A lady taps a card to pay for items at a bakery

Source: Getty Images

Small bakeries are often charged well above the market rate by their card payment providers, recent research has revealed.

Business managers are recommended to search for new deals, which could see them enjoy significant annual savings of more than £5,000.

A four-year review of the card acquiring market was conducted by the Payment System Regulator, an independent subsidiary of the Financial Conduct Authority. It revealed that 92% of small to medium business (SMB) merchants – such as bakeries, newsagents, restaurants, hairdressers, and plumbers – have been with the same payment provider for more than a year. Furthermore, two thirds (66%) said were not aware of the fees they were paying for the service.

Merchants noted they found it challenging to compare prices of providers, and had also been locked into lengthy contracts for card readers. The combination of prices hidden behind sales calls and the high costs of switching providers meant that SMBs were often left paying two to three times the market rate for their payments.

The regulator concluded that the market was “not working well” for the 1.1m SMBs accepting card payments in the UK and outlined a series of aggressive remedies to enact change, which are set to come into force on 6 July. These included ensuring providers are more transparent with their retail customers, encouraging businesses to shop around for deals, and capping contract lengths at 18 months.

A potential facilitator of the PSR’s vision for a fairer payments market is new price comparison platform Statement, which went live today (30 June) with £1.5m in pre-seed funding from global VC investor Northzone.

Statement CTO Olivia Stannah and CEO Ed Hardy  1896x2000

Source: Statement

Statement CTO Olivia Stannah and CEO Ed Hardy

Founded by Ed Hardy (formerly with Worldpay) and Olivia Stannah (ex Citymapper), the platform aims to enable merchants to compare and board to providers ‘in minutes, not days, resulting in meaningful savings’. At the same time, it will offer providers high quality, risk-scored leads that convert.

Since joining startup investment programme Entrepreneur First three months ago, Statement has built partnerships with card payment providers including Worldpay, Barclaycard, NatWest. It has also established partnerships with price comparison sites including uSwitch, Confused.com, and Money.co.uk.

“We’re really excited to see game-changing regulations hit the payments market,” said Hardy, Statement’s CEO, adding that they have spent the last six months engaging with small businesses across the UK.

“Over half of the bakeries we spoke to couldn’t understand their fees and 71% thought they could get a better deal. That’s not just bad for these bakeries – it’s bad for business confidence and bad for consumers,” Hardy noted.

“These changes are making the card payments market fairer with a direct pass down to businesses. A typical bakery could save over £5,000 a year by searching for a new deal, we’re making that process as easy as possible.”

Once businesses upload their most recent merchant statement to Statement’s online platform, its technology automatically pulls the required information to provide a tailored recommendation of payment providers. Merchants are shown a comparison tool, comparing key metrics that are most important to their business and spending needs such as settlement time, contract length, and monthly charges.