Card processing has become more competitive and streamlined than ever meaning that you can accept credit card payments without a merchant account. But you need to make sure you select the right provider for this purpose, as well as your business needs. Here are 5 credit card payment processing options that you can use to avoid the need to set up a merchant account.

Traditional Credit Card Payment Processing

Traditional credit card payment processing was time consuming to set up, with banks treating the facility like a form of high risk credit.  This meant the business as well as in certain cases the business owners needing to pass credit and KYC (know your customer) checks.

Under traditional credit card payment processing a business needed to open its own payment gateway (which processes the credit cards) as well as a merchant account. A merchant account is a special type of bank account which collects money from the payment gateway, holds it for a few days and then transfers that money to the business current account as cleared funds for spending.

Each step in the chain was subject to its own set of PCI compliance and checks, meaning businesses were dealing with different with several different organisations once they decided to accept credit card payments.

Accept Credit Card Payments Without a Merchant Account
Traditional Credit Card Payment Processing

How Modern Card Processing Systems Work

Card Processing has evolved and new companies have entered the market offering an end to end solution. It means you can now accept payments without needing to open up a merchant account using a card reader and an app.

The card payment process itself still works the same but new card processing companies now act as your payment gateway and merchant account so the transaction is seamless. In effect the customer pays and the funds are deposited into your business bank account rather than coming to you via a merchant account.

How to Accept Credit Card Payments Without a Merchant Account

Here are 5 UK providers who currently allow you to accept credit card payments without a merchant account (there are others available with more popping up on a regular basis).  The one you choose will depend on your business needs:

Square

Square is a US based company who have now entered into the UK market, with a lot of success.  They offer wide range of ways to accept credit card payments without a merchant account, making it quite appealing to small but growing businesses.  With a range of marketplace apps, it means Square could be a single solution to taking payments online, in store and on the move.

Who’s It For: Square is a great all round payment solution offering –

  • Mobile Payment Processing
  • E-commerce integration with WooCommerce, Wix and GoDaddy
  • Virtual Terminal Processing
  • Invoice Payments

Cost: The card reader starts at £39 plus VAT where card transactions will cost you 1.75% and virtual terminal/invoices payments/ecommerce costing 2.5%.  There are no other monthly charges.

Funds Transferred: Daily

What’s good about it:

  • Super quick set up;
  • Daily funds transfer is great for cashflow;
  • 30 day money back guarantee;
  • iPad app and stand available giving you a bricks and mortar solution in addition to your mobile payments, saving you the hassle of opening up different solutions;
  • A powerful dashboard that tracks your inventory, time worked by your employees, customers and offers detailed sales analysis (some features carry additional costs);
  • Customers can save their card on file;
  • The square printer means you can offer printed receipts to your customer, as well sending them by email or text;
  • An app marketplace meaning direct integration with things like Etsy, Xero and Woocommerce;
  • A solution with which you can start small but that can grow with your business.

Learn more: Visit the Square website

Sum Up

SumUp is a mobile payment processing provider, with added options to set up a bricks and mortar terminal.  It does not offer the same app marketplace as Square or the ability to connect your online store but it is still an extremely good option for micro businesses looking to accept credit card payments without a merchant account.  However the entry cost is low and with a competitive flat fee charge per transaction, it is a very popular option in the UK.

Who’s It For: SumUp offers a card reader which you can use on the go that connect by bluetooth with your mobile phone and tablet.

Cost: The SumUp card reader has been reduced to £19 plus VAT and every transaction you put through costs you a flat fee of 1.69%.  You can accept contactless, chip and pin as well as android/apply pay via the reader.

Funds Transferred: 2 – 3 days to reach your bank account

What’s good about it:

  • Card reader is one of the cheapest available and is delivered within 3 – 5 days;
  • 30 day money back guarantee;
  • iPad app and stand gives you a point of sale solution in addition to your mobile payments, great it you move about at trade shows or markets;
  • The SumUp printer means you can offer printed receipts to your customers, as well sending them out by email or text;
  • A simple cost effective solution that gets you up and running quickly, without any contracts.

Learn more: Visit the SumUp website

iZettle

accept credit card payments with a merchant account

iZettle, similar to SumUp and Square is a credit card payment processing provider, offering mobile payments, a point of sales terminal solution and more recently it own e-commerce platform.  Its certainly evolving. iZettle was probably one of the very first companies to offer the service of accepting credit card payments without a merchant account.

Who’s It For: iZettle offers a card reader solution, perfect if you just want to accept mobile payments.  But it also gives point of sale functionality, printed receipts and easy invoicing on the go.

Cost: The izettle card reader starts at £29 plus VAT where card transactions will cost you 1.75% and virtual terminal/invoices payments costing 2.5%.  There are no other monthly charges.  However if you do want to sell in store and online you will need to pay an additional monthly subscription of £29 plus VAT, so you may need to consider this depending on your business plans.

Funds Transferred: 1 – 2 days to reach your bank account

What’s good about it:

  • Stock management abilities;
  • The iZettle printer means you can offer printed receipts to your customers, as well sending them out by email or text;
  • Integration with Xero to help with your bookkeeping & accounting.

Learn more: Visit the iZettle website

Paypal

Paypal is known worldwide and offers a full online payment solution for your website, mobile payments and invoicing needs.

Cost: The paypal card reader is the dearest of all at £45 plus VAT.  It pricing for transactions then works on a tiered basis which is different for web, invoice and mobile.

  • Mobile payments start at 2.75%
  • Website payments start at 3.4% + 20p
  • Invoice payment 3.4% + 20p

Funds Transferred: Fund are immediately available in your Paypal account ready for you to transfer to your business account.

What’s good about it:

  • International reputation;
  • Integration with many well known shopping carts such as Woocommerce (although those may carry additional charges)
  • Integration with Xero to help with your bookkeeping & accounting.

Learn more: Visit the Paypal website

Stripe

Stripe does not offer a mobile payments reader but it is a payment solution if you are searching for a way to accept credit card payment without a merchant account on your website.

Cost: Stripe is free to set up although it works with a wide number of shopping cart providers, there may be a cost to attach to using these plugins. Stripe off a simple pay as you go fee structure for the payments it processes:

  • 1.4% + 20p for European Cards
  • 2.9% + 20p for Non European Cards

Funds Transferred: weekly

What’s good about it:

  • Simple dashboard which is easy to navigate along with basic analytics;
  • Supports Apple pay;
  • Integration with Xero invoicing, where invoices are automatically marked as paid on the sales ledger (Xero comes with an additional monthly cost).

Learn more: Visit the Stripe website

Anita is a Chartered Accountant, turned blogger and creator of the ever popular free Go Self Employed Email Mini Course, which has been completed by hundreds of attendees all over the UK. Using her 10 years experience in accounting, tax and operations for Small Businesses, Anita is on a mission to make finance simple for the self employed, so they can stop stressing about tax & finances and focus on building profitable businesses which will give them the lifestyle they dream of.