What is a bureau service?
A bureau service basically provides a relatively simple entry into
e-commerce payments. It does not require a direct arrangement with a
bank as the bureau company allows you to share their merchant account.
The largest bureau provider in the UK is WorldPay. Others include
PayPal and Nochex.
Pros
The setup procedure is fairly straightforward and quick.
Cons
The
rates can be significantly higher than a merchant account, up to as
much as 4.5%. Settlement times may be lengthy and the bureau provider
may hold on to a rolling reserve. You have very little control over the
look of your checkout pages.
Merchant Account
This is a direct contract with a bank that allows a business to
accept all major credit and debit cards. All the major UK banks offer
merchant accounts.
Pros
Rates will be much
lower, typically 2.5% - 3% for a new business and under 2% for an
established one. Settlement times will also be more favourable. The
appearance to the consumer is more professional as your company name
will appear on their card statement. The payment gateway will also
allow you to customise the design of all your secure checkout pages.
Cons
The
application procedure is more thorough. You will need a payment gateway
to handle secure online payments to your merchant account. This is
where we can help with our UPG payment gateway service.
Which should I choose?
Basically if your annual card turnover is more than £20,000 then you
should seriously consider setting up a proper merchant account as the
savings can be significant.
Example
A merchant conducts £50,000 worth of online sales in a year, with average transaction value £50.
Bureau service
£50,000 x 4.5% = £2,250 transaction fees + up to £360 in annual fees.
Total annual cost £2,610.
Merchant account
£50,000
x 2.5% = £1,250 transaction fees + payment gateway fees £99 per annum +
transaction credits £149 (1000 transaction credits).
Total annual cost £1,498
Annual saving by using merchant account is £1,112.
