Electronic payment system pricing

Summary A detailed look at the costs of electronic payment systems These costs involve: Set up cost, annual cost, monthly, PSP, transaction charge, bond. Be aware of hidden costs.

Electronic Payment Systems have some common pricing structures and many unique charging elements. Initially, it pays to examine the various set-up fees for each product and any monthly or annual administration charges they have. You can examine these structures in detail by registering to use the comparison tool. You will find that the product information sheets that are accessible from the tool results pages (either by clicking the graph bars or the hyperlinks on the results tables) will give you detailed cost calculation information on all the solution providers.

Then you need to explore the cost per transaction. Does the provider charge a percentage on each transaction (this could be very expensive if you sell high value items) or is it a flat fee? Switch tends to carry a fixed price of around £0.45 per transaction but credit cards can carry percentage charges ranging from a very low 1.79% to a more costly 8 or 9%!

The specific costs of a product will depend on the business’ average transaction value, transaction frequency, perceived security risk, exposure level, online turnover and how long the company has been trading. The following pages focus on these variables. One last variable to consider is the time the funds from your sales take to be cleared into your bank account (see next section).

Main costs are listed below but are not relevant to all products (although the diagnostic tool will work this out for you):

• Setup Cost: ranges between £50 and £250, if applicable £120 is the average.
• Annual Cost: normally around £150 but often not applicable.
• Monthly: The most standard charge especially from acquiring banks, around £10-25.
• PSP: Can be a commission of as little as 1% but often about £10 per month or 3-4%.
• Transaction Charge: 2.79% for an established business but up to 4-5% otherwise.
• Bond: dependant on exposure level but is often negotiated down.

Example Costs

	Set-up	Recurring Costs	Charges
Generic Acquiring †	£200	£10	2 - 3.35% per credit card transaction £0.25 - £0.35 per debit card transaction
NetBanx PSP ±	£75	£10	from 4% to 1% per transaction
Worldpay‡	£200	£360 (annual)	4.5% credit cards, £0.50 debit cards

† Acquiring (needs PSP), ‡ Bureau, ± PSP (needs Acquiring)

The good news is... The free online and Electronic payments diagnostic tool will calculate the likely cost of some of the market leading UK payment solutions for you. The tool also links to specific cost product information sheets for each payment option and their various application procedures.

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