Credit card processing fees

Credit card fees can eat into your firm's profits - but how do you reduce them without impacting sales? Here's how to find the best deal from the top providers.

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Any small business that accepts card payments has to also contend with the costly issue of merchant processing fees.

How much you have to pay depends on a few factors, including even the type of card your customer uses. Common charges include transaction fees (1-3% per sale), authorisation fees (1-3p per sale), and merchant service fees (0.25-0.35%).

These charges can quickly get confusing – and expensive. However, as the below chart shows, rates vary dramatically depending on the provider you choose:

0 out of 0
Device cost
Transaction fees
PCI compliance
Other fees

Worldpay Reader

Square Reader

Zettle by PayPal

SumUp Air

Barclays Anywhere

Takepayments A920

£49.99 per month (fixed monthly plan)

£19.20 + VAT

£29 + VAT

£29 + VAT

£29 + VAT

Monthly rental

From £10 per month + VAT

2.75% + £0.20

  • 1.75% for contactless and inserted CHIP cards
  • 1.9% for ecommerce payments
  • 2.5% for cardless payments
  • 1.75% for contactless or card payments
  • 1.75% for PayPal payments
  • 2.5% for invoice transactions
  • 1.69% for all card payments
  • 2.5% for invoices


Between 0.3% – 2.5% (personalised depending on your business)

£29.99 per year

None – Square handles this

None – Zettle handles this

None – SumUp handles this

From £4.80 per month

£35 per year

  • Minimum monthly service charge of £15
  • PCI non-compliance fee of £9.99 per month
  • Chargeback fee of £15
  • No minimum monthly transaction requirements
  • No refund charge
  • No early termination fee
  • No chargeback fees
  • Up to £250 chargebacks/month covered for free
  • No refund fees
  • No monthly fees and no contractual obligations
  • Refund charge of 75p
  • Monthly minimum service charge of £10
  • Chargeback fee of £9
  • Refund fee of 30p

The type of business you run will influence how much you'll spend on fees. For example, if you're running an ecommerce website then Square has the lowest online rates. Meanwhile, a local brick-and-mortar shop might want Barclaycard Anywhere as it has the cheapest flat-rate for CHIP and contactless payments.

Researching the top providers will help you to locate the most valuable deal for your business. For this, you can use our free online comparison tool to compare personalised quotes from brands like Zettle or Square.

Or, for a more detailed breakdown of how credit card fees work, read on. Our expert guide will take you through what credit card fees are, how and when to pay them, as well as some handy tips to reduce your bill.

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

What credit card processing fees do I have to pay?

Particularly post-Covid, the UK has become a largely cashless society. Consumers now expect to be able to pay for every product and service with plastic money – so card machines are an important technology to have in your small business.

Credit card machines like the card reader from Zettle by PayPal (formerly known as iZettle) or 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.

Still, there are a range of fees that you will inevitably encounter when taking card payments, even with the best small business merchant providers. We've listed the main ones below:

Type of fee:Average cost:
Transaction fees1-3%
Amex transaction fees4-5%
Merchant account fees£5-£15 per month
Service charges0.2-0.3%
Service fees£10-£15 per month
Authorisation fees1p-3p
Card machine £30-£80
Setup£100 or less
How can I save money on card processing fees?

Having so many different fees to settle makes it difficult to keep costs low. To help you out, our experts have designed a specialist online comparison tool that will compare deals from the top credit card merchant providers based on your specific industry and business requirements.

Credit card processing fees: explained

card processing fees

So now you know the credit card fees you're likely to be charged when taking card payments.

But what exactly are you being charged for?

What is a transaction charge?

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 – they tend to vary according to the type of card used and the payment method.

For example, Square charges 1.75% for card payments, but 2.5% for cardless payments. 

Has Brexit impacted transaction fees?

Many card merchants charge more for transactions completed outside the EU. Luckily for UK sellers, most big-name providers including Square and Mastercard have extended this policy to UK card transactions post-Brexit. However, it's worth checking this with your provider beforehand.

What is an Amex fee?

You'll be charged an Amex fee if you accept American Express credit cards. 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.

What is a 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 security 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. That's why Square charges 1.25% higher in transaction fees for cardless payments.

What are merchant account fees?

Merchant accounts are a checking bank account which you need to have to be able to take card payments. Many 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.

Want to find the best merchant account quotes? Use our specially-designed comparison tool to get a bespoke recommendation based on your industry and business needs.

What is a merchant service charge?

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. They typically range between 0.2-0.3%.

How much do card machines cost?

Card machine costs range from £19.20 (Square card reader) to as much as £80. The number of card payment terminals you require will affect these upfront costs.

If you’re running a busy restaurant, you may need more than one license, which can result in additional costs.

Square card reader

Square card reader

What are minimum monthly service fees?

Depending on the nature of the contract with your processor, you may have a minimum amount you will be charged each month if your transactions do not raise enough in fees.

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

What are transaction 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 around 1p to 3p per transaction.

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

What are setup costs?

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

This can range from £50 to £100, although few credit card processing companies charge these nowadays.

What is a PCI compliance fee?

PCI compliance is a countrywide fraud prevention method. It 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.

Some providers, like Square and Zettle, take on the PCI risk themselves. Purchasing a plan with these providers is an easy way to save money.

Are there any hidden fees?

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 (when a bank has to withdraw money from your account to return it to a customer) generally cost between £10 and £20
  • Invoices and foreign card processing often add a percentage point to the credit card processing fee
  • Refunds (when you voluntarily return money from your business account to a customer) generally cost between 30p to £1

Next steps

Now you know what the main card processing fees are, how much you can typically expect to have to spend, as well as what some of the most common hidden charges are. Your next step now is to find the right provider to save you the most money when taking payments.

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.

But 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.

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Credit card processing fees: FAQs
  • How much do card machines cost?
    Card machines cost between £30-£80, depending on the provider and whether you bought them new or second-hand.
  • How can I avoid credit card processing fees?
    You can't not pay processing fees if you want to take payments from customers. However, to keep costs low, make sure you are constantly comparing provider costs to get the best deal on the market. You could also try to negotiate with your current payment processing service for a lower fee.
  • Why does my provider charge more than the average?
    If your current card processing provider charges more than the average transaction fee (1-3%) they are likely adding in markup fees for services like support and account setup. This is why it's important to compare how a provider's quote compares to the market to avoid hidden fees.
  • What is a monthly minimum fee?
    A monthly minimum fee is the lowest amount of sales you can make per month. It ensures that there is activity in your merchant account. 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 to provide free advice and reviews for our readers. It has no additional cost to you, and never affects the editorial independence of our reviews.

Helena Young
Helena Young Senior Writer

Helena "Len" Young is from Yorkshire and joined Startups in 2021 from a background in B2B communications. She has also previously written for a popular fintech startup.

Included in her topics of interest and expertise are tax legislation, the levelling up agenda, and organisational software including CRM and project management systems. As well as this, she is a big fan of the films of Peter Jackson.

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