Credit card fees eat into your firm’s profits – but how much do they actually cost, and can you avoid paying them? Find out in our full credit card transaction fees cost breakdown.
Startups.co.uk is reader supported – we may earn a commission from our recommendations, at no extra cost to you and without impacting our editorial impartiality.
Square: £0 monthly fees
Tide: low, transparent fees — only 0.79% + 3p
Takepayments: Transaction fees from 0.3% to 2.5%
You need to answer only two questions. These will help us show you indicative fees for what you’ll pay, including from top providers such as Square, Tide, WorldPay, and more – each of which also offers the best card machines for small businesses with associated fees.
How much revenue does your business make in a typical month?
How many transactions per month do you estimate you process?
What card processing fees will you pay?
Based on your inputs, you can expect the following card processing fees from major card reader providers, including the cheapest card processing fees in the UK.
Square
Tide
Shopify
SumUp
Smartpay Anywhere (Barclaycard)
Tyl by Natwest
Dojo
WorldPay
PayPal Point of Sale (formerly Zettle)
Card processing fees are charges that merchants pay for accepting card payments, covering costs such as authorisation, settlement, and compliance.
The main cost is your payment processor’s transaction fee, which is typically 1-5-3.5% per sale, plus a small fixed fee with some providers.
However, taking card payments isn’t just about choosing the best card machine; you’ll also need to understand credit card processing fees (including the cheapest credit card processing fees), as they can affect your profits and pricing decisions. Even the most affordable terminal won’t save you money if each transaction incurs high fees.
Below, you’ll find guidance to help explain the fees your small business will encounter, including a breakdown and analysis of the seven types of card payment costs.
- Merchants can expect to pay between 1.5% and 3.5% in transaction fees when taking card payments.
- As of 2018, it has been illegal to pass on card processing costs to your customers.
- Additional charges include interchange fees (0.2% to 0.3% for consumer cards) and authorisation fees (1p to 4p per authorisation).
- Merchants taking card payments must be fully PCI DSS compliant to protect customer data, reduce fraud, and avoid costly penalties.
- Some payment processors set a minimum monthly service charge, ranging from £10 to £30 per month, but most merchants easily clear this.
- Merchants taking payments internationally will need to factor in additional costs, such as a currency conversion fee (around 1% to 3%).
What are card processing fees?
Card processing fees are charges that businesses incur whenever a customer pays by card, whether in person or online.
As a merchant, you can expect the following typical card-processing fees:
- Transaction fees: Between 1.5% and 3.5% with each payment, depending on the credit card your customer uses.
- Authorisation fees: Between 1p and 3p per sale.
- Merchant service fees: 0.25% to 0.35% per transaction.
Why are card processing fees charged?
Card processing fees are charged to cover the costs incurred by systems and services for all payments.
Whenever a customer pays by card, payment service providers (like Square or SumUp), card-issuing banks and card networks or card schemes (such as Visa or Mastercard) handle authorisation, secure data transfer, and move the funds – ensuring the payment reaches you safely. The fees you pay support the technology, security, and infrastructure required to process these transactions.
Generally speaking, merchants pay their processors for these services, and then the processor distributes the fees to all parties involved.
Can I avoid paying card processing fees?
No, you can’t avoid paying card processing fees – even if you’re a small business. Since 2018, it has been illegal for business owners to pass credit card processing fees onto customers. You must bear these costs yourself.
What UK card processing fees will I pay?
There are specific fees you must pay, as well as additional charges depending on your business size, your payment provider, and how you take payments.
| Transaction fees | Interchange fees | Authorisation fees |
|---|---|---|
| Come from your payment processor or merchant account provide | Pass from your bank to the card issuer for every card payment, then get passed on to you | Pass through your payment processor, which requests authorisation from Visa, Mastercard, Amex, and other networks |
| Takes a percentage of each transaction | Cover transaction handling, bad debt, and risk | Apply regardless of whether the payment is approved or declined |
| Combine scheme fees, provider markup, and sometimes interchange fees | Stay capped in the UK at 0.2% for consumer debit and 0.3% for consumer credit (with higher commercial card rates) | Vary based on card type and transaction volume |
What additional fees might I need to pay?
The additional fees you may need to budget for are:
| Minimum monthly service charges (MMSC) | Card machine costs | Setup charges | PCI compliance fees |
|---|---|---|---|
| Charged if your monthly transaction fees don’t meet a minimum | Charged upfront or monthly, depending on your contract | One-time fee when first signing up for a payment processor or merchant service provider | Fee for maintaining PCI DSS security compliance |
| The absolute lowest amount you can be billed in a month | Depends on machine type (such as Square or SumUp) | Most providers don’t charge it | May incur an additional cost for quarterly security scans |
| Can affect seasonal businesses as they must still budget for these fees during the off-season | Options range from basic phone-connected readers to advanced handheld point-of-sale (POS) devices | If your business is in a “high-risk” industry (like travel, or gambling) or has highly complex requirements, providers may charge an upfront admin fee of £50 to £150 to handle the legal paperwork | Usually £4 to £6 per month (or roughly £50 to £250 a year) |
What are the average costs for all card processing fees?
If you don’t understand average prices and what you should be paying, you could get stung. Here’s a breakdown of the different types of fees and their average costs:
| Type of fee: | Average cost: |
|---|---|
| Transaction fees | 1.5% to 3.5% (can be as low as 0.2% or as high as 6%, but these instances are rare) |
| Interchange fees | 0.2% to 0.3% for consumer cards in the UK Approximately 1% to 1.9% for commercial cards |
| Authorisation fees | 1p to 4p per authorisation |
| Minimum monthly service fees | £15 to £30 per month |
| Card machine costs | £19 to £399 if bought upfront £15 to £30 per month if leased |
| Setup charge | Up to £150 |
| PCI compliance fee | £5-£10 per month |
How much does Visa charge merchants in the UK?
Visa doesn’t charge merchants directly. It charges interchange, assessment, and processing fees to the payment processor, which incorporates these fees into its merchant packages.
In the UK, Visa’s standard interchange fees are capped by law at 0.20% for debit cards and 0.30% for credit cards. For UK business and commercial cards, these are unregulated and typically range from 1.15% to 2.00%.
Want to ensure your fees are fair and reasonable? Check out our article on the best merchant service providers to compare the top options and choose the right provider for your business.
What additional fees apply to international card payments?
Small businesses that make multi-currency sales should budget for additional charges as follows:
- Currency conversion fees: 1% to 3%
- Cross-border fees: 0.6% to 1.5%
- Dynamic Currency Conversion: 3% to 4%
Most payment processors charge significantly higher transaction fees for international card payments due to higher fraud risk, complex regulatory compliance, currency conversion fees, and other factors. There may also be additional regulatory requirements to comply with, such as the EU Strong Customer Authentication (SCA).
For example, Square charges an additional 1.5% fee for international card transactions on top of its usual processing fees. Meanwhile, Stripe charges 2.6% + 20p fees for EEA cards and 2.9%-3.25% + 20p for the rest of the world. If the international customer pays you in their local currency (like USD) and Stripe has to convert it to British Pounds (GBP) into your bank account, they charge an additional 2% currency conversion fee.
What is SCA, and how does it affect my small business?
Short for “Strong Customer Authentication”, SCA is a set of strict regulatory security rules designed to reduce online fraud and protect bank account details.
While EU rules no longer cover domestic or UK-EEA transactions, SCA still applies when either the card issuer or the acquiring bank is located in the European Economic Area.
SCA requires customers to verify their identity using two independent factors when making an online payment.
These factors must come from at least two of the following categories:
- A password or PIN
- A phone, card reader, or authentication app
- A fingerprint or face scan
In practice, this often means a customer must approve an online purchase through their banking app or an SMS code before completing the payment.
Why is SCA important for businesses?
SCA matters for UK small businesses because:
- It reduces fraud by adding an extra layer of identity verification, helping protect your business from fraudulent payments and chargebacks.
- It affects checkout conversion, as unclear or slow SCA can lead to abandoned transactions.
- It may influence your choice of payment provider, as some handle SCA automatically while others require additional setup.
- It can change how payments are routed, and some cross-border transactions may be declined if SCA is required, but the authentication fails.
If you accept international online payments, choosing a provider that manages SCA helps you stay compliant, reduces fraud risk, and supports higher conversion rates for overseas customers.
What responsibilities apply to me as a merchant?
When taking card payments, compliance should be paramount; it’s your responsibility as a merchant to be fully PCI DSS compliant.
What is PCI DSS compliance?
PCI DSS stands for Payment Card Industry Data Security Standard and is the PCI Security Standards Council requirement that all merchants, regardless of size, must comply with.
PCI DSS is in place to ensure that sensitive information, such as card details, is handled securely throughout the payment lifecycle.
What are the different PCI DSS compliance levels, and how is my level determined?
PCI DSS has four compliance levels, which are based on transaction volume:
- Level 1: More than 6 million Visa or Mastercard transactions per year (or any merchant that has suffered a data breach).
- Level 2: 1–6 million transactions per year.
- Level 3: 20,000–1 million ecommerce transactions per year.
- Level 4: Fewer than 20,000 ecommerce transactions per year or up to 1 million transactions across all channels.
How to work out your level – even if you’re starting out
If you’re unsure how many transactions you process per year, there are ways you can check:
- Use projected volumes: acquiring banks typically let you estimate your first-year transaction volume based on sales. They’ll usually assign you a provisional level and adjust it later, if needed.
- Start with the lowest reasonable level: if you’re a micro or early-stage business with minimal transactions, you’ll often start at Level 4 until data proves otherwise.
- Remember that levels can change: if your business grows or changes how it handles card data, your level (and required tasks) may increase.
Note: To re-evaluate your PCI compliance level, you’ll need to calculate your annual transaction volume, determine your merchant or service provider status, map data flows (how cardholder data moves through your systems), match volume to PCI level criteria, and consult your acquiring bank/payment processor.
How to remain PCI compliant
To remain PCI DSS compliant, businesses that store, process, or transmit cardholder data must meet ongoing security and administrative requirements.
Your requirements vary depending on your merchant level, with Level 1 merchants facing the most stringent requirements.
- Level 1: must complete an annual Report on Compliance (ROC) with a Qualified Security Assessor (QSA), quarterly network scans by an Approved Scanning Vendor (ASV), and the Attestation of Compliance Form.
- Level 2: must complete an Annual Self-Assessment Questionnaire (SAQ), a quarterly ASV network scan, and the Attestation of Compliance Form.
- Level 3: must complete a SAQ, quarterly ASV network scan, and the Attestation of Compliance Form.
- Level 4: must complete a SAQ, quarterly ASV network scan, and the Attestation of Compliance Form.
For many businesses, the simplest way to reduce risk is to limit how much card data they touch – for example, by using hosted payment pages or third-party payment processors. You can also document the systems, people, and processes that interact with card data.
Secure technology is also key. Card payment systems should be separated from the rest of your business network, and all software and operating systems must be kept up to date with security patches. Out-of-date systems are one of the most common reasons businesses fail PCI checks.
What security features should my payment processing provider have?
We’d recommend looking for providers with robust security and fraud prevention measures, including:
- End-to-end encryption: this ensures your information remains secure and prevents third parties from accessing it.
- Tokenisation: this is where your customers’ sensitive payment data is replaced with a non-sensitive surrogate, keeping their card information secure.
- Active fraud monitoring: some payment processors offer 24/7 fraud monitoring, with every transaction analysed for suspicious activity.
- 3D secure authentication: an extra verification step at checkout, where customers confirm their identity, often via their bank app or a one-time code.
- Machine learning fraud detection: more advanced systems use AI to analyse behaviour patterns in real time to spot unusual activity that basic systems might miss.
- Custom fraud rules and controls: some providers let you set your own rules (like blocking high-risk countries or flagging unusually high transactions) to give you more control over risk.
- Address Verification Service (AVS) and CVV checks: these verify that the billing address and card security code match the cardholder’s details, to protect against fraudulent transactions.
This is just a quick overview of key compliance considerations; you can find more information on GOV.UK, which has detailed guides on customer data protection and obligations around invoicing and taking payments from customers.
How to save on card processing fees
Now that you have a clear picture of card processing fees, watch our Reviews Expert explain our top money-saving tips in just two-and-a-half minutes:
1. Negotiate your fees
Some payment providers will have flat transaction fee rates, but others, such as takepayments, have quote-based fee structures. If you have a large turnover of high-value transactions, you’ll have more negotiating power with providers like Worldpay, whose services are tailored to larger businesses.
2. Compare free payment processors to those with a monthly contract
Decide whether it’s worth going with a free payment processor that charges higher rates, or pay for a monthly contract. For example, Square charges 1.75% for debit card payments, while Worldpay charges only 1.5% but also imposes a quote-based monthly fee. Based on your monthly transaction volume, you can work out whether it’ll be cheaper for you to pay higher transaction fees or cheaper fees plus monthly charges.
3. Don’t overpay on your payment gateway
If you currently accept or plan to accept online payments, make sure your payment provider offers an affordable payment gateway – the software that acts as the ‘checkout system’ for your customers. Payment gateways have different fees and costs, so be sure to research to find the best one for you.
4. Look out for hidden costs and card-specific fees
You might see a transaction fee rate and assume you’re getting a great deal, but if you look more closely, you’ll likely discover there are alarmingly high charges for non-UK or commercial cards.
For example, a provider might advertise a rate of 0.9% +20p for UK cards, but a £100 transaction could cost you £2.95 if it’s paid with a non-UK card, or £3.40 with a commercial card. Always read the fine print.
5. Follow the rules to the letter
Chargebacks can have a big impact on your bottom line, and they’re most often incurred when you aren’t PCI-compliant or don’t deliver the product or service as promised. Make sure you understand the regulations that apply to you to avoid costly mistakes.
6. Set a minimum spend amount
Accepting many low-value payments and paying fees each time may not be financially viable for you, so it’s worth setting a minimum spend threshold for your card transactions.
7. Encourage cash payments
It might seem like the UK is becoming a cashless society, but many people still prefer to pay the old-fashioned way. This is the oldest – and simplest – trick in the book for avoiding card fees.
Summary: card processing fees in the UK
Processing fees will be deducted from your sales whenever customers pay via credit or debit card. There are various fees associated with card payments, but the most common is the transaction fee charged by your payment processor. Typically, this will be between 1.5% and 3.5% of each sale.
Remember that it is illegal to pass these card processing costs on to your customers; you are responsible for bearing these fees.
Jump back up to our fee calculator, or any of our guidance:
- Credit card processing fees calculator
- What are card processing fees?
- What UK card processing fees will I pay?
- What are the average costs for all card processing fees?
- What additional fees apply to international card payments?
- What is SCA, and how does it affect my small business?
- What responsibilities apply to me as a merchant?
- How to save on card processing fees
- Quick video: money saving tips
Startups.co.uk is reader-supported. If you make a purchase through the links on our site, we may earn a commission from the retailers of the products we have reviewed. This helps Startups.co.uk to provide free reviews for our readers. It has no additional cost to you, and never affects the editorial independence of our reviews.
