Credit card processing fees

Finally understand credit card charges for merchants, and calculate your credit card processing fees with our quick and easy form

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We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality. This article was authored by:
  • Bryn Glover

Taking card payments as a business means you'll also pay a number of related credit card processing fees. These include transaction fees (typically between 1% and 3%), authorisation fees (between 1p to 3p per transaction) merchant service charges (typically between 0.25-0.35% for debit cards, 0.7-0.9% for credit cards), and more.

How much you are charged depends on a few factors, including even the type of card your customer uses.

These costs can quickly add up, and credit card processing companies often offer different fees depending on the type of business you run; so, it's a good idea to look for the cheapest merchant account for your business in order to reduce the time, and money, spent processing these payments.

For this, you can use our free online comparison tool to compare quotes and find the best payment solution for your business.

Or, read on; in this guide our experts will take you through the most common questions asked about credit card processing fees, including what they are, how much they could cost you, and what options are available to save you money.

Find the card machine provider with the lowest processing fees Do you currently accept card payments? Compare quotes quickly and easily

What are credit card merchant fees?

Credit card merchant fees include the credit card transaction charges, as well as one-time fees and monthly fees. To work credit card processing charges for retailers, you need to add the card machine price to the on-going credit card processing fees, such as merchant service charges and credit card transaction charges.

Sound easy? Well, you also need to do a bit more brainwork to calculate the credit card processing costs for your individual business.

Before we call on our trusty interactive calculator for help, let's just understand what costs are involved in the credit card fees for retailers and small businesses.

Credit card merchant fees include:

  1. Credit card transaction charges – Usually between 1% and 3%
  2. Merchant service charges – 0.2% for debit cards and 0.3% for credit cards
  3. Minimum monthly service fees – around £10 (if applicable)
  4. Transaction authorisation fees – 2p per transaction
  5. Card machine price – £50 – £80 on average
  6. Set-up cost – £50 – £100 on average (one-off fee)
  7. PCI compliance fee – £3.50 per month
  8. Chargeback fees – Usually between £10 and £20

Credit card processing fees explained

There are a range of fees that you may encounter when taking card payments. The table below includes some of the most likely inclusions, with more information about each type included below.

FeeWhat is it?Likely cost
Transaction chargesSmall charge for each payment1-3% avg.
Amex feesAccepting American Express payments1-2% more than normal payments
MethodHow you customers payHigher price when card is not present
Merchant account feesHolding pen for customer card payments£5-£15/month
Service chargesInterchange or discount rates0.2-0.3%
Service feesContract fees for account£10-£15/month
AuthorisationTransaction authorisation fees1p-3p/sale
Card machineCost of actual payment machine£30-£80
Set-upInstallation and software£100 or less (if any required)

Credit card transaction charges: Between 1% and 3% on average

Every time you take a debit or credit card payment, there'll be a small charge, usually not more than 3%.

There is no hard and fast rule for credit card transaction fees for merchants – major banks like NatWest quoted us a rough figure of 3% per transaction, but with Zettle by PayPal (formerly iZettle) or Square it's a flat rate of 1.75%.

Remember, credit card processing fees vary according to a couple more factors too: the type of card used and the payment method.

The most common credit and debit cards used (Visa and Mastercard) generally carry the base rate credit card transaction fees in your contract, whereas American Express is often more expensive for small businesses to accept.

American Express merchant fees

Depending on the nature of your business, you may want to think about accepting American Express. With Amex, you need to apply separately to the company itself, and you’ll be paying one to two percent more in your credit card transaction charges.

That’s why many small business choose not to accept Amex. Alternatively, some people 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.’

Card payment method

How your customers pay can also impact the credit card processing charges to retailers: with some contracts, it matters whether you are tapping, inserting, swiping or keying in their payment card.

This is because of the different levels of risk associated with various credit card processing methods. When the physical card is not present, for example, the credit card company charges merchants more, as they are accepting more risks.

Merchant account fees

A merchant account is just the checking bank account you need to have to be able to take card payments.

Many merchant accounts charge fees of around £5 to £15 a month, but some (such as Zettle by PayPal and Square) keep costs low for small businesses with no monthly fees.

Think of the merchant account like a holding pen for your customers’ card payments to sit in, while the cash gets authorised and transferred to your personal or business account. This usually takes a couple of working days, but can be instant with PayPal Here.

Merchant service charges: 0.2% or 0.3% of the sale

In the EU, interchange rates do not exceed 0.2% of the sales total for debit cards, and 0.3% for credit cards.

You may have heard of merchant service charges as interchange rates or discount rates. These are the fees charged by banks to cover their costs in accepting credit card transactions.

Minimum monthly service fees: Around £15 a month

Typically, this is in the region of £10 to £20 per month.

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.

Transaction authorisation fees: 1p to 3p per sale

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 around 1p to 3p per transaction.

Card machine price :£30 to £80 on average

The PDQ machine or card machine price is generally low compared to the credit card processing fees. When making your pick, think about the features you will want.

A chip and PIN terminal offering cashback or phone top-ups may cost a tad more, but if it brings you more loyal customers through your door, it can be a great return on investment.

And of course, the number of card payment terminals you require will affect these upfront costs. If you’re running a busy restaurant, you may just need more than one, so your customers can pay when they’re ready.

Set-up costs: Under £100 (if any)

Is there is a set-up cost, it can range from £50 to £100, but fewer and fewer credit card processing companies charge these nowadays.

Depending on the nature of your merchant account and your provider, you may face a one-off fixed fee for setting up card processing – it's just like a membership for joining a gym.

PCI compliance fee: Under £5 a month

PCI compliance is a countrywide fraud prevention method, and costs between £2.50 and £5 per month.

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.

Any extra costs?

On top of the credit card processing fees, you might like any extra services such as chargebacks, sending invoices or accepting international payment cards.

As you might expect, these optional add-ons will depend on your contract, but to give you an idea, chargebacks generally cost between £10 and £20, and e-invoices and foreign card processing often add a percentage point to the credit card processing fee.

Tip for lowering credit card processing fees: Just ask

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 it’s always worth trying to renegotiate your credit card charges.

Many supermarket chains, petrol outlets and other larger companies, for example, don’t pay the full £15 for each swipe machine – volume discounts are available for businesses, so it’s a good idea to talk to the card processing provider about the best deals.

Compare credit card charges

Nowadays, you can get your hands on a cheap chip and pin machine for as little as £30 new or £15 a month rented.

Credit card machines like the card reader from Zettle by PayPal (formerly known as iZettle) or that from Square  are devices that are now making credit card processing more affordable than ever for small businesses, thanks to their low price and credit card processing charges.

Here is how their credit card processing fees compare:

Merchant providerBest forCost (excl. VAT)Transaction fees
SumUpCheapest transaction fees£591.69%
Zettle by PayPal
Formerly iZettle
Best all-rounder£19 (on offer here)1.75%
SquareBest card machine for features£39
(on offer here)
WorldpayMost flexible£39.991.95-2.75%
PaypalBest for growing business£45 (on offer here)1-2.75%
BarclaysTrusted payments brand£602.6%

Compare credit card processing fees today

Many merchant account providers offer card processing fees to suit a range of business types. PayPal and Square are great for growing businesses, while companies like Barclays and Worldpay are generally more appropriate for larger companies with consistently high revenue.

To find the best, most suitable provider for your business, it is important to compare quotes from as many merchant account service providers as possible.

Clicking the most fitting option below will send you to our quote comparison tool, where we use information you give on your business information to pair you up with the best and most relevant credit card processing partners – the first step towards finding the perfect match for your business.

High risk merchant accounts
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Compare fees from top providers in the UK and find the best deal for your small business. Whatever industry you work in, card payments can help you and your customers to complete transactions quickly and efficiently.

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Bryn Glover
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