Merchant Facilities: How to Choose Without Overpaying
Written by Al Baker | Founder & Editor, The Penny Pincher - Last updated: the 13th of October 2026
Selling through your own website can look appealing when you’re watching marketplace fees eat into the money you make from each order. You get more control over how your products appear, but you also need a way for customers to pay you, which is where merchant facilities come in.
Choosing a suitable service means looking at what each sale will cost, how easily customers can complete their purchase and when the money will reach your bank account.
I’ve seen through my own work in e-commerce how changing the payment setup can affect sales, even when the fees initially look attractive. A customer who wants to buy something shouldn’t have to stop and work out whether they need another account before they can pay.
Before committing to a provider, it’s worth understanding what you’re buying and trying the checkout from your customer’s point of view.
What is a merchant facility?
Imagine you’ve set up a website selling handmade birthday cards, and someone wants to pay £12 for an order using their debit card. Your ordinary bank account doesn’t, by itself, provide the checkout that accepts their card details and processes that payment.
Merchant facilities is the broad term used for the services that let your business accept these payments, whether that’s through a website or a card reader at a market stall.
For online sales, you’ll also come across the terms payment gateway, payment processor and merchant account. The payment gateway passes payment details securely to the processor, while a merchant account receives funds from card payments before they’re paid into your business bank account. Some providers combine these services, so you don’t necessarily need to arrange and manage each part separately.
Compare the fees against what you actually sell
A small percentage difference can look unimportant until you apply it to a month’s orders, but the percentage isn’t always the whole charge. Payment fees can include a fixed amount for each transaction, separate gateway charges and monthly account costs. Ask for the complete payment-fee breakdown rather than comparing only the first rate advertised.
As an illustration, a fee of 1.5% plus 20p would cost you 35p on a £10 order, leaving £9.65 before your other expenses. On a £100 order, the same fee would be £1.70, leaving £98.30. These are example figures rather than a provider’s quote, but they show why someone selling low-priced cards needs to pay particular attention to the fixed charge on each sale.
For a useful merchant facility comparison, give each provider the same information about your expected monthly sales and average order value. If you’re already trading, use recent statements rather than guessing, and ask what you’d have paid for those transactions under the proposed deal.
Our guide to the costs of getting paid for a side hustle also explains how payment charges can reduce the money you keep.
Make sure the service fits your business
A payment setup for an occasional craft stall may be different from one for a website taking orders every day. Think about where you’ll sell, whether you need recurring payments and whether customers will be paying from overseas. Ask the provider to confirm that it supports those uses, rather than assuming every feature comes with the account.
If you’re comparing payment gateway uk services, Fasto Payments specialises in arranging payment solutions for businesses classed as higher risk. It works as a broker with acquiring partners, the businesses involved in accepting and settling card payments, rather than being a general recommendation for every new seller. Ask which company would handle your payments, what approval depends on and whether your business would face additional fees or money being held in reserve.
A reserve means some of your takings are held back, potentially to cover refunds or disputed payments, so that money isn’t immediately available to spend. For example, if you need the proceeds of this week’s orders to buy next week’s stock, a hold on those funds could cause a problem even if the processing rate looks reasonable. Get the payout schedule and any reserve conditions in writing before building your plans around that income.
Is setting up a merchant facility easy?
The amount of work depends on the provider, your business and the website you’re using. Before applying, ask what business and identity documents are needed, whether your products are eligible and what technical work is required. Don’t announce that your new shop is ready to take orders until the account is approved and you’ve tested the payment process.
If you need help finding a provider, Octopus offers a merchant-facility introduction service and advertises a free consultation. Ask what the introduction covers, which providers it considers and whether any charges apply beyond that initial discussion. Being introduced to a provider doesn’t guarantee approval or establish that its offer is the cheapest for your business.
It’s also worth finding out who you contact if something stops working. If you tend to receive orders at weekends, support that’s only available during weekday office hours may leave you waiting while customers struggle to pay. Ask who handles website problems, payment problems and account queries, because those jobs may sit with different companies.
Can’t I just use PayPal?
PayPal can be part of your payment setup, and some customers will prefer using it. It also offers guest checkout for card payments without a PayPal account, although that option isn’t available to every buyer or for every payment arrangement. The checkout you offer needs to make the available choices clear rather than leaving customers to guess.
When I originally wrote this guide, an e-commerce business I worked for had switched to PayPal to handle its transactions because the processing fees looked attractive. We then saw more failed transactions and heard from customers who were confused about whether they needed a PayPal account.
That was particularly awkward for business customers who simply wanted to pay with a company card.
We reintroduced a separate card-payment option, and failed transactions fell while sales improved. That experience made me much more careful about choosing a merchant facility and checking how the checkout works for customers. It was a lesson from that particular setup, rather than proof that every business needs a separate provider or that PayPal won’t work well for yours.
Check security, overseas payments and the contract
Before connecting a service to your shop, ask who handles customers’ card details and what security responsibilities remain with you. Have the provider explain any required checks or paperwork in ordinary language, including whether help with them costs extra. A reassuring-looking checkout or a promise of fraud screening shouldn’t replace understanding what you’re responsible for.
If you plan to sell abroad, ask which currencies customers can pay in and what will arrive in your own account. Accepting a payment in euros doesn’t necessarily mean you’ll receive euros, and conversion charges can affect what you keep. Make sure the quote covers overseas cards and currency conversion if those will form part of your sales.
Read the cancellation terms before signing, especially if the deal includes a separate card-reader rental agreement. The Payment Systems Regulator’s work on card-payment services identified price comparisons and lengthy equipment contracts as problems for businesses. Ask for the minimum term, notice period and any exit charges in writing, so you can see what switching later would involve.
Try the checkout before your customers do
Before launching, run through the checkout on your phone as well as your computer, following the provider’s testing instructions. Look for the point where you choose how to pay, whether an account appears compulsory and what happens when a payment fails. Check that the order confirmation reaches the right place and that you understand how to issue a refund.
Then ask someone who hasn’t helped build the website to try it, because they won’t already know where everything is. If they hesitate over a button or can’t work out how to pay by card, that’s something you can fix before a paying customer encounters it.
Take those findings back to the provider alongside your cost comparison before committing to the arrangement.
Frequently asked questions
What is a merchant facility?
A merchant facility is a service that lets a business accept card payments, online or in person. Depending on the provider, the payment gateway, processing and merchant-account services may be supplied together or arranged separately.
How do I compare merchant facilities?
Ask providers to calculate the total cost using the same monthly sales, average order value and payment types. Include regular charges, payout conditions and cancellation costs, rather than comparing only the percentage taken from each sale.
Do I need a separate merchant account for online payments?
Not necessarily, because some payment providers combine merchant-account services with their payment processing. Check what your chosen service includes before paying for another account or gateway.
Can customers pay through PayPal without an account?
PayPal offers guest checkout that can let customers pay by card without a PayPal account. Availability depends on the checkout setup and PayPal’s checks, so it isn’t guaranteed for every buyer or transaction.
