For many small businesses and start-ups, choosing the right card payment solution is a crucial early decision. The landscape can seem confusing, especially when comparing the low upfront costs of providers like Square with the more traditional, rental-based models offered by major industry players.

At Nexpay, we’re often asked: “At what point does it make sense to move from a simple, pay-as-you-go solution like Square to a major provider with a rental contract?” Here’s a straightforward, numbers-driven answer to help you make the right call.

Square v Major Providers

Let’s set the scene with a typical scenario:

– Square offers a card terminal for a one-off fee. After that, you pay a flat 1.75% on every transaction. There are no ongoing rental fees and no monthly minimums, making it a favourite for businesses just getting started or those with low turnover.

– Major providers offer card machine rental and PCI Compliance at £400 per year (on Average). Their transaction rates are much lower. However, the annual rental is a fixed cost, regardless of the volume of transactions processed.

At first glance, Square’s low entry cost is appealing, especially if you’re unsure how much card turnover your business will generate in its early days. However, as your business grows, those higher transaction fees begin to accumulate.

The Breakeven Calculation: Where Do the Costs Cross Over?

To work out when it’s the optimum time to switch, let’s compare the total costs for each option over one year.

Square card terminal fees:

– Terminal cost: £99 (one-off)
– Transaction fees: 1.75% of annual card turnover

So, the total annual cost for Square is:
£99 + (1.75% × turnover)

Major Provider:

– Terminal rental: £400 per year
– Transaction fees: 0.XX% of annual card turnover

So, the total annual cost for a major provider is:
£400 + (0.XX% × turnover)

Finding the Breakeven Point Square V The Traditonal Providers

Set the two total costs equal to each other to find the turnover where the major provider becomes cheaper:

£99 + 1.XX% × turnover = £400 + 0.XX% × turnover

In plain English:

With our rate schedules, once a business processes more than £23,150 per year in card transactions, the lower transaction rates offered by major providers begin to outweigh the higher rental cost. Below that threshold, Square is the more cost-effective choice. These calculations are based on Nexpay rates and should not be used as a general guideline for any provider.  Please request a formal breakdown of costs and a professional analysis of your business BEFORE switching to a new provider.

What Does This Mean for Small Businesses?

If your annual card turnover is under £23,150, Square’s simplicity, low upfront cost, and lack of rental fees make it a smart choice. You get predictable pricing and the flexibility to grow at your own pace—ideal for new businesses, market traders, pop-ups, or anyone with unpredictable sales volumes.

But as your business grows and your card turnover increases, the math changes. Once you cross the £23,150 mark in annual card transactions, the savings from lower transaction fees with Nexpay start to outweigh the £400 rental cost. At this point, it makes sense to review your payment solution and consider switching to a provider with lower rates—even if it means locking into a rental contract.

The Nexpay Approach

At Nexpay, we’re committed to providing honest, customer-first advice. We understand that for many micro-merchants and start-ups, it simply isn’t cost-effective for either us or them to spend hours negotiating rates or setting up complex contracts when turnover is low. That’s why we often recommend Square as a starting point for new businesses.

However, we also know that today’s small business could become tomorrow’s high-turnover enterprise. By helping you understand your breakeven point, we are acting as your trusted advisors, ready to provide proactive reviews and better deals as your business evolves.

What Should You Do Next?

– Under £23,150 turnover? Stick with Square or a similar platform, and focus on growing your business.
– Over £23,150 turnover? It’s time to review your rates—Nexpay can help you negotiate a better deal and manage the switch to a more cost-effective provider.

Final Thoughts

Choosing the right payment solution isn’t just about today’s costs—it’s about planning for the future. By understanding your breakeven point, you can make smarter decisions that support your business’s growth, keep costs down, and avoid getting locked into the wrong solution.

If you’re unsure where you stand or if your business is growing rapidly, reach out to Nexpay for a free, no-obligation review. We’ll help you crunch the numbers and find the best fit for your needs—now, and as you scale.

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Nexpay – Every Transaction Matters