The lowest transaction rate is not always the cheapest merchant account. Reprice each quote using the cards and transaction sizes your business actually handles, then compare the contract, terminal terms, payouts and extra fees. The percentage gets your attention; the rest of the agreement decides whether switching saves you money.

Choosing a Merchant Account at a Glance

Choose the account that costs least for your trading pattern without leaving you tied to unsuitable terms or short of cash. We would reject any quote that leaves the full monthly cost, contract length, payout timing or reserve rules unclear.

What a Merchant Account Costs

Compare what you would pay over a normal month, not the percentage printed most prominently on the quote. Fixed transaction charges, terminal rental, dispute fees, faster payouts and compliance costs can all change the result. We include those costs before judging whether a lower processing rate is genuinely cheaper.

Blended and Flat Rates

Flat and blended rates are easy to read, but you still need transaction size and card mix to compare them fairly. Stripe charges 1.5% plus 20p for standard UK cards online, while Square charges 1.4% plus 25p for UK cards online. The lower percentage does not always produce the lower bill.

Our calculation puts the break-even point at a £50 online payment, where both services charge 95p. On a £20 sale, Stripe costs 50p against Square’s 53p; on a £100 sale, Square costs £1.65 against Stripe’s £1.70. If your average sale is nowhere near £50, the headline percentage tells only half the story.

Volume can make a larger difference for in-person payments. At £5,000 a month of UK card takings, Square’s 1.75% rate costs £87.50 and Dojo’s 1.2% blended rate costs £60 for a business within Dojo’s under-£100,000 annual card turnover band. We calculate the gap at £27.50 a month, or £330 a year, before terminal and other charges.

That £330 is worth investigating, but it is not a verdict on its own. A saving in processing fees can disappear once the contract and terminal costs are added. Our guide to card processing fees explains how to pull the relevant charges from your current statement.

Interchange-Plus Pricing

Interchange-plus can work well when most customers use UK consumer cards, but it is not automatically cheaper. UK interchange is capped at 0.2% for consumer debit cards and 0.3% for consumer credit cards only when the merchant, acquirer and card issuer are all in the UK. The provider adds its own margin and other processing costs on top.

Our £40 debit-card example shows how little of a blended or flat charge may be interchange. Capped interchange is at most 8p, while a 1.2% blended charge is 48p and a 1.75% charge is 70p. Most of either provider’s charge therefore pays for something other than interchange, which is why the provider’s margin and added fees deserve attention.

Cards issued outside the UK can change the calculation sharply. On a £100 online payment made with a consumer credit card issued in the European Economic Area (EEA), interchange at 1.5% is £1.50. A UK-issued consumer credit card carries a maximum of 30p under the 0.3% cap. That is five times as much interchange before the acquirer adds anything.

A cheaper rate on cards you rarely take is not a saving. We would not accept an interchange-plus estimate based mainly on UK debit cards if your payment data shows a substantial share of EEA or other international cards. Our pricing-model guide covers interchange-plus, blended and flat-rate pricing in more depth.

Other Fees to Watch

Extra charges can wipe out a modest rate saving. Stripe charges £20 when a dispute is received and £20 when you counter it, although the second fee is refunded if you win. Standard payouts are free, while Instant Payouts cost 1% of the amount paid out, with a minimum fee of 40p. Those costs matter more to some businesses than a small difference in the transaction rate.

PCI compliance can also add a recurring charge. Barclaycard states that PCI DSS compliance is mandatory for every business taking card payments. Its Data Security Manager costs £4.80 per month for each level at which a business confirms compliance, even when another company provides the compliance service. Barclaycard warns that missing the deadline can bring non-compliance charges, but it does not publish an amount on that page.

A rolling reserve is not a fee, but it can still leave you short of usable cash. Stripe describes it as a percentage withheld from each new transaction and gives a 30-day rolling window as an example. It states no standard percentage on its reserves page. If a quote includes a reserve, the percentage, release timetable and provider’s right to change it belong near the top of your comparison.

How to Compare Merchant Account Providers

Make every provider price the same set of transactions. The Payment Systems Regulator requires the 15 card-acquiring firms covered by its directions to give each business with annual card turnover up to £50 million a bespoke summary box and prompts to shop around or switch. Use that personalised information with your own payment data rather than comparing unrelated headline examples.

Get Quotes Built on Your Own Card Mix

Build every quote around the same card mix, sales channels, average transaction values and monthly volume. If your provider is covered by the regulator’s directions, its summary box should give you bespoke price and service information to use as a starting point. Your recent payment data then shows whether those figures reflect the way customers actually pay you.

Ask each provider to show the resulting monthly cost, including fixed transaction charges and recurring fees. A model built mainly on the cheapest domestic debit cards will flatter the quote if you take many commercial, credit or overseas-issued cards.

Read the Contract Before the Rate

The contract can cost more than a small difference in the processing rate. Put the acquiring agreement and terminal rental terms side by side, then identify their end dates, renewal rules, notice requirements, equipment-return obligations and any charges triggered by leaving.

The Payment Systems Regulator caps point-of-sale terminal lease and rental contracts at 18 months for the firms covered by its directions, followed by a rolling monthly contract. That limit applies to terminal rental, not automatically to every part of the acquiring agreement. I would not sign until the documents make that distinction clear.

Check How Your Money Is Held and Paid Out

Payout timing matters when card receipts fund stock, supplier bills or the next trading day. Compare the standard timetable, any charge for faster payouts and the provider’s right to delay or reserve funds. A low rate is poor compensation if the cash reaches your bank account too late for the way you trade.

Reserve terms need a plain answer to three questions: how much is withheld, when each amount is released and what lets the provider change the arrangement. Money held in reserve is still your revenue, but you cannot use it during the holding period. Our chargeback guide explains the disputes that reserves are intended to cover.

Check the Provider Is Authorised

Rule out a firm that is not authorised for the service it offers. The FCA warns that clone firms copy genuine authorised businesses, so a familiar name or convincing website proves little. Match the legal name, website, telephone number and other contact details you have been given against the FCA Firm Checker.

Authorisation does not make a quote good value, but mismatched contact details are enough to stop the comparison. We treat this as a safety check before weighing rates, terminals or contract terms.

Common Mistakes to Avoid

The expensive mistakes usually begin with one attractive number standing in for the whole agreement. Keep the card mix, monthly cost, contract, payout rules and compliance charges together while you compare.

• Comparing percentages alone: Include fixed charges, recurring fees, terminal costs, disputes and payout charges.
• Using a generic card mix: Make every provider price the cards and transaction sizes your business actually handles.
• Ignoring separate contracts: Acquiring and terminal agreements may have different renewal, notice and end-date rules.
• Treating reserves as small print: Withheld funds can hurt cash flow more than a modest rate saving helps it.
• Assuming PCI support is free: Include compliance charges in the monthly total rather than leaving them outside the quote.
• Trusting a familiar name: Match the firm’s contact details against the FCA record before discussing commercial terms.

When to Compare Merchant Account Providers

Compare providers when your processing bill has grown faster than your sales, a new quote adds terminal or contract commitments, or your card mix has changed. Start with our card-processing cost comparison. Use the card machine guide when hardware is the main issue, the high-risk merchant account guide if mainstream firms will not accept your sector, and our switching guide once you have chosen a replacement.

Frequently Asked Questions