Common questions about payment processing fees
How much are card processing fees in the UK?
Most UK businesses pay between 1% and 2.5% per transaction in total card processing fees. Smaller businesses typically pay towards the higher end of this range. Businesses turning over £500,000 or more annually can often negotiate rates below 1%. Your exact rate depends on your card mix, transaction volume, pricing model, and provider.
What is a good card processing rate for a small business?
For a small UK business, a competitive effective rate sits between 1.2% and 1.8% for in-person card payments. If you're paying above 2% consistently, there is almost certainly a better deal available. Online payments typically cost slightly more due to higher fraud risk.
What are interchange fees and do I pay them?
Interchange fees are charged by the cardholder's bank every time a card payment is processed. They are set by Visa and Mastercard, not your provider and are non-negotiable. In the UK, interchange is capped at 0.2% for consumer debit cards and 0.3% for consumer credit cards. You pay them indirectly through your provider's pricing. Under interchange-plus pricing, you can see exactly what you're paying in interchange vs. provider margin.
What hidden fees should I look out for in my merchant contract?
Common hidden fees include: PCI DSS compliance fees (£5–£30/month), authorisation fees per transaction (1–3p), minimum monthly service charges (£15–£30), early termination penalties (up to £300), and scheme fees charged by Visa/Mastercard. Always request a full fee schedule before signing.
What is the difference between blended and interchange-plus pricing?
Blended pricing charges you a single flat percentage regardless of card type, simple but usually more expensive. Interchange-plus pricing passes the actual interchange cost to you and adds a fixed margin on top, making costs transparent. As your volume grows, interchange-plus almost always works out cheaper.
How can I reduce my card processing fees without switching provider?
Start by requesting an itemised fee breakdown from your current provider. Identify any PCI non-compliance fees (resolve your compliance status to remove these), check for unnecessary add-ons, and ask your provider directly to match a competitor's rate. Many providers will reduce fees when presented with a competing quote, use our free comparison tool to get one.
Should I switch payment provider to save money on fees?
Switching is worth considering if your effective rate has increased, you've been on the same contract for more than two years, or your business volume has grown significantly. Before switching, always request a competing quote to use as leverage with your existing provider. Many businesses save money without switching at all.
