Credit card processing fees for UK businesses in 2023 generally consist of a percentage fee per transaction, ranging from 0.4% to 3.5%. This percentage fee often includes various components such as interchange fees, transaction fees, and card scheme fees.

In addition to the percentage fee, businesses may also be charged other fees, such as authorisation fees (commonly 1-3 pence per sale) and merchant service fees (usually between 0.25% and 0.35%).

Here is a breakdown of the different types of credit card processing fees:

  • Interchange fees: These are fees paid by the merchant’s bank to the cardholder’s bank for processing the transaction.
  • Transaction fees: These are fees charged by the payment processor for processing the transaction.
  • Card scheme fees: These are fees charged by the credit card network (e.g., Visa or Mastercard) for using their network.
  • Authorisation fees: These are fees charged for each time a customer’s credit card is authorised, even if the transaction is not completed.

Below, I’ll go deeper into transaction fees, interchange fees, and other costs that could be lurking in your merchant account statements. I’ll also offer strategies to minimize these costs, thereby improving your operational efficiency and profitability.

Finally, I’ll list the providers who offer what I’ve researched to be the most competitive rates.

Credit Card Processing Fees & Rates

Comparing Credit Card Processing Fees among Top Providers

If you’re new to this area, it can be incredibly confusing to work out which providers charge what and which functionality is absolutely necessary.

At the entry-level end of the market, providers like Square, Zettle and SumUp focus on fixed, transparent fees with zero or no contracts.

But once you start taking beyond about £5000 per month, getting into a fixed contract will give you access to lower transaction fees overall. We recommend someone like Takepayments at this point for a medium-sized business.

At the higher end, Barclaycard’s Smartpay Anywhere offers some of the best flat-rates for CHIP and contactless payments. We also recommend Lightspeed, who specialise in customisable EPOS solutions for retail or hospitality.

ProviderDevice CostsTransaction FeesPCI Compliance FeesOther FeesVisit
Zettle by PayPalStarts from £29 + VAT1.75% for contactless, card, and PayPal payments; 2.5% for invoicesFreeNo monthly fee; Up to £250 in chargebacks per month is free; No refund fees
Square Reader£16 + VAT1.75% for CHIP and contactless payments; 2.5% for other paymentsFreeNo monthly fee; No minimum monthly transaction fees; No refund fees; No early termination fees; No chargeback feesGet Deal
SumUpStarts from £29 + VAT1.69% for all card payments; 2.5% for invoice paymentsFreeNo monthly fee; No minimum monthly fees; No contractual obligations
Worldpay Reader£17.50/mo for terminal0.75%-2.75%£29.99/yearMinimum monthly service charge: £15; PCI non-compliance fee per year: £29.99; Chargeback fee: £15
Retail Merchant ServicesNot SpecifiedFrom 0.4%Not SpecifiedMonthly fee – from £10 + VAT
DojoNot Specified1.4%Not SpecifiedMonthly fee – from £24.95 + VAT
BarclaycardNot Specified1.60%Not SpecifiedMonthly fee – £15 – £75
Takepaymentsfrom £7.50 + VAT per monthFrom 0.4%Not SpecifiedMonthly fee – from £20 + VAT per month

Understanding Credit Card Processing Fees

Credit card processing fees are the costs that merchants incur for the ability to accept credit card payments. These fees are generally divided into three primary categories:

Transaction Fees

These fees are charged per transaction and are often the largest part of your credit card processing costs. A merchant in the UK, for example, could face a complex fee structure that includes interchange fees, card scheme fees, and payment processor margins. These can cumulatively range from 1.5% to 3.5% of the transaction value.


  • Interchange fee for a Visa credit card transaction: 1.5% + 5p
  • Card scheme fee for a Visa credit card transaction: 0.15%
  • Payment processor margin for a Visa credit card transaction: 0.25%

Flat Fees

These are fixed costs that are payable irrespective of your transaction volume. They could include monthly account maintenance fees or software subscription charges that remain constant.


  • Monthly account maintenance fee: £20
  • Software subscription charge: £10

Incidental Fees

These are additional, event-triggered fees that arise due to specific circumstances, such as customer-initiated chargebacks or non-adherence to Payment Card Industry (PCI) standards.


  • Chargeback fee: £20
  • Non-compliance fee: £100
Fee TypeDescriptionExample Rate
Transaction Fees (Total Charge)Total fees charged per transaction, comprising various components.1.5% per transaction
— Interchange FeesComponent paid to the card-issuing banks.0.8% of transaction amount
— Processor MarkupComponent charged by the payment processor.0.4% of transaction amount
— Assessment FeesComponent paid to credit card networks.0.05% of transaction amount
Authorization FeesCharged each time a transaction is submitted for approval.5p per authorization
Statement FeesMonthly fee for the provision of a detailed account statement.£2 per month
Chargeback FeesFees incurred when a customer disputes a transaction.£10 per chargeback
Account FeesMonthly or annual maintenance fee for the merchant account.£5 per month
Cross-Border FeesAdditional fees for transactions involving foreign banks or currency conversion.0.5% of transaction amount

Credit Card Pricing Models Used by Payment Processors

Credit card processors usually offer several pricing models, each with its own set of fees and rate structures.

The most common are:

  • Interchange-plus pricing: This model is considered the most transparent, breaking down the costs into interchange fees plus a markup.
  • Flat-rate pricing: A simple model where you pay a fixed percentage and/or a fixed fee per transaction. This is what Square, Zettle and SumUp use.
  • Tiered pricing: In this model, transactions are grouped into tiers based on certain criteria, with each tier having its own rate.

Why Credit Card Processing Fees Vary for Merchants

Credit card processing fees can vary widely for merchants, and it can be tough to understand why.

Here are some of the key factors that affect credit card processing fees:

  • Industry and business type: Businesses in high-risk industries, such as online gambling or pharmaceuticals, may face higher fees due to the increased risk of fraud and chargebacks. On the other hand, businesses with a long-standing history of reliable transactions may be offered more competitive rates.
  • Volume and value of transactions: Higher transaction volumes or higher average transaction values often offer the leverage to negotiate lower fees with your payment processor.
  • Method of transaction: Card-present transactions, where the card is physically swiped or inserted, generally have lower fees compared to card-not-present transactions, which are considered riskier.
  • Merchant account vs. payment service providers: Using a dedicated merchant account usually results in lower processing fees compared to utilizing a third-party payment service provider like PayPal or Square. However, merchant accounts often have additional costs like monthly fees and setup costs that you’ll need to account for.
  • Geographical factors: Cross-border transactions or accepting cards issued from foreign banks usually incur additional fees. Even within the same country, regional regulations can lead to variations in rates.
  • Type of card used: The kind of credit card used for the transaction can also affect fees. Premium or rewards cards often have higher interchange fees, which, in turn, increases the cost for the merchant.
  • Contract terms: The terms of your agreement with the payment processor can introduce variability in your processing fees. Some contracts may offer lower fees but include additional charges for services like customer support or account maintenance.

Cross-Border Fees: A Hidden Cost of Credit Card Transactions

Cross-border fees are additional charges levied on transactions that involve international elements. These fees are typically a percentage of the transaction, and they can add up quickly, especially when combined with other fees like interchange and assessment fees. Credit card networks impose cross-border fees and are non-negotiable.

Several factors can influence the imposition and size of cross-border fees, including:

  • Card issuer’s country: Transactions involving cards issued outside your home country will generally attract cross-border fees.
  • Currency conversion: If a transaction requires currency conversion, this often incurs an additional fee.
  • Network policies: Each credit card network has its own set of rules and fees for cross-border transactions, which can change periodically.

There are a few things you can do to manage the impact of cross-border fees, including:

  • Multi-currency processing: Consider adopting a payment processing solution that allows you to accept payments in multiple currencies, thereby eliminating the need for currency conversion in some cases.
  • Localized payment methods: Offering local payment options can sometimes circumvent the need for cross-border fees, making your products or services more attractive to international customers.
  • Fee monitoring and transparency: Choose a payment processor that provides detailed reporting on cross-border fees, enabling better tracking and accounting.
  • Strategic pricing: If a large proportion of your business involves international transactions, consider this when developing your pricing strategy to offset the additional costs.

Additional Credit Card Processing Fees: What to Watch Out For

In addition to the more obvious credit card processing fees, such as transaction, interchange, and cross-border fees, there are a number of hidden fees that can add up over time.

Authorization Fees

Authorization fees are charged each time a customer swipes their credit card, regardless of whether the transaction is approved or declined. These fees are typically small, but they can add up quickly for businesses with high transaction volumes.

Statement Fees

Many payment processors charge a monthly statement fee for providing you with a detailed account statement. This fee is usually modest, but it’s a recurring cost that you need to factor into your overall expenses.

Chargeback Fees

A chargeback occurs when a customer disputes a transaction and their credit card company reverses the charge. In addition to refunding the customer, merchants are often assessed a chargeback fee by their payment processor. These fees can be significant, and they can also increase the likelihood of facing higher processing fees in the future.

Strategies for Reducing Your Credit Card Processing Fees

Credit card processing fees can eat into your profits, but there are steps you can take to reduce them.

This section outlines key strategies you can use to save money on credit card processing without sacrificing quality or service.

Negotiating Lower Rates with Processors

One of the best ways to reduce credit card processing fees is to negotiate with your payment processor. You can do this when you’re first signing a contract, or you can renegotiate your existing terms if your business has changed significantly.

Here are some tips for negotiating lower rates with processors:

  • Shop around and compare rates from different providers. This will give you a good idea of what’s fair and reasonable.
  • Be prepared to walk away. If you’re not getting the deal you want, don’t hesitate to take your business elsewhere.
  • Leverage your business metrics. If you have a high transaction volume or a low chargeback rate, you can use this to your advantage in negotiations.

Comparing Rates and Fees Between Providers

Once you’ve negotiated the best possible rates with your processor, it’s important to compare them to the rates and fees offered by other providers. This can help you ensure that you’re getting the best deal possible.

When comparing providers, be sure to consider all of the costs involved, including transaction fees, interchange fees, assessment fees, and equipment costs.

Reviewing Contract Terms Impacting Fees

Before you sign a contract with a payment processor, be sure to read it carefully and understand all of the terms and conditions. This includes the fees you’ll be charged, as well as any early termination fees or other potential costs.

Credit Card Processing Fee FAQs

Are card processing fees legal in the UK?

What are the components of credit card transaction fees in the UK?

What types of flat fees are associated with credit card processing?

What triggers incidental fees in credit card processing?

How can UK businesses minimise their credit card processing fees?

Can UK businesses pass on credit card processing fees to customers?

What are the penalties for non-compliance with UK regulations on credit card processing fees?