• Mary Mullally

What SMEs need to know about accepting electronic payments.

I sometimes hanker back to the time when payment for a product or service was simple and straight-forward, either cash or cheque.

When I started my ‘Time for You’ massage business almost 15 years ago now, cash or cheque was the most popular, in fact, probably the only payment method available.

The advent of electronic payments is certainly progress. They save time, and are very convenient for the client. But for the merchant (that’s you or me) running a small business, it takes time to set up.

You then have to maintain monthly records for the transaction fees depending on the payment system(s) you offer clients. More and more, I find that you need to offer varied and flexible payment methods in today’s busy, fast-paced business environment or risk losing the sale.

Would you believe that I actually accept payments for my two, small service and product-based businesses (with an e-commerce website) in 6 different ways?

  1. Cash

  2. Cheques

  3. EFTs directly into back account

  4. SumUp (for debit/credit card payments)

  5. Stripe (ditto)

  6. PayPal

I thought it would be good to explain what’s involved in setting up these payment systems and their pros and cons. And, more importantly the fees charged by the different providers, which can vary greatly and affect your margins. So here goes……

Cash: Well cash needs no explanation and is ALWAYS welcome!

Cheques: Welcome but you have to physically visit the bank but the Quick Lodge facility is very convenient. It is well worth having a look at your Quarterly Fee Advice from your bank, unless, of course, you are lucky enough to have an account where fees are waived, once you have a specified amount being lodged EVERY month. Depending on the type of account you have, fees vary from:

  • .35c (self-service) per cheque lodged to your account,

  • .39c (staff assisted) per cheque lodged to your account

  • .45c cash handling transaction fee per €100

  • .20c automated transaction fee for direct debits and credits

Believe me, it all adds up. The only advantage for you, as a sole trader, is that you can claim these fees as a business expense in your annual accounts.

Credit/Debit Card Payments: These really are now an essential service you have to offer clients. I use three service providers SumUp, Stripe and PayPal.

SumUp: The initial set up cost to purchase the Card Reader varies greatly (watch out for special offers) between €29 and €79, but there are no other costs involved - unless you go the bank route then you have monthly charges, I believe.) The Card Reader is a very convenient, small mobile unit that can be used anywhere, but you need a smartphone or tablet (iPhone or Android) internet connection, location finder and bluetooth. You receive a daily and monthly transaction record, via email, and funds are in your account within 24 hours.

SumUp fees are: 1.95% per transaction – and that’s it – no VAT or other charges.

Stripe: Has no set up costs or monthly fees; you just load the Stripe software package on your PC or mobile and take credit or debit card payments, in person, or over the phone. You do have to jump through a few hoops to prove ‘you are who you say you are’ and the legal owner of the business etc., for anti-money laundering reasons. But, once you’ve completed this process it’s plain sailing after that. Legally, card details should never be stored and destroyed after input.

Personally, I find Stripe extremely easy to use with minimal time involved in processing a payment. However, funds do not hit your account for almost a week. A disadvantage, perhaps, but I like to think of this positively as “money in the bank – almost”. Refunds, either full or partial, are easily handled, in my experience of using this system for the past 18 months.

Stripe fees are: 1.4% of the cost with a .25c charge per transaction, + VAT @ 23%

PayPal: And, then we have PayPal – unfortunately, a must for all small businesses as so many people have PayPal accounts and choose this extremely convenient payment method. However, the transaction fees paid by the merchant are much higher and do not warrant the advantage, in my opinion, of the money hitting your account instantly. Personally, I would prefer to pay a reduced fee and wait a few days for payment. Again, full or partial refunds are easily handled.

PayPal fees are: 3.4% of the cost with a .35c charge per transaction, no VAT charged.

After all those figures and percentages, I’m sure that you are somewhat confused so here’s what a €70 (gross) transaction fee with Sum Up, Stripe and PayPal will cost you:

  • Sumup: €1.37 you nett €68.63

  • Stripe: €1.51 “ €68.49

  • PayPal: €2.73 “ €67.27

This is not a comprehensive explanation of electronic payments or transaction fee costs from all service providers, simply my personal experience with a small selection. I hope that you find it useful and it may help you make a decision on what payment methods will work both for you, your clients and your bank account!

Put any questions you may have in the comment box or PM me – if I can answer them, I will be more than happy to. Mary – always here to help


Any questions?  Please contact me on 087 287 0555, or by email at mary@purepro.ie

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