How much will it cost to process card transactions?

Discover how much each credit card transaction will cost your business and find the best deals today

Understanding the cost of processing card transactions is essential when it comes to deciding on whether you need to purchase one or not.

On this page we have put together information about credit card processing costs. These costs include the cost of transaction and contract fees, but not the cost of hardware – for more information about these costs, visit our ‘how much is a chip and pin machine?’ page.

As with many parts of business, determining the cost of a service to your business can be difficult as all businesses – no matter how similar – have different running costs and incomes. This means that, to understand how much you will be paying, you need to apply percentages or cost estimates directly to your own business.

The best way to find out how much credit card processing will cost your business, you should simply complete the form at the top of this page now.

Cost of credit card machine payments

There is no hard and fast rule, but NatWest and others quoted a rough figure of 3% per transaction plus the rental of the swipe machine – £15 – £25 per month – and a one-off set-up fee of £100-£150.

  • 3% per transaction
  • £15 per month (basic card machine)
  • £25 per month (advanced card machine)
  • £100-£150 set-up fee

Based on the costs included in the list above, most small businesses can expect to pay between £280 and £450 per year for a rented card machine, plus the percentage cost of transactions.

A business with an average of monthly income of £5,000, for example, would pay £150 a month extra, bringing the yearly total to between £2080 and £2250.

Credit card machine processing costs

Though we have covered some of the basic costs that you can expect to pay when it comes to processing card transactions, we have not done so in much detail. The information in the small sections below should provide some more information about the range of fees and charges you will encounter when you open your merchant account and begin taking payments.

Upfront costs

The upfront costs encountered when getting a chip and pin machine are low. Typically, you can be looking to buy cheap chip and pin machines for as little as just £40. It should be noted that chip and pin machines, by their very nature, need to be tough and durable.

Price often reflects this.In terms of durability, you need to consider not only the casing and technology, but also elements such as battery life (if opting for a mobile or portable chip and pin machine). You may find it is more cost-effective to invest slightly more in terms of upfront payments.

Upfront costs are affected by the number of devices you need. Generally, the more you need, the greater savings you can negotiate.You should also consider functionality in upfront costs. A chip and pin machine which offers cash back or phone top-ups may cost you slightly more, but if it brings more loyal customers through your door then it can represent a worthwhile return on investment.

For more information on the upfront costs of hardware, visit our ‘how much does a credit card machine cost?’ page now.

Monthly fees

If you opt to rent or lease your chip and pin machine then you will have slightly different upfront costs. You will have a monthly commitment, usually as part of a wider merchant account package. Indeed, your chip and pin rental charges may well be hidden within the merchant service charge, and the machine itself given to you ‘for free’.

Whether renting or buying is most cost-efficient will depend on the nature of your business. We will look at this in more detail later. For straightforward chip and pin renting, you will be looking at approximately £15 per month for a countertop chip and pin machine, £19 per month for a portable chip and pin machine, or around £22 for a mobile chip and pin machine.

The list below includes a basic breakdown of approximate monthly fees:

  • Countertop machine – £15/month or £180/year
  • Portable machine – £19/month or £228/year
  • Mobile machine – £22/month or £264/year

As mentioned in a section above, some businesses will need multiple machines to cater to various needs. A retail store with two tills then, may expect to pay £25-£30 a month, which will increase the annual cost. Likewise, a retail store that regularly visits or shows at events, may need a mobile machine, adding an extra £22 a month.

To understand your costs, you will need to consider all of these factors. The best way though, to consider your own needs is to speak to suppliers – complete the form at the top of this page to do so today.

Usage fees

These fees tend to catch you by surprise and require a little more understanding. Sometimes known as payment processing fees, these usage fees are made up of several different types.The table above includes a breakdown of usage fees, for more information about each charge, check the list below.

  • Merchant service charge (MSC): This is the amount charged for every transaction – so every time you accept a credit or debit card transaction. These typically range from 0.7% to 0.9% for a standard credit card, but can be less for debit cards, and more for commercial credit cards.
  • Authorisation fees: The first stage of card processing involves the card issuer authorising the payment. There is a charge for this on every transaction. It will typically be in the region of 1p to 3p per transaction.
  • Minimum monthly service charge: Depending on the nature of the contract with your processor, you may have a minimum amount you will be charged each month even if your transactions do not raise much in fees. Typically, this is in the region of £10 to £20 per month.
  • Set-up fees: depending on the nature of your merchant account, and your provider, you may be charged a one-off fixed fee for setting up card processing. This can range from £50 to £100.
  • Chargeback fees: If a cardholder requests a chargeback then you will be charged an administration fee, usually in the region of £10 to £20.
  • PCI compliance fee: This is a small charge to ensure you are compliant with payment card industry data security, and will cover your PCI self-certification questionnaire and compliance certificate. This is a countrywide fraud prevention method. It costs between £2.50 and £5.50 per month.

Credit card machine cost per transaction

If you’re in any professional association at all, don’t be afraid to ask whether there are price breaks available – and as your business grows don’t worry about renegotiating rentals. For example, many supermarket chains, petrol outlets and other larger companies do not pay the full £15 for each swipe machine – volume discounts are available, but need to be found and negotiated.

A number of different machines are available, but a basic merchant account will come with two; one that plugs into the phone socket and one of the old-fashioned swipe machines (with vouchers) in case your phone line is ever down. If you anticipate a lot of transactions you might have to factor the cost of an extra phone line into your calculations.

Depending on the nature of your business, you might also want to think about accepting American Express (Amex).

This works differently from the basic package in that you need to be apply separately to Amex itself, and the downside is that you will pay a couple of percentage points more per transaction. This leads some people to put in a cost differential for Amex, as Jim Bissett, MD of computer seller EQ Consultants, notes: ‘It doesn’t seem to put people who have only Amex off – I expect they are used to surcharges.’

For hospitality, there is the Diners Club, pitched at the more affluent business traveler – again, apply direct to Diners Club and bear in mind that putting the sticker in the window as much as a statement about the kind of company you are as a means of gaining income.

As your business grows do not be afraid to renegotiate rentals.

Credit card processing costs over phone, internet and fax

If you are going to use the credit card facility to take cards over the phone, internet or by fax then when you apply for merchant status you need to make it clear you want ‘customer not present’ transactions.

Processing transactions over the phone and by fax has been present for some years, and processing payments over the internet is among the most prominent forms of processing today, with ecommerce having become a huge part of the modern retail and service industries.

Today, many merchant account suppliers cater directly to online processing requirements, and so you will be able to find a service to suit you.

Compare card processing costs

To compare the cost of credit card processing – whether in person, online or by phone – simply complete the form at the top of this page.

We can help you to get in touch with up to four suppliers, and you can then choose the service, products and prices most suited to your business and budget.

The process is free, quick and easy, and it could help you make the best choice possible.

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