Your business doesn’t need a payment terminal: how you can accept card payments on your phone

November 25, 2021

Just a few years ago, if you wanted to accept card payments, you would need to rent or purchase a payment terminal. Although a perfectly acceptable solution for many commercial environments, card terminals aren’t always the answer for small businesses.

Technology has enabled a whole range of digital payment systems to flourish. It has also improved the way businesses can accept all of these digital payments.

This article explores the drawbacks to card terminals, and why using a smartphone for phone payments is a great alternative for many businesses.

If you're a business looking to widen your accepted payments, Pomelo Pay will enable you to take over 25 payment methods. Contact us, to find out how we can help your business.

Table of contents

What are the drawbacks to using card reader terminals?

They can be costly

To use a POS payment terminal you will need to purchase one first, these range in price from £25 all the way up to £300. You will then need to pay monthly fees, merchant service costs and/or set-up fees to use your payment terminal.

Most payment terminal providers charge a transaction fee that hovers around 1.7-2%. However, some pricing structures can be quite complicated and you may need to pay a 3% payment processing fee if your transaction volume remains below a certain threshold.

Some companies will also charge an additional credit card processing fee of 10-30p. If you want to accept any specific payments such as American Express or PayPal you may need to pay higher fees. All of these costs can build up at the end of the month.

You’re restricted to certain payment methods

The way customers pay for products isn’t restricted to cash or credit cards anymore. Around 24% of UK customers use digital wallets. There’s also cryptocurrencies, buy now, pay later platforms and bank account transfer payments.

Each payment terminal company will have their own accepted forms of payment. This may not align with the payment methods that your customers like to use.

You may be tied into a contract

With some payment terminal service providers, you will need to sign-up to a contract, especially if you are renting an expensive machine. Although contracts are not as prevalent as they used to be.

They can have connectivity issues

You need a secure internet connection at all times when using a payment terminal. If network coverage is poor, glitches may occur or customers will have to wait for transactions to be completed.

They can be unwieldy

If your business doesn’t operate from one location and you frequently move around, you may not want to bring a payment terminal with you. Although some of the newest models are small in size, many are not built for easy transportation.

What are the alternatives to payment terminals?

Your business can always revert to just using cash, but this isn’t feasible considering over 13.7 million customers in the UK rarely use it. If you want to accept digital payments, take advantage of the latest technology and take payments on your smartphone.

How can I accept contactless payments on my phone?

Technology has enabled mobile phones to transform into virtual terminals to accept payments. This is achieved through two ways.

QR Codes

Quick Response (QR) codes are advanced barcodes that can store website links, information and payment links. QR code transactions are most popular in Asia, but their usage is increasing every year. Estimates say that QR code payments will reach $35 billion by 2030.

Smartphones simply need to scan a QR code and they will be sent to a secure payment gateway. Here the user can select their preferred payment method and pay for their purchase with a digital wallet, bank transfer or debit card.


Alternatively, smartphones can be turned into payment terminals through Software Point of Sale (SoftPOS) technology. Like QR codes SoftPOS requires no additional hardware and will allow a business to accept payments simply by downloading an app.

SoftPOS technology is relatively new and uptake is not widespread. There are also functionality limitations in that some SoftPOS solutions will only work with the newest smartphones that use Android operating systems.

What are the advantages of using my phone as a card reader?

Easy set-up

With a smartphone payment terminal you will spend significantly less time setting it up. There’s no need to set-up multiple terminals in store. All you will need to do is download the payment app and you can start accepting card payments.

Diverse payment methods

A smartphone payment terminal will be able to accept a more varied range of payment methods. From cryptocurrencies to bank transfers there are a number of different payment methods to attract every segment of your customer base.

Easy management

Naturally, your smartphone will provide you with all the data you need. You can investigate your most popular times, identify where improvements can be made and see what payment methods your customer use the most.

Hygienic payments

It looks like covid-19 will be with us for a few more years at least. Using a smartphone as a payment terminal will help you create a contactless environment that reduces the risk of disease transmission.

Is there an app to take card payments?

Yes, there are a number of apps which will enable you to take debit card payments and credit card payments on your phone. At Pomelo Pay we have been helping businesses use their smartphone to accept mobile payments since 2017.

Accept over 25+ payment options

Pomelo Pay has partnered with over 25 different payment companies. Customers can use all of their favourite payment companies including Klarna, MasterCard, Visa, Apple Pay, Google Pay, iDeal, WeChatPay, AliPay, BitPay and many more.

Pay only 1.49% per transaction

You won’t have to worry about any contracts or terminal purchases when using Pomelo Pay. The only fee you pay is a flat 1.49% transaction fee. This cost remains the same whether you process £100 a month or £10,000 a month.

Manage everything on one platform

The Pomelo Pay app is designed to make managing a business easy. If you run a business you may have a number of different sales channels. You can connect everything on one merchant account that will make management much easier.

How to accept card payments on my phone?

Once you have created an account with Pomelo Pay, all you need to do is download the app. You will be able to create a simple, secure and touch-free checkout experience without having to share your customer’s card number, card information or security code.

  1. You or your employee enters the transaction amount on the Pomelo Pay app.
  2. A unique QR code is generated which your customer scans by hovering their phone camera above the QR code.
  3. Once scanned, an online payment notification will pop-up on their phone screen.
  4. The cardholder can then enter their card details through their preferred payment method such as Apple Pay, Google Pay or MasterCard.
  5. The transaction is processed and an email receipt is sent to the customer.

Which businesses are smartphone card readers suitable for?


Smartphone card readers are great for restaurants and bars. Employees aren’t restricted to using one terminal to take payments. As long as they have a smartphone they can process orders which reduces cooking and ordering times.

Construction and trade

It may not be feasible to purchase a payment terminal if you only process card transactions a few times a week. You always have your smartphone with you and you won’t have to carry a terminal to every job you go to.

Pop-up shops and street vendors

If you manage a pop-up retail shop or street stall you’ll be in different locations on different days. It may not be feasible to carry a payment terminal, but with a smartphone phone reader, you’ll never be restricted in taking payments.

“People know how QR codes work now and I don’t need to explain it to my customers, and that’s why we are keeping it on the stand. It’s much easier compared to a card reader which we constantly would need to clean.” Tiziania, Heart Melts


Charities and non-profit organisations that run events on an ad hoc basis can take donations by smartphone. This saves the need to purchase a payment terminal which would otherwise get used just a handful of times.


For some transportation businesses like minicab services, you will have a large number of drivers to manage. Providing everyone with a payment terminal may not be cost-effective, so you can ask your drivers to use their smartphones to collect payments.

“It’s all in one hub rather than everyone having their individual card readers and it being all over the place. If I had 7 drivers using card readers, then I would have had to manage their account. With Pomelo Pay, it’s more streamlined. And then at the end of the month you get your statements and it is easier for your paperwork.” Amran, Sky Taxis

International Businesses

Should you have a diverse or international customer base then you may not want to restrict yourself to the payment methods that your terminal accepts. With a smartphone card reader you can accept cryptocurrencies, buy now, pay later platforms and digital wallets.

If you are a business owner looking for a digital alternative to a payment terminal, contact us at Pomelo Pay to find out what our smartphone payment solution can do for you. We are a certified Payment Card Industry Data Security Standard (PCI DSS) company.