35 per device per month, Advanced Access from £20 a month per location, and Loyalty from £25 a month.

None of that contradicts the claim. The payments genuinely carry no monthly fee. The monthly money has moved to the software, where it is priced per device and per site, which is how an EPOS quote grows after you think you have agreed it.

What the phrase does not cover, part two: the charges that were never monthly

A charge that lands per transaction survives a no monthly fee claim completely intact, because it was never monthly in the first place.

On its card reader page, Zettle publishes 1.75 per cent on all cards and states there is no monthly fee and no hidden costs, with a reader from £29 excluding VAT and additional readers at £69 excluding VAT. There the percentage is the whole charge, which is clean and easy to compare. On a quoted account it usually is not, because an authorisation fee is counted per transaction rather than per month, and a per transaction charge behaves very differently depending on your average sale.

What we charge

Being straight about our own side of this, because an article about fee claims that goes quiet on its own fees is worth nothing.

We do charge an authorisation fee. It is priced per contract, and there are terms that are not published on this website. Ask for both in writing before you sign anything, with us or with anybody else.

We do not charge a PCI compliance fee, terminal rental or a subscription on the terminal. Hardware, installation and the upfront cost are free, which is a real saving and also the smallest number in most deals. Your rate depends on your turnover and your card mix, and we will quote it before you commit to anything.

What this does not fix

• A crossover figure taken from one provider's published plans is that provider's crossover. A different monthly charge and a different rate gap give a different number, and the only sum that matters is the one done on the two quotes actually in front of you.
• It does not tell you your rate. No published figure can, because a quoted rate depends on what you take and which cards you take it on.
• Published hardware prices exclude VAT. The monthly comparison does not change, but the number on the invoice will.
• It says nothing about what leaving looks like. That is a separate question and it needs a separate answer, in writing.

Three questions worth asking

Is there a card machine with no monthly fee? Yes, several, and for a low turnover business they are often the right answer. Zettle and Square both publish 1.75 per cent with no monthly fee on the payment account itself. The question is not whether the deal exists. It is whether your turnover makes it the cheaper one.

How much does a credit card machine cost per month? On a plan with no monthly fee, nothing fixed, and the whole cost is the percentage on whatever you take. On a plan with a monthly charge, SumUp publishes £19 a month for its Payments Plus plan. Acquirers more commonly build the monthly line out of a terminal hire charge and a PCI DSS compliance charge, both of which the Payment Systems Regulator describes at paragraph 4.20 of its market review.

What does a card reader cost for a small business? Zettle publishes a reader from £29 excluding VAT, with additional readers at £69 excluding VAT. Hardware is also the part of a deal most often given away, so the device price deserves to be the least important number in your comparison.

Do the sum on your own figures

You need two numbers from each quote: the monthly charge and the rate. Divide the monthly charge by the gap between the two rates, and you have the turnover where the two deals swap places. Check that against what you actually took last month, not against what you hope to take.

If you would rather not do it by hand, the savings calculator on our pricing page runs it against your own turnover.