Starting a shop: what payments cost in year one

The line you underestimate

New shop budgets are usually careful about rent and casual about payments. A shop taking $8,000 a month on cards at an effective 2.6% pays about $2,500 in the first year. At 1.6% with no fixed costs it pays about $1,540. The difference is a month’s rent in a lot of towns.

What the first year usually looks like

Takings are low and lumpy, which is exactly the shape that a monthly fee punishes. A $25 monthly charge is nothing at $30,000 a month and is 3% of takings at $800. Start on something that costs nothing when you are quiet.

The two things not to sign

A terminal lease. Three to five years, non-cancellable, and separate from the payment account, so changing provider does not end it. A reader you buy outright costs less than a year of the lease.

A minimum term on the payment account. If the provider is confident about its pricing it does not need to lock you in. If it is not confident, you have learned something.

What to set up on day one

An account that pays out daily rather than weekly, because cash flow in a first year is a weekly problem that becomes a daily one. A clear split between the business account and your own. And the takings report going to your bookkeeper automatically, before there is enough of it to be a job.

What to revisit at month six

By then you know your real average sale, your card mix and your busiest hours. That is the point to work out your effective rate and decide whether the lower band on a paid plan is worth it. Before month six you are guessing.

The short version

Pay nothing fixed while you are small. Buy the kit rather than leasing it. Refuse anything with a term. Then look again when you have six months of real numbers.