Card Processing Fees Explained: What UK Businesses Actually Pay

Card processing fees explained for UK businesses: interchange, scheme fees, acquirer margin, blended vs interchange-plus, and how to reduce what you pay.

Most UK businesses know they pay a percentage on every card transaction. Fewer understand that the rate they see on a statement is the sum of three different charges, each going to a different party, each with different logic behind it.

In this guide, we break down every component of a UK card processing fee: interchange, scheme fees, and the acquirer margin.

We explain the difference between blended and interchange-plus pricing, surface the hidden costs in processing contracts, and set out what can realistically be done to reduce your costs.

The Three Components of a Card Processing Fee

Every UK card transaction involves three separate fee layers, even when they appear as a single line on your statement. We cover each in turn.

Interchange is the largest component. It is set by Visa or Mastercard — not your processor — and paid to the cardholder’s bank as compensation for the credit risk and rewards programme costs they carry.

The merchant does not pay this directly. The acquiring bank pays it and passes the cost on to you.

Scheme fees are charged by Visa and Mastercard for use of their network infrastructure. They are a smaller component of your total processing cost — typically 0.01–0.15% depending on transaction type — but they are non-negotiable and passed on by all acquirers.

The acquirer margin is the layer your processor adds on top — this is where competition and negotiation matter.

On a blended rate deal, this margin is bundled invisibly into the single percentage you see. On interchange-plus pricing, it appears as a separate, explicit markup.

Why your processing rate varies by card type
Your blended rate is an average across all card types. But the underlying interchange differs significantly: a contactless Visa debit card carries 0.2% interchange; a premium Visa Infinite credit card might carry 1.5% or more. If your customers predominantly use premium or corporate cards, your blended rate will look expensive even if the acquirer margin is competitive.

How UK Interchange Rates Work

We have included the interchange rate table in the next section — it shows how widely rates vary by card type.

The Interchange Fee Regulation (IFR), which remains in force in the UK post-Brexit via the Payment Services Regulations 2017, caps interchange on UK consumer cards. Consumer debit card interchange is capped at 0.2%. Consumer credit card interchange is capped at 0.3%.

The cap does not apply to commercial cards, corporate purchasing cards, or cards issued outside the EEA. These can carry interchange of 1.5–2.5% or more.

American Express is also exempt — it operates a closed-loop network and sets its own merchant service charges, typically 1.5–2.9% for UK businesses.

This matters in practice. A retailer whose customers mainly use personal Visa debit cards faces very different card economics from a B2B services business whose clients pay with corporate Mastercard purchasing cards. Your blended rate may look the same on the surface, but the interchange underneath is very different.

Interchange Rate Ranges by Card Type (UK, 2026)

We have drawn these rates from published Visa and Mastercard schedules. Actual interchange varies by transaction type (card-present vs card-not-present) and specific card product.

Blended Rate vs Interchange-Plus Pricing

Blended rate pricing charges a single percentage for every transaction regardless of card type. SumUp charges 1.69%. Square charges 1.75%. Stripe charges 1.5% + 20p for UK cards. All blended rates — the processor has averaged across all card types, added their margin, and presented one number.

Interchange-plus pricing separates the actual interchange from the processor’s margin. Your statement shows: interchange pass-through (the real cost, varies by card type) + a fixed margin (e.g. 0.25% + 5p).

The total is usually cheaper at volume because the processor cannot blend premium card costs into the standard debit rate.

The cross-over point varies by your card mix. At volumes below £10,000/month, blended pricing is simpler and the saving from switching is small.

Between £10,000 and £30,000/month, the comparison is worth running. Above £30,000/month, interchange-plus from a traditional acquirer is almost always more cost-effective — provided the fixed monthly costs are factored in.

To compare fairly, get an interchange-plus quote and run it against three months of your own statements. Calculate the cost based on your actual card mix, add the acquirer’s fixed monthly fee, and compare the total to what you pay now.

Businesses at £25,000/month have saved £80–£120/month by making this switch.

The Hidden Fees in Card Processing Contracts

The per-transaction rate is only one component of the total cost. Below, we have listed the fees that frequently appear in processing contracts but rarely make it into headline comparisons.

Minimum monthly service charge (MMSC): if your transaction fees do not reach this floor, you pay the difference. A business paying 0.35% on a slow month where only £2,000 passes through (generating £7 in fees) will pay the MMSC floor — often £15–£25 — instead.

PCI DSS compliance fee: acquirers charge £2–£5/month when your annual PCI self-assessment questionnaire is up to date. They charge £15–£30/month when it is not. Completing the questionnaire — a simple online form for most small businesses using hosted payment pages — eliminates this cost.

Chargeback fees: typically £15–£25 per dispute, charged regardless of outcome. If you win the dispute, the transaction value is returned but the fee usually is not. High-chargeback businesses pay a disproportionate amount in fees relative to their volume.

Terminal rental: countertop terminals from acquirers are typically rented, not purchased. Rental fees of £15–£30/month per terminal are common. Over a three-year contract, that is £540–£1,080 per terminal before transaction fees — worth factoring in when comparing terminal purchase vs rental.

Authorisation fees: a small per-transaction fee (0.5–2p) charged on every authorisation attempt, including declines. Usually minor but can add up for businesses with high decline rates.

How Card Type Affects What You Pay

The card a customer uses has a direct effect on your processing cost, whether you see it on a statement or not. On a blended rate, the variation is hidden. On interchange-plus, it is explicit. We explain why this matters more for some businesses than others below.

A customer paying with a standard Visa debit card triggers 0.2% interchange. The same customer paying with a Visa Infinite credit card (a premium travel card) might trigger 1.5% interchange. Same transaction, same merchant, cost difference of 1.3 percentage points.

For most B2C businesses the card mix skews toward consumer debit and standard credit cards, where the IFR cap keeps interchange low.

The picture changes when your customers are other businesses. Corporate Mastercard and Visa purchasing cards carry higher interchange and are common in B2B purchasing — professional services and software businesses serving corporate clients often see a material corporate card proportion in their mix.

American Express requires a separate merchant agreement. Amex sets its own rates — typically 1.5–2.9% for UK merchants — and settles directly with the merchant.

Whether to accept Amex depends on whether your customer base uses it and whether the conversion uplift justifies the higher rate. Businesses serving affluent consumers or corporate travellers are more likely to see Amex usage.

How to Reduce Your Card Processing Costs

Card processing rates are negotiable above a certain volume threshold. Acquirers quote differently for different business sizes, card mixes, and risk profiles.

Getting competing quotes and presenting them to your current processor is the most direct lever. We have found that businesses processing £20,000+/month have enough volume to negotiate meaningfully.

Switching from blended to interchange-plus pricing is the second lever worth pulling for your business. This requires moving to a traditional acquirer rather than a payment service provider.

A monthly fixed cost applies and the application process takes longer, but the per-transaction rate runs lower for businesses with a standard UK debit and credit card mix.

Auditing your monthly statement for avoidable fees takes under an hour. Check whether you are being charged a PCI non-compliance fee — completing the questionnaire eliminates it.

Also check whether the MMSC regularly costs more than your actual transaction fees (if so, your volume may not justify the current contract), and whether your chargeback rate can be reduced through better documentation and fraud screening.

Surcharging is banned in the UK for consumer Visa, Mastercard, and Maestro transactions under the Consumer Rights (Payment Surcharges) Regulations 2012. If you attempt to pass card fees to consumers directly, you risk FCA action.

The surcharge ban does not apply to B2B transactions where both parties are commercial entities.

Steering customers toward lower-cost payment methods is permitted and widely done. Offering a small discount for cash or bank transfer, or making bank transfer the default on your B2B invoices, reduces card volume without breaching surcharge rules.

We cover bank transfer and direct debit setup in the accepting payments guide if you want to move more volume off the card networks.

Bottom line: Card processing costs are three layers deep: interchange, scheme fees, and your acquirer margin. Under £10k/month, a blended-rate provider is fine; above £20k/month, interchange-plus saves money once you audit your contract fees.

Frequently Asked Questions

Why does my processing fee vary from month to month?
On interchange-plus pricing, the fee varies because interchange itself varies by card type. A month where more customers pay with premium or corporate cards will cost more than a month where most payments are standard debit. On blended pricing, the rate is fixed per transaction — monthly variation comes from volume, not card type.

What is an MSC (merchant service charge)?
The merchant service charge is the total fee charged per transaction by your acquirer — it covers interchange, scheme fees, and the acquirer margin combined. On a blended deal, you see only the MSC. On interchange-plus, you see the interchange component and the acquirer margin separately. The MSC is what appears on your merchant statement as the processing cost.

Is it worth accepting American Express?
It depends on your customer base. Amex cards are more common among corporate travellers, affluent consumers, and business owners who use Amex for rewards. If those segments make up a meaningful part of your customer base, refusing Amex risks losing sales. If your customers rarely carry Amex, the higher rate (1.5–2.9%) may not be justified. You need a separate Amex merchant agreement — acceptance is not automatic with a Visa/Mastercard acquiring contract.

Can I pass card processing fees on to my customers?
No, for consumer transactions in the UK. The Consumer Rights (Payment Surcharges) Regulations 2012 ban surcharges on consumer Visa, Mastercard, and Maestro transactions. The ban does not apply to B2B transactions where both parties are businesses, or to American Express on consumer transactions (though adding an Amex surcharge is unusual and may deter use). Businesses must absorb card processing costs rather than itemising them as a surcharge.

What is the cheapest way to accept card payments in the UK?
For low volumes (under £10k/month), SumUp at 1.69% or Square at 1.75% are the most cost-effective options with no monthly fee or contract. At higher volumes, an interchange-plus contract from Worldpay, Barclaycard Payments, or Paymentsense will be cheaper once monthly fixed costs are factored in. The actual cheapest depends on your volume, card mix, and what rate you can negotiate.

What does card-not-present mean and why does it cost more?
Card-not-present (CNP) means the physical card was not presented at the point of sale — online payments and phone orders are CNP transactions. They carry higher interchange than card-present transactions because the fraud risk is higher without chip-and-PIN or contactless authentication. The premium varies by card scheme but is typically 0.1–0.3 percentage points higher than the card-present equivalent.

How we put this guide together

This guide is based on published Visa and Mastercard UK interchange schedules, the UK Payment Services Regulations 2017 (which retained the IFR interchange caps post-Brexit), FCA guidance on payment surcharging, and publicly available acquirer and payment service provider pricing pages as of April 2026.

Where ranges are given, they reflect variation by card product, transaction type, and published tier pricing rather than a single representative figure. We recommend confirming rates directly with providers before making any contract decisions.

This is editorial guidance, not regulated financial advice. We have no commercial relationship with any acquirer or payment processor named in this article.