What Is a PDQ Machine and How Do Card Payments Work?
Brandon Conway
Business Development Executive · Nov 3, 2024 · 6 min read
PDQ stands for Process Data Quickly. In practice, a PDQ machine is the card terminal used by businesses to accept debit and credit card payments from customers. The term is sometimes used interchangeably with card terminal, card reader, and point-of-sale (POS) terminal, though there are distinctions between these. Understanding how card payments work, what PDQ machines cost, and how card processing history affects your access to business finance is useful for any UK business that accepts card payments.
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How card authorisation works
When a customer taps, inserts, or swipes their card on a PDQ machine, the terminal reads the card data and sends an authorisation request to the business's payment service provider (PSP) or acquiring bank. The PSP passes the request to the card scheme (Visa, Mastercard, or Amex) which routes it to the cardholder's issuing bank. The issuing bank checks whether the cardholder has sufficient funds or credit and whether the transaction passes its fraud checks, then sends an authorisation code back through the same chain.
This entire process takes between one and three seconds in most cases. The card scheme (Visa or Mastercard) charges the issuing bank an interchange fee for processing the transaction. The acquiring bank or PSP charges the merchant a merchant service charge, typically expressed as a percentage of the transaction value. The difference between what the merchant pays and what the issuing bank retains after paying interchange is the PSP's margin.
PDQ vs POS vs card terminal: the distinctions
A PDQ machine is specifically the card-reading hardware. A POS (point-of-sale) system is broader: it includes the PDQ machine plus the software that manages inventory, receipts, reporting, and often staff management. A simple PDQ machine from a provider like SumUp or iZettle requires no POS software; it connects to a smartphone app and processes payments standalone. A full POS system integrates card processing with stock management, customer accounts, and business reporting.
Card readers are a subset of PDQ machines: the small portable devices that connect via Bluetooth to a smartphone and are typically used by sole traders, market stall vendors, and mobile service providers. These differ from countertop PDQ machines (used at fixed tills in retail and hospitality) and portable PDQ machines (used tableside in restaurants or for deliveries). All accept chip and PIN, contactless, and often mobile wallet payments.
"Your PDQ machine does more than take payments. Every month of card processing history builds your eligibility for merchant cash advance, often the fastest and most accessible form of business finance for card-taking SMEs."
- Brandon Conway, Business Development Executive
Costs: rental vs purchase, transaction fees
PDQ machines are available through a rental model (from the acquiring bank or PSP, typically £15 to £40 per month per terminal plus transaction fees) or as outright purchases (particularly the smaller card reader format, from around £29 to £99 for basic models). Outright purchase models typically offer lower transaction fees (0.75% to 1.75% per transaction for card reader providers) but no ongoing support contract.
For higher-volume businesses, the acquiring bank model (where you rent terminals and sign a merchant services agreement) often produces lower effective costs at scale. Transaction fees from acquiring banks can be negotiated down significantly for businesses processing above £500,000 per year in card turnover. At lower volumes, card reader providers (SumUp, iZettle, Square) are often more cost-effective because their rates are transparent and there are no monthly rental fees.
PDQ machines and merchant cash advance
Merchant cash advance (MCA) is a form of business finance that is directly linked to your card payment history. A lender advances a lump sum to your business, which is repaid as a fixed percentage of your daily card takings. Because repayment is tied to card revenue, lenders underwrite MCAs based on your PDQ processing history rather than traditional credit metrics. Typically six to twelve months of card processing statements are required.
This makes the MCA particularly accessible for hospitality, retail, and service businesses with high card payment volumes but potentially patchy credit histories or short trading histories. A business processing £20,000 per month through its PDQ machines can typically access an MCA of £20,000 to £40,000 within 24 to 48 hours of application. The cost is expressed as a factor rate (typically 1.15 to 1.45 of the advance), meaning a £20,000 advance at a 1.25 factor rate results in a total repayment of £25,000.
Frequently Asked Questions
Do I need a PDQ machine to accept contactless payments?
Yes. Contactless payments including mobile wallets such as Apple Pay and Google Pay require a contactless-enabled PDQ machine or card reader. Most modern terminals are contactless-enabled as standard. Older terminals may require a software update or hardware replacement from your provider.
Can I switch PDQ providers mid-contract?
Switching before the end of a merchant services agreement typically incurs early termination fees, which vary by provider and remaining contract length. Before switching, request a copy of your current agreement and calculate the termination cost against the savings from the new provider. Some PSPs offer to cover termination fees as part of a switch incentive.
The bottom line
If your business takes card payments and you want to understand your merchant cash advance options, Spark Finance can assess your eligibility and identify the most competitive offers on the market. Start at apply.sparkfinance.co.uk.
Check your eligibilityAbout the author
Brandon Conway
Business Development Executive
Brandon is a Business Development Executive at Spark Finance with extensive experience placing asset finance and business loans for UK SMEs. He works closely with businesses that have been declined by high street banks, finding specialist lenders suited to adverse credit and complex trading profiles.
