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This card processing fees glossary explains every term UK business owners are likely to see on a merchant statement, in a payment provider contract, or when comparing quotes, using plain English rather than payment industry jargon. From "interchange" to "chargeback" to "PCI DSS", each entry below tells you what the term means, why it matters, and how it affects what you pay. Bookmark this page as a reference for the rest of our Card Processing Fees guide and for reviewing your own paperwork.
Key Takeaways
- Card processing statements typically combine three fee layers: interchange, scheme fees, and the acquirer or provider markup - understanding each helps you spot overcharging.
- Terms like "blended rate", "interchange-plus", and "tiered pricing" describe how your provider structures charges, not just what you pay - the structure matters as much as the headline rate.
- Hidden or poorly explained fees (PCI non-compliance fees, minimum monthly service charges, authorisation fees) often add more to a bill than the headline transaction rate.
- Since Strong Customer Authentication (SCA) became mandatory under PSD2, terms like 3D Secure and liability shift appear more often on UK statements.
- Knowing the correct terminology strengthens your negotiating position when querying a statement or comparing providers.
- Most UK merchants pay between 0.3% and 2.75% per transaction depending on card type, business sector, and pricing model - this glossary explains why that range is so wide.
Why a Card Processing Glossary Matters for UK Businesses
Card processing statements are notoriously difficult to read, partly because providers use technical language that means little to non-specialists, and partly because the underlying system - card networks, acquiring banks, and payment providers - involves several parties each taking a cut. Understanding the terminology is the first step towards spotting overcharging, negotiating better rates, and comparing quotes on a like-for-like basis. This glossary is organised alphabetically so you can look up a specific term quickly, whether you found it on a statement, in a sales call, or in a contract you are about to sign.
A
Acquirer (Acquiring Bank)
The bank or financial institution that processes card payments on behalf of your business. Your payment provider is either an acquirer itself (as with Barclaycard or Elavon) or works in partnership with one on your behalf. The acquirer receives funds from the card networks, deducts its fees, and settles the remainder into your business bank account, usually within one to three working days.
Authorisation Fee
A small flat fee charged every time a card is authorised, whether or not the transaction ultimately completes. Authorisation fees typically range from 1p to 5p per transaction and can add up significantly for businesses processing high volumes of low-value sales. See our dedicated guide on authorisation, scheme and minimum fees for a full breakdown.
American Express (Amex)
A card scheme that, unlike Visa and Mastercard, often acts as its own acquirer. Amex transactions typically carry higher fees for merchants (often 1.5% to 3.5%) than Visa or Mastercard, which is why some smaller UK businesses choose not to accept it.
B
Blended Rate (Flat Rate Pricing)
A single, all-inclusive percentage rate charged on every card transaction regardless of the card type used. Providers like Square and SumUp typically offer blended rates because they simplify pricing, but they usually cost more overall than interchange-plus pricing for businesses with higher turnover.
BIN (Bank Identification Number)
The first six to eight digits of a card number, which identify the issuing bank and card type. Payment systems use the BIN to route transactions correctly and to determine which interchange rate applies.
Batch Settlement
The process by which a day's card transactions are grouped together and sent to the acquirer for processing, usually at the close of business. Timing of batch settlement can affect how quickly funds reach your business bank account.
C
Card Not Present (CNP)
Any transaction where the physical card is not presented at the point of sale, such as online, phone, or mail order payments. CNP transactions generally carry higher processing fees than card-present transactions because they carry greater fraud risk.
Chargeback
A reversal of a card payment initiated by the cardholder's bank, often due to a dispute, fraud, or non-delivery of goods. Chargebacks typically incur an administration fee from your acquirer (often £15 to £25) regardless of the outcome, on top of the refunded transaction value.
Chip and PIN
The standard UK method of card-present authentication, requiring the customer to insert their card and enter a PIN. It remains one of the lowest-risk (and therefore lowest-cost) transaction types for merchants.
Contactless
Card or mobile wallet payments made by tapping rather than inserting a card. The UK contactless limit is £100 per transaction as of 2024, and contactless now accounts for the majority of in-person card payments in the UK.
D
Debit Card Interchange Fee
The fee paid to the card-issuing bank on every transaction, which is typically lower for debit cards than for credit cards. UK-regulated interchange caps are 0.2% for consumer debit cards and 0.3% for consumer credit cards under the EU/UK Interchange Fee Regulation. For a full comparison, see Debit vs Credit Card Fees UK.
Discount Rate
An older term, still used by some acquirers, describing the overall percentage fee deducted from each transaction before funds are settled to the merchant.
Dynamic Currency Conversion (DCC)
A service that allows overseas cardholders to pay in their home currency rather than GBP. DCC can generate additional revenue for merchants but often comes with its own fee structure and requires customer consent.
E
Early Termination Fee
A charge levied by a provider if a merchant ends a contract before the agreed minimum term expires. These fees can range from a flat charge of £50-£100 to the equivalent of several months' minimum service charges - see our detailed guide on early termination fees for real contract examples.
EMV
The global standard for chip-based card payments (named after its founders, Europay, Mastercard and Visa). EMV compliance reduces fraud liability for merchants using compliant terminals.
F
Fixed Fee (Per-Transaction Fee)
A flat amount charged on top of, or instead of, a percentage rate for each transaction processed. Common in tiered and interchange-plus pricing models, fixed fees typically range from 1p to 20p depending on the provider and transaction volume.
Funding Time (Settlement Time)
The period between a transaction being processed and the funds appearing in your business bank account. Standard UK settlement is one to three working days, though some providers offer next-day or same-day funding for an additional fee.
I
Interchange Fee
The fee paid by the acquirer to the card-issuing bank on every transaction, set by Visa and Mastercard and capped by UK regulation at 0.2% (consumer debit) and 0.3% (consumer credit). Interchange fees are non-negotiable and identical regardless of which provider you use - only the markup on top varies.
Interchange-Plus Pricing
A pricing model where the provider passes through the exact interchange and scheme fees at cost, then adds a transparent, separate markup. This model is generally considered the most cost-effective and transparent option for medium and larger UK businesses, though it produces a less predictable monthly bill than blended pricing.
Issuing Bank (Card Issuer)
The bank that issued the customer's card (for example, Barclays, HSBC, NatWest, or Monzo). The issuing bank receives the interchange fee and is responsible for approving or declining transactions.
M
Merchant Account
A type of bank account that allows a business to accept card payments. Some providers offer a "sub-merchant" arrangement (aggregated processing, as used by PayPal or Square) rather than a dedicated merchant account, which affects settlement times and risk controls.
Merchant Category Code (MCC)
A four-digit code assigned to a business based on its industry, used by card schemes to determine applicable interchange rates and risk classification. MCCs partly explain why card processing fees vary by business type.
Minimum Monthly Fee
A guaranteed minimum charge some providers apply if your total transaction fees in a given month fall below a set threshold. This can catch out seasonal or low-volume businesses unexpectedly.
P
PCI DSS (Payment Card Industry Data Security Standard)
A set of security requirements all businesses accepting card payments must meet to protect cardholder data. Non-compliance can result in a monthly PCI non-compliance fee, often £15-£30, until the required compliance questionnaire is completed.
PIN Entry Device (PED)
The physical terminal used to accept chip and PIN or contactless payments. PED rental typically costs £15-£35 per month, though some providers now include terminal costs within an all-in package.
R
Refund
The return of funds to a customer following a purchase. Unlike a chargeback, refunds are merchant-initiated, but some providers still charge a processing fee on refunded transactions even though the sale itself did not ultimately generate revenue.
Rolling Reserve
A percentage of a merchant's transaction volume withheld by the acquirer for a set period as security against future chargebacks or fraud, common for high-risk sectors or new businesses with limited trading history.
S
Scheme Fee
A fee charged by the card networks (Visa, Mastercard, Amex) for the use of their infrastructure, separate from interchange. Scheme fees are typically small (fractions of a percent) but numerous, and are explained fully in our scheme and authorisation fees guide.
Settlement
The process of transferring processed transaction funds from the acquirer to the merchant's business bank account, net of fees.
Strong Customer Authentication (SCA)
A regulatory requirement under PSD2 mandating additional verification (such as 3D Secure) for many online transactions, intended to reduce fraud. SCA affects checkout flow design and can influence approval rates for card-not-present businesses.
T
Tiered Pricing
A pricing model that groups transactions into categories (often "qualified", "mid-qualified", and "non-qualified") each with a different rate, rather than passing through the exact interchange cost. Tiered pricing is generally less transparent than interchange-plus and can obscure genuine cost increases.
Terminal Fee
A charge for the rental, lease, or purchase of card payment terminal hardware, separate from transaction processing fees.
V
Visa/Mastercard Assessment Fee
A specific type of scheme fee charged by Visa or Mastercard as a percentage of transaction volume, used to fund network operations and fraud prevention programmes.
Comparing Common UK Card Processing Fee Types
The table below summarises the fee types most UK merchants encounter, showing typical ranges and where they usually appear on a statement.
| Fee Type | Typical UK Range | Who Sets It | Negotiable? |
|---|---|---|---|
| Interchange Fee | 0.2% (debit) - 0.3% (credit) | Card scheme (regulated cap) | No |
| Scheme Fee | 0.01% - 0.15% | Visa/Mastercard/Amex | No |
| Provider Markup | 0.1% - 1.5% | Payment provider/acquirer | Yes |
| Authorisation Fee | 1p - 5p per transaction | Acquirer | Sometimes |
| Terminal Rental | £15 - £35 per month | Provider/hardware supplier | Yes |
| PCI Non-Compliance Fee | £15 - £30 per month | Acquirer | Avoidable via compliance |
| Chargeback Fee | £15 - £25 per case | Acquirer | No |
How to Use This Glossary When Reviewing a Statement
When you receive a new merchant statement or a quote from a provider, the most useful approach is to identify which pricing model is in use first - blended, tiered, or interchange-plus - because this determines how the rest of the terminology applies. Once you know the model, check that scheme fees and interchange are itemised separately from the provider's own markup; if they are bundled together with no breakdown, you cannot verify whether the markup is competitive. Our companion guide on how to read your merchant statement walks through a real statement line by line using the terms defined here.
Red Flags to Watch For
Certain terms should prompt closer scrutiny when they appear in a contract: "non-qualified surcharge" (a sign of opaque tiered pricing), "PCI non-compliance fee" recurring every month (suggesting the compliance questionnaire has not been completed), and "early termination fee" without a clearly stated amount or sliding scale. If any of these appear on paperwork you are reviewing, it is worth asking the provider directly for a written explanation before signing or continuing.
Why Terminology Differs Between Providers
Not all UK payment providers use identical language for the same concept, which adds to the confusion. What one provider calls a "service fee" another may label a "monthly minimum" or "account fee", even though the underlying charge is similar. This is another reason why comparing quotes purely on headline percentage rates is unreliable - two providers advertising "1.5%" may structure the remaining charges very differently, and understanding the vocabulary lets you ask the right clarifying questions before committing.
Frequently Asked Questions
What is the difference between interchange and scheme fees?
Interchange fees are paid to the customer's card-issuing bank and are capped by UK regulation at 0.2% for debit cards and 0.3% for credit cards. Scheme fees are paid to the card network itself (Visa, Mastercard or Amex) for the use of their infrastructure, and are typically much smaller but still add up across high transaction volumes.
Why do different providers quote different rates for the same interchange cost?
Because interchange and scheme fees are fixed and identical for every provider, the difference between quotes almost always comes down to the provider's own markup, plus any fixed fees, terminal charges, or minimum monthly fees layered on top. This is why reviewing the full fee structure, not just the headline percentage, is essential when comparing offers.
Is interchange-plus pricing always cheaper than blended pricing?
Not always, but it is usually more cost-effective for businesses processing more than around £10,000-£15,000 per month, because the transparent markup tends to be lower than the premium built into a blended rate. Very small or seasonal businesses sometimes prefer blended pricing for its predictability, even at a slightly higher average cost.
What should I do if I see an unfamiliar term on my statement?
Use this glossary to check the definition first, then compare it against the fee schedule in your original contract to confirm the amount matches what was agreed. If the term or the amount does not match, contact your provider for a written explanation, and if you remain unsure, Compare Card Fees can review the statement with you free of charge.
Do all UK businesses pay the same PCI DSS compliance fee?
No, PCI non-compliance fees vary by provider and are only charged when a business has not completed its required annual self-assessment questionnaire (SAQ). Completing the SAQ, usually a free and straightforward online process, removes this charge entirely, so it should never be a permanent line item on a well-managed account.
What is the safest pricing model for a new business to choose?
For most new or lower-volume UK businesses, a straightforward blended rate offers predictability while trading volume is established, before switching to interchange-plus pricing once monthly turnover grows. Reviewing your statement every six to twelve months against current market rates ensures you are not overpaying as your business scales.
Can I negotiate scheme and interchange fees directly?
No, interchange fees are capped by law and scheme fees are set by Visa, Mastercard and Amex, so neither element can be negotiated with your provider. The only negotiable components are the provider's markup, fixed per-transaction fees, terminal rental costs, and minimum monthly charges.
How Compare Card Fees Can Help
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Whether you are looking to reduce your card processing costs, switch provider, or understand what you are currently paying, our experts can help. Tell us about your business and we will find the best rates available.
