UK Credit Card Processing Fees & Rates Calculator

1 of 3

Square – transaction fees from 1.75%

4.7

Try Square

2 of 3

Tide – flat transaction fee of just 1.5%

4.0

Try Tide

3 of 3

Takepayments – transaction fees from 0.3% to 2.5%

4.8

Try Takepayments

*The star ratings for each provider above have been taken from the extensive analysis on merchant accounts conducted by our research team. 

How much revenue does your business make in a typical month?

How many transactions per month do you estimate you process?

Taking card payments isn’t just about choosing the best card machine. Any small business that accepts card payments also has to contend with credit card processing fees.

You can expect to pay anything from 1.5% to 3.5% with each payment, depending on the credit card your customer uses. There can also be authorisation fees that cost around 1p to 3p per sale, and merchant service fees of 0.25% to 0.35%.

It’s important to understand the exact rates you’ll be charged each time you take a card payment. To help with this, we’ve built a handy custom card processing fees calculator for merchants, above. We also have all the guidance you’ll need to understand the kind of fees you’ll encounter, throughout this article.

What are card processing fees?

These are the charges that you, the business owner, will incur when your customer makes a payment – whether in-person or online – via card. The most common processing fee is the transaction fee that you’ll be charged by your payment processor for every sale you make. These generally sit between 1.5% and 3.5% of each sale, and some processors will also tack on an additional charge of a few pence (typically about 20p).

Be mindful, though, that there’s a whole host of other fees associated with card processing, which we’ve broken down below.

Why are they charged?

You pay payment service providers and card networks (also known as card schemes, this refers to the communication system between card issuers and merchants that allows payments to take place) whenever a card payment transaction is triggered.

This covers the services and technology that’s used to handle the transaction, including safely and securely transferring the payment data needed to get your money from the customer.

Can I avoid paying them?

No. As a small business owner, you’ll want to keep your costs as low as possible. However, since 2018, it is illegal for you to pass these costs onto your customers. As a merchant, it’s your responsibility to bear these costs yourself.

What other responsibilties apply to me as a merchant?

Compliance should be paramount to all merchants. When taking card payments it’s your responsibility to be fully PCI DSS compliant.

This stands for Payment Card Industry Data Security Standard: essentially these are rules set by the PCI Security Standards Council that all merchants, big or small, must adhere to.

They are in place to ensure that sensitive information is handled to a safe standard in the payment lifecycle.

There are four levels of PCI compliance, with your level determined by how many transactions you are taking each year.

• Level 4: less than 20,000 card transactions per year
• Level 3: 20,000 to one million card transactions per year
• Level 2: one million to six million card transactions per year
• Level 1: more than six million card transactions per year

What will be required from you will be dependent on your level, but at the very least you’ll need to complete a Self-Assessment Questionnaire (SAQ).

Data breaches and non-compliance can result in hefty fines and penalties, so it’s crucial for merchants (and the payment providers they use) to be PCI and GDPR compliant.

We’d recommend looking for providers that have robust security and fraud prevention measures in place. Look for measures like:

Payment devices with end-to-end encryption: this ensures your information is secure, and prevents third-parties from accessing private data.

Tokenization: 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 will provide 24/7 fraud monitoring, with every transaction being analysed for suspicious activity.

This is just a quick overview of some key compliance considerations, but you can find more detailed information from gov.uk. You can also find more detail from the government on data protection.

We tried out the Square Terminal card machine in the Startups offices. Source: Startups.co.uk

All the fees you’ll pay to process card payments

Taking card payments isn’t as straightforward as paying a single fee per transaction. To get the funds, you’ll be subject to a range of costs, even if you’ve signed up with one of the best merchant service providers.

We really appreciated how ergonomic the takepaymentsplus card reader was during our testing. Source: Startups.co.uk

If you don’t know all the different types of fees, and the average you should be paying, you could get stung. We have provided a breakdown of the different types of fees and their average costs in the table below. We’ll then go into more detail about each fee actually means.

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, and around 1% to 1.9% for commercial cards
Authorisation fees	1p to 4p per authorisation
Minimum monthly service fees	£10 to £30 per month
Card machine costs	£50 to £200 upfront (they can also be leased for around £10 to £30 per month)
Setup charge	Up to £100 upfront
PCI compliance fee	£10 per month

Transaction fees

These are the most common fees you’ll be incurring when taking card payments and are charged by your payment processor or merchant account provider.

Unsure about what a merchant account is? Essentially its the middleman between you and the customer. When you accept a payment, it holds the money while the transaction is verified, before eventually being sent to your business bank account.

They charge a per transaction fee for their services, most commonly based on a percentage of the transaction. High merchant service fees can really eat into your profits, so you’ll need to choose a provider that will give you a competitive rate.

These fees are typically made up of scheme fees, a markup fee by the payment processor, and can also include interchange fees, which we’ll explain below.

Interchange fees

These are the fees that your bank must pay to your customer’s card issuer every time you accept a credit or debit card payment. These fees are then passed on to you as the merchant. The fees cover the cost of handling the transaction, as well as bad debt costs or any risk involved in the process.

UK legislation caps these consumer debit card fees at 0.2% and consumer credit card fees at 0.3% (these caps don’t apply to commercial cards which have higher rates).

No need to worry about these fees if you’re using a third party payment processor that issues flat-rate fees (such as Square or Stripe) – the cost will fall under the transaction fee we listed above.

Authorisation fees

The first stage of the transaction process is the card issuer authorising payment. Your payment processor will send an authorisation request to the card network (Visa, Mastercard, Amex etc.) to make sure the payment card is valid, and that there are sufficient funds in the account.

You’ll still be charged whether the payment is approved or declined, as the fee is for the auhorisation check being carried out. The amount you’ll be charged will be dependent on factors like the card type used and your transaction volume.

Minimum monthly service charge (MMSC)

Some payment processors might charge you if your transaction processing fees don’t total a certain amount each month.

Though generally this is quite low, and most businesses will clear the threshold easily – but it can be a concern to those who operate seasonally.

Card machine costs

To take card payments in person, you’ll need a card machine, like the Square card reader.

They can be bought upfront for a one off cost, or leased monthly from your payment processor or merchant service provider.

What you’ll pay for your card reader will depend on factors like your contract type and the type of card machine. Some are basic devices that connect to a smartphone, whereas others can be sophisticated handheld point-of-sale devices with advanced features.

Setup charge

A one-time fee that might be charged by your payment processor or merchant service provider when you first sign up – like when you join a new gym.

It can be up to £100, but this is rare…the majority of payment providers won’t charge you.

PCI compliance fee

This is a fee that a merchant account or payment processor may pass onto you as the merchant for maintaining PCI DSS compliance.

Additionally, if not included by your provider, you may need to pay for quarterly security scans.

What about international payments?

We’ve focused on card payments in the UK, but some SMEs might also be making sales internationally.

Just be aware that there may be a host of additional charges you will incur when making multi-currency sales, including:

• Currency conversion fee: generally 1-3%
• Cross-border fee: these can range from around 0.6-1.5%
• Dynamic Currency Conversion: can typically range from 3-4%

Also bear in mind that most payment processors may charge a significantly higher transaction fee for international card payments.

There may also be some some additional regulatory requirements that will be triggered by international payments such as the EU Strong Customer Authentication (SCA).

How to save on card processing fees

Now you understand all the fees that can cut into your profit, here are our top money-saving tips:

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.

Similarly, you may be able to secure a lower rate by demonstrating a reliable payment history.

Compare free payment processors to those with a monthly contract

Decide if it’s worth going with a free payment processor that charges higher rates, or pay for a monthly contract. Square charges 1.75% for debit card payments, while Worldpay only charges 0.75%. However, the latter also charges 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.

Don’t overpay on your payment gateway

If you plan to take online payments, make sure your payment provider offers an affordable payment gateway (the software that will be acting as the ‘checkout system’ for your customers).They each come with their own costs and fees, so be sure to do your research into the best one for you.

Lookout for hidden costs and card-specific fees

You might see a transaction fee rate and assume you’re getting the deal of the century, but if you look closer you might realise there are alarmingly high charges for non-UK cards or commercial cards. Always read the fineprint!

Follow the rules to the letter!

Chargebacks can have a big impact on your bottom line, and these are mostly incurred if you are not PCI compliant, or don’t provide the product or service as promised. Make sure you understand the regulations that apply to you to avoid costly mistakes.

Set a minimum spend amount

Taking a lot of extremely low value payments and paying fees each time might not actually be financially viable for you, so you could try setting a minimum spend amount for your card transactions.

Encourage cash!

It might seem like the UK is becoming a cashless society, but plenty of people still like to pay the old fashioned way. This is the oldest – and simplest – trick in the book for avoiding card fees!

Our Senior Research Executive and Reviews Writer noted how light and easy to handle the Zettle Reader 2 was when they examined it. Source: Startups.co.uk

The key points

Processing fees will be taken out of your sales whenever your customers make payment via credit or debit card. There are a variety of fees associated with card payments, but the most common of these is the transaction fee charged by your payment processor: typically this will be between 1.5% to 3.5% of each sale.

Remember that it is illegal to pass these costs onto your customers, and it is your responsibility to bear these fees.