Complete Breakdown of All Card Processing Costs
Know exactly what you're paying and how to negotiate better rates
Every card transaction involves three parties, each taking a fee:
| Party | Fee Name | Typical Cost | Who Sets It |
|---|---|---|---|
| Card Schemes (Visa/Mastercard) |
Scheme Fees | 0.01%-0.05% | Visa/Mastercard |
| Issuing Bank (Customer's bank) |
Interchange Fee | 0.20%-2.00% | EU Regulation |
| Payment Provider (Your provider) |
Acquirer Fee | 0.30%-1.50% | Negotiable |
Since December 2015, the EU (and post-Brexit UK) has capped interchange fees:
| Card Type | Interchange Fee | Example on £100 |
|---|---|---|
| UK Consumer Debit | 0.20% | £0.20 |
| UK Consumer Credit | 0.30% | £0.30 |
| UK Business Debit | Unregulated (0.90%-1.50%) | £0.90-£1.50 |
| UK Business Credit | Unregulated (1.50%-2.50%) | £1.50-£2.50 |
| EU Consumer Cards | 0.20% (debit) / 0.30% (credit) | £0.20 / £0.30 |
| Non-EU Cards | Unregulated (1.50%-3.00%) | £1.50-£3.00 |
How it works: One fixed rate for all card types
✓ Pros: Simple, predictable, easy to calculate
✗ Cons: Usually more expensive overall, especially if you take mostly debit cards
Best for: Low-volume businesses, simple setups, those who value simplicity
How it works: Interchange fee + fixed markup
✓ Pros: Transparent, usually cheapest for debit cards, you only pay actual costs
✗ Cons: Variable fees, statements more complex, harder to predict monthly costs
Best for: High-volume businesses, those taking mostly debit cards, businesses wanting transparency
How it works: Different rates for different card types
✓ Pros: More fair than blended, somewhat transparent
✗ Cons: Can still be expensive, providers may add cards to "expensive" tiers arbitrarily
Best for: Medium-volume businesses wanting balance between simplicity and cost
| Fee Name | Typical Cost | Can You Avoid It? |
|---|---|---|
| PCI Compliance Fee | £10-£40/month or £100-£200/year | Sometimes - some providers include it, or waive with annual compliance |
| Minimum Monthly Service Charge | £10-£30/month | Negotiate away if you have good volume |
| Terminal Rental | £15-£35/month | Yes - buy your terminal outright (£150-£400) |
| Statement Fee | £5-£15/month | Yes - most providers don't charge this anymore |
| Chargeback Fee | £15-£30 per chargeback | Reduce chargebacks; some providers offer lower rates |
| Refund Processing Fee | £0-£0.10 per refund | Many providers don't charge for refunds |
| Manual Entry Fee | Same rate or +0.5% | Minimize manual entries; use terminal when possible |
| Gateway Fee | £10-£30/month for online payments | Negotiate into package if you do online + in-person |
| Setup/Installation Fee | £0-£100 one-time | Often waivable - ask |
Typical Offers:
Potential savings: £95/month or £1,140/year
Typical Offers:
Potential savings: £249/month or £2,988/year
Typical Offers:
Potential savings: £552/month or £6,624/year
To know if you're getting a good deal, calculate your effective rate:
Example:
Effective Rate: (£320 ÷ £20,000) × 100 = 1.60%
Calculate it before negotiating. You can't negotiate blind.
Aim for 3-5 quotes. Use them as leverage: "Provider X offered me 1.25%, can you beat that?"
Providers love high-volume businesses. If you process £20K+/month, you have negotiating power.
If 80%+ of your transactions are debit cards, push for IC++ pricing. You'll save significantly.
Providers prefer long contracts. Trade contract length for better rates: "I'll sign 18 months if you reduce the rate by 0.3%"
£25/month rental = £450 over 18 months. Buy a terminal for £200 and save £250.
Need both in-person and online? "Give me a better rate if I use you for both."
PCI fee, MMSC, setup fees - all negotiable. "Can you include PCI compliance in the package?"
Include: "Rates will be reviewed annually and adjusted to remain competitive with market rates."
"I'm working with MerchantSwitch to find the best rate." Providers know brokers mean competition.
This script shows you're informed, shopping around, and serious.
| Red Flag | Why It's Bad |
|---|---|
| "Zero Fee" Terminals | Fees are hidden in higher transaction rates. No such thing as free. |
| Contracts over 36 months | Market changes quickly. You'll be stuck with outdated rates. |
| "Introductory Rate" | Read fine print. Rate often jumps after 3-6 months. |
| Huge Early Termination Fees | £500+ ETF means you're trapped even if service is terrible. |
| Pressure to Sign Today | Good deals don't expire in 24 hours. Take time to compare. |
| Vague "Competitive Rates" | Get specific numbers in writing before signing anything. |