App-based card readers did something genuinely useful. Before them, taking a card payment meant an acquiring relationship, a terminal lease and a wait, which was not a realistic ask for a market stall, a mobile hairdresser or a plumber. Now it means ordering a small piece of hardware and trading the same week.
That convenience is real, and this article is not an argument against it. It is an argument about when the arrangement stops fitting, because the reasons a reader is easy to start with are precisely the reasons it becomes awkward later. Both facts have the same cause.
How reader pricing actually works
An app-based reader is sold with a one-off hardware price and a flat percentage per transaction. No monthly fee, no contract, no minimum. One number, printed on the website, the same for everybody.
That single number is doing a great deal of work. The actual cost of a card payment varies enormously depending on what card is presented. A UK consumer debit card is cheap to accept. A commercial credit card is several times more expensive. A card issued outside the UK costs more again. Underneath any pricing model sits interchange, set by the schemes and paid to the customer's bank, and it is not the same from one transaction to the next.
A flat rate blends all of that into one figure. Which means it has to be priced for a mix, and a mix has to assume some proportion of the expensive cards. If your customers mostly tap consumer debit cards, you are paying a rate built to absorb premium credit and foreign cards you rarely see.
At low volume this genuinely does not matter. The difference between a good rate and a blended one, on four thousand pounds a month, is not worth an afternoon of anyone's time. At forty thousand pounds a month it is a salary.
Why sign-up takes minutes
The second thing worth understanding is what you are actually signing up to.
App-based readers run on aggregated processing. The provider holds the acquiring relationship, and you trade as a sub-merchant underneath it. You are not underwritten in the way a merchant is normally underwritten, because you are not the merchant of record. The provider is.
This is exactly why onboarding takes an afternoon rather than a fortnight. Underwriting has not been skipped, it has been deferred: rather than assessing you before you trade, the provider's risk systems watch the account afterwards. It is a reasonable model, and for most businesses it never surfaces.
The catch is what happens when it does surface. The enforcement tools available to a risk system watching an account after the fact are holds, reserves and freezes, because there is no relationship to renegotiate. For mainstream retail this is close to theoretical. For anything a risk policy treats as unusual, it is less a risk than a timeline.
Do you still need the hardware at all?
Increasingly, no. Modern phones can read a contactless card or a mobile wallet directly through their own NFC chip, so the phone becomes the terminal and there is no separate device to buy, charge or lose. Several providers now offer this, on both major mobile platforms.
It is worth being clear about what has and has not changed. The commercial model underneath is usually identical: the same aggregated processing, the same flat blended rate, the same deferred underwriting. What has gone is the hardware cost and the hardware itself, which is a real saving for a business taking payments occasionally, and a genuine convenience for anyone who works out of a van.
What you lose is a physical PIN pad, which still matters above contactless limits and for cards that fall back to chip and PIN, and a printed receipt, which some trades are simply expected to hand over. So it removes a purchase, not a decision. Everything below about volume, sector and payment shape applies exactly the same way, because the arrangement behind it has not changed.
The four ways businesses outgrow a reader
Growth is only one of them, and it is not the most common.
Volume. The arithmetic above, eventually. Once your monthly takings are large enough, per-category pricing quoted against your actual card mix beats a blended rate, and the gap widens with every month you leave it.
Sector. Aggregators publish prohibited and restricted lists, and they are broader than most people expect. Plenty of entirely legal businesses sit on them: anything with delivery far in the future, anything with high average transaction values, anything regulated. A business can trade happily for two years before a periodic review notices what its merchant category code actually says.
Payment shape. Readers are built for a customer standing in front of you. Deposits taken by phone, invoices settled remotely, recurring billing, subscriptions, payment links, multi-currency: each one is either unavailable or awkward. Businesses usually discover this not by outgrowing the reader but by winning a customer who wants to pay a different way.
Reconciliation. One flat rate is simple until finance needs to know what a payment actually cost, which cards drove the margin, or why last month's effective rate moved. Blended pricing is the most expensive line in many small businesses that nobody itemises, precisely because it arrives pre-blended.
Working out your own crossover point
This is arithmetic you can do in an afternoon, and it is worth more than any comparison table, including this one.
Export three months of transactions. Split them by card type: consumer debit, consumer credit, commercial, and anything issued outside the UK. Most reader dashboards will give you this, and if yours will not, that is itself informative.
Now take the total you paid in fees over that period and divide it by the total you processed. That is your effective rate, and it is the only number that compares cleanly between providers. Not the headline rate, not the rate quoted to a similar business, and not the rate you were paying when you started, because your card mix has almost certainly moved since.
Take that mix to a provider who will quote per category and ask them to price it. If the quoted structure does not beat your effective rate, stay where you are: the simplicity is worth real money and you should keep it. If it does, you now know exactly what the convenience is costing.
Be honest about the fixed costs on the other side too. A merchant account may carry a monthly fee, a gateway fee, and in some sectors a reserve. Those belong in the comparison. A provider who will not name them before you sign is not a provider you can compare.
What changes when you move
A dedicated merchant account inverts the trade you made at the start.
You are underwritten before you process rather than monitored afterwards, which takes longer and means the account is far harder to freeze on a whim, because somebody has already looked at your business and accepted it. You are the merchant of record. Pricing is quoted against your categories instead of blended across everyone's. And you get a named contact, which matters most on the day something goes wrong.
What you give up is the afternoon sign-up. That is the honest summary: readers optimise for starting, merchant accounts optimise for continuing, and the right answer changes as the business does.
What this comparison deliberately does not do
It names no brand fees. Reader pricing changes, promotional rates expire, and brand-by-brand tables published once and left up are worse than useless, because they are wrong in a way that reads as authoritative. Fees are published here only once verified against live pricing.
There are no affiliate links on this page, and none anywhere on this site. The comparison is type-level on purpose: what a category of product does well, where it stops fitting, and how to tell which side of that line you are on. If a reader is right for you, the useful outcome of reading this is that you keep it.