How to take payments

A female customer pays for her flowers in a florists using a card payment

Getting paid and taking payments is a crucial part of running a your own business; and offering a range of ways to pay can help you boost your revenue. Whether you are a freelancer, a retailer or run an ecommerce website, here's how to get paid

Getting paid is the name of the game for any small business or sole trader. Whether you charge for work by invoice, take payments online or have a retail outlet where customers pay in person, you need to make sure it is easy for customers to pay you. Having the right payment process also allows you to manage your accounts and keep on top of your cash flow.


If you are paid for work after you have completed it, it's vital to minimise any delays. Late payment is a huge problem for small businesses, but there are lots of ways to improve your chances of being paid on time:

  • Agree payment terms with your client in advance. Talk to your client about how they will pay and what the terms are right from the start.
  • Do a credit check. It's simple to find out if new clients have a good credit record using an agency like Experian or Equifax.
  • Send an invoice as soon as you can. This may sound obvious, but many busy business owners are slow to invoice or even forget to charge some clients because their invoice processes are inefficient.
  • Include all the necessary information on the invoice. Invoices can easily get overlooked if they don't have the right information. This includes PO numbers, reference numbers and also your bank details.
  • Provide a payment deadline. Under the Government's Late Payment Directive you can charge interest if payments are late, so make this clear on the invoice.
  • Provide customers with easy ways to pay. Individuals and businesses overwhelmingly favour electronic payment methods over cash (and cheque). For amounts of not more than £100 (increased from £45 in October 2021) you could accept contactless payments using a contactless-enabled terminal.
  • Don't be slow to send reminders. If emails don't work, get on the phone and chase payment as soon as it is due. If necessary, send a formal email or letter.

Any business can sign up to the Government's Prompt Payment Code to demonstrate its commitment to paying suppliers on time.

Taking card payments

Some small firms still don't take card payments; and yet shoppers increasingly use cards rather than cash (less than £1 in every £5 spent in UK shops in 2020 was cash).

Although card payments carry costs for the merchant, there's no doubt that you will get more business by accepting them - research shows that one in five shoppers have left a store because they didn't take cards.

The first step is to choose what's known as an "acquirer" who will provide a card payment terminal and set up a merchant service agreement with you. The terminal provides you with authorisation to take payment, so you know that the card being used is not lost or stolen and that your customer has enough money in their account to make the purchase.

An acquirer will want to know about your business (where it is located and what you sell) as well as details of the number and type of transactions you are likely to carry out. There are often special packages for small businesses.

Face-to-face card payments are known as 'card present' transactions. Online and over-the-phone transactions are known as card-not-present transactions. To guard against fraud when taking card-not-present payments, you can ask for the card's Card Security Code (CSC).

Accepting payment in person

Card-present transactions include: chip and pin; chip and signature; contactless; and magnetic stripe.

Contactless technology is a secure, quick and easy alternative to cash. It does not require a pin number to be entered; however, from time to time a chip and pin transaction will be requested in order to deter fraud.

Charges for taking credit and debit cards (known as interchange fees) vary. Credit cards are priced on a percentage of the value of the card transaction whereas debit cards are priced per transaction.

Each card scheme (such as Visa or MasterCard) will also have a different level of interchange fee for each of their card types.

If you want to give customers an itemised receipt before they pay the total, you may need an integrated point-of-sale terminal. Most retailers rent their terminal; the advantage of this is that it is serviced and updated by the provider.

If you need to provide a refund, you'll need to use the card that was used for the original transaction. Don't be tempted to offer cash or cheque refunds - this is a common way for fraudsters to get cash from a stolen card.

Your merchant card terminal can help you to keep a close eye on your daily sales activity. At an agreed time with your acquirer, you can print out the day's transactions which will show everything you've taken and any refunds you have given.

Online trading

If you run an ecommerce business, you'll need an internet merchant number and a secure payment page where customers can provide their card details. A Payment Service Provider (PSP) provides this service and usually charges both a set-up fee and a per-transaction fee.

As an additional security measure, you can use Verified by Visa or MasterCard SecureCode to ensure that transactions are not fraudulent. You can also offer other secure payment methods such as PayPal.

Make it clear on your website that you offer a secure payment process and protect customer data in order to encourage more people to buy from you online.

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