Understanding Card Scheme Fees: What UK Businesses Actually Pay
Demystifying Visa, Mastercard, and Amex fees in plain English
When you accept card payments, you do not just pay your payment provider—you also pay fees to the card schemes (Visa, Mastercard, American Express). Understanding these fees helps you spot where your money actually goes and negotiate better deals.
What Are Card Schemes?
Card schemes are the networks that facilitate card transactions. The main schemes operating in the UK are:
Visa
Most common in UK
~50% market share
Mastercard
Second largest
~45% market share
Amex
Premium cards
~5% market share
Breaking Down Scheme Fees
Every card transaction involves multiple parties taking a cut. Here is the complete breakdown:
Example: £100 Visa Debit Transaction
Total cost: £0.63 (0.63% of £100)
Understanding Interchange Fees
Interchange is the largest component of card processing costs. It is the fee paid to the bank that issued the customer card. Interchange rates are set by Visa and Mastercard and vary based on:
| Card Type | Typical Interchange (UK) |
|---|---|
| UK Debit Card (consumer) | 0.2% (capped by EU regulation) |
| UK Credit Card (consumer) | 0.3% (capped) |
| Business/Corporate Card | 1.5-2.5% (not capped) |
| Premium/Rewards Card | 1.8-3.0% (not capped) |
| Non-UK/International Card | 1.5-3.5% (not capped) |
Good News for UK Businesses
UK and EU debit/credit cards have capped interchange rates (0.2% and 0.3%), meaning most consumer transactions have predictable costs. Business and premium cards are uncapped, which is why they cost more.
Scheme Fees Explained
In addition to interchange, Visa and Mastercard charge scheme fees (also called assessment fees). These typically range from 0.08-0.12% per transaction.
Typical Scheme Fee Breakdown:
- Visa: ~0.09% authorization fee + processing fee
- Mastercard: ~0.08% network access fee + switch fee
- American Express: No separate scheme fee (bundled into merchant rate of 2.5-3.5%)
These fees are non-negotiable—every merchant in the UK pays the same scheme fees regardless of size. The only fee you can negotiate is your payment provider markup (acquirer margin).
Blended vs Interchange++ Pricing
Blended Pricing
One flat rate for all cards (e.g., 1.75%)
✅ Pros:
- • Simple to understand
- • Predictable monthly costs
- • Good for low volumes
❌ Cons:
- • Overpay on debit cards
- • Hidden margins
- • Expensive for high volume
Interchange++ Pricing
Pay exact interchange + small fixed markup
✅ Pros:
- • Transparent costs
- • Save on debit cards
- • Best for high volume
- • Fair pricing on all cards
❌ Cons:
- • Statements harder to read
- • Variable monthly costs
Real Example: Monthly Cost Comparison
Small Cafe Processing £10,000/month (90% debit, 10% credit)
Blended Pricing (1.75% all cards)
Total monthly fees: £175
Interchange++ (0.2% debit + 0.3% credit + 0.25% markup)
Debit (£9,000): £40.50
Credit (£1,000): £5.50
Total monthly fees: £46
Savings: £129/month (£1,548/year) 💰
How to Reduce Scheme Fees
You cannot negotiate interchange or scheme fees (they are set by card networks), but you CAN reduce their impact:
Switch to Interchange++ Pricing
Save 30-50% on debit card transactions
Negotiate Lower Acquirer Margin
Reduce markup from 0.5% to 0.15-0.25%
Batch Settle Daily
Avoid late settlement fees (some schemes charge extra)
Optimize Card Mix
Encourage debit over credit where possible
Review Quarterly
Scheme fees change - review statements regularly
Scheme Fee Changes in 2024-2025
Card schemes regularly adjust their fees. Recent changes affecting UK merchants:
- Visa increased assessment fees by 0.01% in October 2024
- Mastercard introduced new fraud prevention fees for MOTO transactions
- Both schemes now charge premium rates for subscription/recurring payments
- Contactless interchange rates remain unchanged (capped at 0.2%/0.3%)
Conclusion
Understanding scheme fees empowers you to negotiate better. While you cannot control interchange or scheme fees, you can absolutely control your provider markup—and that is where the biggest savings lie. For most businesses, switching to interchange++ pricing immediately reduces costs by 25-40%.
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