What raising money against a PDQ machine involves
PDQ is the everyday British name for a card payment terminal, and businesses searching for a PDQ machine loan are almost always looking for one of two quite different things. The first is finance to acquire the machine itself. The second is funding raised on the strength of what the machine takes. This page is about the second, which is far and away the larger market.
The mechanism is a receivables purchase. A funder agrees to buy a fixed amount of your future card sales at a discount, pays you a lump sum today, and then takes an agreed percentage of every day's card takings until that amount has been delivered. Nothing is charged over the equipment, no monthly instalment is set, and the terminal itself is irrelevant to the funder except as the route through which its money arrives.
That is why the size of the advance tracks turnover rather than hardware value. A single countertop terminal taking £30,000 a month supports a far larger advance than three terminals taking £4,000 between them, even though the second business has more equipment. What is being valued is the flow of transactions, not the machines processing them.
The same logic extends beyond physical terminals. An ecommerce business processing through a payment gateway, a mobile trader on a portable reader, or a hospitality business running several tills all present the same thing to a funder: a settlement record showing money arriving from cardholders every day.
Why your acquirer statement is the underwriting file
Between the customer tapping a card and money reaching your bank account sits a merchant acquirer: the organisation that processes the transaction, holds your merchant identification number and settles the proceeds to you. Worldpay, Barclaycard, Lloyds Cardnet, Elavon, Dojo, SumUp, Square, Teya, Takepayments, Stripe and PayPal all perform this role in one form or another.
The statement that acquirer produces is the single most valuable document in this kind of funding, because it is a transaction-level record of trade that nobody can dress up. It shows gross takings by day, the number of transactions, average transaction value, refunds, chargebacks and the charges deducted before settlement. For a small trading business that is a truer account of performance than a set of annual accounts filed nine months after the year end.
Funders read four things in it. Volume, which sets the size of the advance at roughly one month of card turnover. Consistency, which sets confidence and therefore price. Seasonality, which sets the holdback percentage the business can actually carry through a quiet period. And transaction shape, because a business built on many small transactions is more predictable than one built on a few large ones, where losing a single customer moves the whole month.
One practical consequence is worth acting on. If your card volume is split across two terminals with different acquirers, or between a terminal and an online gateway, a funder may see two or three modest merchants rather than one substantial one, and size accordingly. Bringing the volume together, or at least presenting every statement so the full picture is visible, frequently increases the offer. The complete qualifying picture is on our merchant cash advance eligibility page.
The two ways collection is actually taken
Funders recover their money in one of two ways, and which one applies to your agreement changes both the paperwork and how it feels day to day.
The first is a split taken at the acquirer. Your card processor is instructed to divert the agreed percentage of each day's settlement to the funder before the balance reaches your bank account. You never see the money, so there is nothing to forget and nothing to bounce. This is the arrangement most acquirer-embedded programmes use, and it is the cleanest mechanically. Its drawback is that it requires the acquirer's cooperation, which is what creates the practical tie described below.
The second is a daily debit from your business bank account, calculated against the previous day's card takings. Settlement arrives from your acquirer in full and the funder collects separately. This works with any acquirer, which is why independent funders often prefer it, and it keeps your card processing arrangements untouched. It does mean the money passes through your account, so the account needs to hold enough to meet each collection.
A third variant appears occasionally: a fixed daily amount rather than a percentage, adjusted periodically against actual takings. It behaves more like a loan repayment and loses much of the flexibility that makes this product suit seasonal trades. If a business has a genuinely uneven trading year, a true percentage split is usually the better structure, and it is worth asking which one you are being offered. Our guide on how a merchant cash advance works follows the money through the full sequence.
Terminal providers that run their own funding programmes
Because acquirers hold the data, most of them now put funding in front of their own merchants. If you take card payments, an offer has probably already appeared in your portal.
- Bank-owned acquirers. Barclaycard and Lloyds Cardnet offer advances to their merchant customers, usually with the split taken at source.
- Independent acquirers and terminal providers. Worldpay, Dojo, SumUp, Square, Teya and Takepayments all serve large numbers of small businesses and variously offer funding alongside processing.
- Online payment platforms. Stripe Capital and PayPal Working Capital apply the same model to gateway settlement data rather than terminal takings.
These offers are convenient and often fast, because the provider already holds everything it needs to decide. Two things are worth checking before accepting one. The offer is sized only against the volume passing through that provider, so a business splitting card takings elsewhere may be offered less than its true turnover supports. And the balance sheet behind an acquirer-branded programme is frequently a specialist funder operating white-labelled, which means the terms are not automatically different from what the independent market would offer directly.
Treat an embedded offer as one quote rather than the answer. Holding it against the independent panel takes little effort and regularly changes the outcome; the funders involved are set out on our merchant cash advance lenders page.
Switching card provider while an agreement is running
This is the issue that catches businesses out, and it is specific to funding taken against a terminal.
Where collection is a split taken at the acquirer, the funder's recovery depends on that acquirer continuing to process your sales. Agreements therefore contain provisions restricting a move: consent may be required, notice may be demanded, or diverting card volume to another provider may trigger a default. The practical effect is a tie to your current card processor for the life of the advance, which can be twelve to eighteen months.
That matters because card processing charges vary considerably, and a business paying above the market rate may find that switching would save more each year than it expected. Taking an advance collected at source can put that saving out of reach for the duration. Where you already know a switch is likely, the daily debit structure keeps the option open, since it collects from your bank account and does not care who processes the cards.
Two more points deserve a look before you sign. Adding a second terminal or an online checkout with a different provider can breach a covenant about not diverting card takings, even where the intention is entirely innocent, so check what the agreement defines as card takings and whether it captures new channels. And if you are planning to sell the business, funding agreements commonly restrict a sale or change of control without consent, which is a conversation to have early rather than during a transaction.
Buying a card machine is a different transaction
Because the vocabulary overlaps, it is worth separating the three arrangements a business might be looking at when it searches for card machine finance.
Acquiring the terminal itself is normally handled through the provider: a monthly rental as part of a processing contract, an outright purchase for a modest sum, or occasionally a lease. Countertop and portable terminals are inexpensive relative to most business equipment, and mobile readers cost very little, so this is rarely a financing question at all. If it is, asset finance rather than an advance is the right instrument, because the term should match the life of the equipment.
Funding against the takings is the subject of this page: a lump sum bought against future card sales, priced with a factor rate and collected as a daily percentage. It is used for stock, refits, equipment, tax bills and working capital, and the terminal plays no part beyond generating the receipts. You can model what that costs with a cash advance calculator before deciding whether it fits.
The third arrangement is the processing contract itself, which governs the charges deducted from every transaction. It is a cost question rather than a funding question, but it is the one with the longest-running effect on a business taking card payments, and it deserves reviewing on its own terms rather than as part of a funding decision.
The legal shape: receivables purchase, not equipment finance
Nothing here is a loan and nothing here is secured on the machine. A funder buys a defined amount of your future card sales at a discount and recovers it as those sales occur, which is why the agreement refers to a purchase price and a purchased amount rather than principal, interest and a term. If the takings never materialise because the business genuinely stops trading, the commercial risk of that sits with the funder, subject to whatever covenants the agreement contains.
Where the business is a limited company, the arrangement is unregulated commercial finance and falls outside the Financial Conduct Authority's consumer credit perimeter. There are no Consumer Credit Act rights, no statutory cooling-off period and no automatic route to the Financial Ombudsman Service. Your protection is contractual, so the definitions of card takings and the provisions on switching provider, adding channels and selling the business carry real weight.
Sole traders and small partnerships sit differently, because those agreements can in some circumstances fall within the Consumer Credit Act, and the analysis depends on how the agreement is drafted; that is covered on our sole trader cash advance page. Businesses in retail and hospitality make up most of this market, and the same mechanics apply whether the takings come from a countertop terminal, a handheld device or an online checkout. We are an arranger and introducer, not a lender, and we are not authorised by the Financial Conduct Authority.
How we structure it
The first thing we do on a terminal funding case is map where the card volume actually goes. A surprising number of businesses process through more than one provider without thinking about it: a main terminal from one acquirer, a handheld added later from another, an online checkout on a third. Presented piecemeal, that looks like three small merchants and produces three small offers. Presented together, with every statement in the file and the relationship between them explained, it produces one offer sized against the real turnover.
The second is choosing the collection mechanism deliberately rather than accepting whatever the funder proposes. If a client is paying too much for card processing and is likely to switch within the year, we steer toward a daily debit structure so the advance does not lock them into an expensive contract. If the trade is highly seasonal, we push for a true percentage split rather than a fixed daily amount, because a fixed collection removes the flexibility that makes this product worth having.
The third is reading the covenants properly before anything is signed. Restrictions on changing acquirer, on adding a new payment channel and on selling the business are where terminal-linked funding causes problems months later, and they are far easier to negotiate before completion than to unpick afterwards. Matt Lenzie handles each case personally and will say plainly when a business would be better off fixing its processing charges than raising money against them.
Related
- Merchant cash advance lenders: who funds UK card-taking businesses
- Merchant cash advance requirements: what UK funders ask for
- A small business merchant cash advance, arranged against your card takings
- Merchant cash advance for sole traders and small partnerships
- Shop funding from counter takings
- How does a merchant cash advance work?