UK Card Payment Terms Glossary: 30 Terms in Plain English

The fees underneath your rate

Interchange

The fee paid to the bank that issued the customer's card, on every transaction. Rates are set by the card schemes and vary by card type, typically 0.2% to 1.5%. It is the largest underlying cost inside your headline rate, and your provider passes it on whether the pricing shows it or not. Our card machine fees guide breaks down how it stacks with the other components.

Scheme fee

What Visa or Mastercard charge for the use of their network, separate from interchange. Smaller than interchange per transaction, but it has risen sharply in recent years and merchants cannot negotiate it directly; only the provider's markup on top is negotiable. See our guide to card scheme fees.

Merchant service charge (MSC)

The headline percentage your provider charges on each card sale. On blended pricing it bundles interchange, scheme fees and the provider's margin into one number. It is usually the biggest line on your statement, but rarely the only one. Our merchant statement walkthrough shows where it sits among the others.

Authorisation fee

A per-transaction charge of a few pence, typically 3p to 4.5p on the acquirer price lists we track, billed every time your terminal asks the bank whether a payment can go ahead. It applies whether or not the sale completes, and it sits on top of the percentage rate on traditional acquirer pricing. Flat-rate readers do not charge it. Worked examples in our authorisation fees explainer.

Blended pricing

One flat rate for every card, whatever it actually costs to process. Simple to compare and impossible to be surprised by. The pay-as-you-go readers we track all use it, at 1.69% to 1.75% per transaction (see the rates table). The trade-off: cheap debit cards subsidise expensive corporate cards, so high-volume businesses often pay more than they would on unbundled pricing.

Interchange++ (interchange plus plus)

Pass-through pricing. You pay the actual interchange, the actual scheme fee, and a fixed provider markup on top, itemised separately. More complex to read than a blended rate but usually cheaper at volume, because you keep the benefit of low-cost debit cards instead of paying one averaged rate. Compared side by side in fees explained.

PCI DSS

The Payment Card Industry Data Security Standard: the card industry's security rules for any business that handles card data. Acquirers typically charge a £5 to £15 monthly compliance fee, and £20 to £50 a month if you fail to complete the annual self-assessment. Pay-as-you-go readers handle compliance for you and charge nothing. More in hidden card machine fees.

Minimum monthly service charge (MMSC)

A floor on your monthly bill, typically £20 to £50. If your transaction fees come in under the minimum, the provider charges the difference anyway. A quiet-month tax, in effect, and one of the first things to negotiate away.

Accounts, hardware and infrastructure

Acquirer

The company that processes card payments on your behalf: it routes each transaction to the card networks, collects the money and pays it into your bank account. Worldpay, Barclaycard and Dojo are acquirers or sell acquiring; SumUp and Square bundle acquiring invisibly into their flat rate. Profiles of each on our providers hub.

Acquiring bank

The regulated bank behind the acquirer, which holds the money between the customer paying and you being settled. The opposite number is the issuing bank, which gave the customer their card. Most merchants never deal with the acquiring bank directly.

Merchant account

The holding account where your card takings sit between authorisation and settlement into your business bank account. Traditional providers require one; pay-as-you-go readers create the equivalent behind the scenes, which is why they can sign you up in minutes. We answer whether you need one separately.

MID (merchant ID)

The unique number that identifies your business to the acquirer and the card schemes. It appears on your statement and terminal receipts, and you will be asked for it whenever you query a transaction, dispute a fee or switch provider.

Pay-as-you-go (PAYG) reader

A card reader you buy outright for £19 to £39 plus VAT, paying a flat 1.69% to 1.75% per transaction and nothing else: no monthly fee, no contract, no PCI charge, no authorisation pennies. The dominant model for smaller UK businesses, and usually the cheapest below roughly £4,000 to £5,000 a month in card takings. Compared in cheapest card machine UK.

Terminal rental

A monthly charge for the card machine itself rather than buying it outright, common on acquirer contracts. Dojo, for example, offers its terminals upfront or on monthly plans from £15 a month (see the rates table). Rental looks small next to the transaction fees but runs for the life of the contract, so always include it in the effective rate.

Payment gateway

The software layer that carries a card payment from a website, app or virtual terminal to the acquirer, encrypting the card details on the way. In-person payments do not need one; online and keyed payments do, and it is sometimes billed as its own monthly fee.

Virtual terminal

A secure web page where you type in a customer's card details yourself, used for taking payments over the phone. No hardware involved. Keyed payments carry more fraud risk than chip and PIN, so they are priced higher and are the first thing an acquirer asks about when quoting. Setup covered in taking card payments by phone.

Payments in practice

Settlement

The transfer of your card takings from the acquirer to your business bank account, usually one to three working days after the sale. Settlement speed varies by provider; Dojo, for instance, settles next day including weekends. Slow settlement is a cash flow cost that never appears on a price list.

Batch

The bundle of a day's transactions that a terminal submits for settlement in one go, usually automatically at end of day. If a batch is not submitted, nothing in it settles, which is the classic explanation for takings that fail to arrive.

Contactless limit

The maximum value of a single tap payment without a PIN, £100 in the UK since October 2021. Above the limit the customer inserts their card or uses a mobile wallet, which authenticates on the device and has no fixed cap. Details in our contactless limit guide.

ATV (average transaction value)

Your card turnover divided by your transaction count: what the typical sale is worth. Acquirers quote on it because fixed per-transaction costs weigh heavily on small tickets. A cafe with a £4 ATV gets a worse rate than a furniture shop with a £600 ATV on identical turnover. See how it moves quotes in our UK fee benchmarks.

Card mix

The split of card types your customers pay with: personal debit, personal credit, commercial and premium cards. Debit is the cheapest to accept and commercial the dearest, so a business taking mostly debit gets quoted lower than one taking corporate cards, even at the same turnover.

MOTO (mail order, telephone order)

The card industry's label for payments taken without the customer or card present, by phone or post. MOTO transactions are keyed rather than tapped, carry higher fraud liability for the merchant, and need a virtual terminal or a MOTO-enabled account.

Strong customer authentication (SCA)

The UK and EU rule requiring two-factor checks on most electronic payments: something the customer has, knows or is. It is why online checkouts bounce customers to their banking app, and why a contactless card occasionally demands a PIN after a run of taps.

Risk, disputes and money held back

Chargeback

A transaction reversed through the customer's bank rather than refunded by you, typically after a dispute over fraud, non-delivery or quality. The money comes back off you, and most acquirers add a £15 to £25 administration fee per case whether you win or lose the dispute. Listed with the other quiet charges in hidden card machine fees.

Refund vs reversal

Two different ways of giving money back. A reversal cancels a transaction before it settles, so it never fully leaves the customer's account. A refund is a new transaction pushing money back after settlement, takes days to land, and on many pricing plans the original transaction fee is not returned.

Rolling reserve

A percentage of your takings the acquirer holds back as security against future chargebacks, applied to businesses it judges higher risk. Each slice is typically released 90 to 180 days after it was withheld. If you switch providers, any reserve follows the same release schedule rather than paying out immediately.

Contracts and getting out of them

Early termination fee (ETF)

What a provider charges for leaving a fixed-term contract before it ends. On the contracts we have researched these run from around £200 to £1,500 or more, depending on time remaining. Rolling and pay-as-you-go deals charge nothing, which is a large part of their appeal. Escape routes in how to get out of a card machine contract.

Business funding against card sales

Merchant cash advance (MCA)

A lump sum advanced against your future card sales, from around £1,000 up to £1 million, repaid automatically as a percentage of each day's card takings. There is no APR and no fixed monthly payment; the total cost is set by a factor rate agreed up front. Full explainer: what is a merchant cash advance.

Factor rate

The multiplier that sets the total cost of a merchant cash advance, typically 1.1 to 1.6, with most UK quotes between 1.10 and 1.25. Multiply the advance by the factor rate to get the total repayment: £20,000 at 1.35 means £27,000 back, a £7,000 cost. It is not an APR, so the effective annual cost depends on how fast you repay. Run your own numbers in the MCA cost calculator.

Holdback

The percentage of daily card sales withheld to repay a merchant cash advance, typically 10% to 20%. On £50,000 of monthly card sales, a 15% holdback sends £7,500 a month to the advance. Repayments flex with trade: busy months repay faster, quiet months slower. More funding terms in the business funding glossary.

Where the figures come from

Every number in this glossary already appears on a MerchantSwitch page that documents its source: authorisation fees of 3p to 4.5p from the acquirer price lists behind our authorisation fee research, flat rates of 1.69% to 1.75% from the published pricing in the rates table, and the fee ranges for PCI, minimum monthly charges, chargebacks and exit fees from our hidden fees research. Where pricing is bespoke we give the range we track rather than invent a single figure. How we research and maintain all of this is set out in our editorial standards.

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