Your card-processing bill can include several charges besides the advertised transaction rate. To compare providers fairly, use the same sales figures and include hardware, recurring fees and contract costs.
This guide explains how to read those costs. For a short answer to a specific question, visit the fees and contracts FAQs.
What Card Machine Transaction Fees Include
A merchant service charge is the amount you pay for card-acquiring services. Its components can include:
- Interchange: generally paid by the acquirer handling your business's card payments to the customer's card issuer.
- Scheme and processing fees: charged by card networks for their services.
- Acquirer charges: covering the provider's own costs and margin.
The UK interchange caps apply to specified domestic consumer-card transactions. They do not cap your total merchant service charge. The Payment Systems Regulator's merchant guide explains the distinction and scope.
Depending on your package, there may also be terminal rental, software subscriptions, authorisation fees, monthly minimums, PCI support charges, refund fees or chargeback administration charges. Ask which are included, separate or inapplicable.
Blended, Interchange-Plus and Interchange++ Pricing
Blended or standard pricing
A provider may quote a combined rate for a category of payments, or a flat rate covering specified cards. It does not necessarily cover every card and payment method at the same price. Check for separate international, commercial, online or manually entered payment charges.
A simple quoted rate can make budgeting easier. Whether it is cheaper depends on your transactions and the other charges.
Interchange-plus and Interchange++
Interchange-plus (IC+) passes through the applicable interchange fee with an additional provider charge. Interchange++ (IC++) also passes through applicable scheme and processing fees. Confirm how the provider calculates its own charge and how the statement identifies each component.
Neither model guarantees a saving. Compare the total using your actual card mix and transaction values. The PSR sets out these pricing definitions in its scheme-fees review.
Which model fits your business?
Ask each provider to cost the same representative period. There is no universal turnover threshold where one model becomes the right choice.
For seasonal trading, compare a quiet period as well as a busy one. A monthly minimum or subscription can have a greater effect when sales are lower. For businesses taking deposits or frequent refunds, include those transactions too.
How to Read a Merchant Statement
Start with the card-sales total and check it covers the same dates as the fees. Then identify:
- Card categories and payment channels. Note consumer, commercial and international cards, alongside in-person and remote payments.
- Transaction charges. Check percentage rates and fixed fees against the applicable transaction counts and values.
- Recurring costs. Include rental or software invoices billed separately.
- Adjustments. Separate processing charges from refunded sales, chargebacks and reserves so you understand what each amount represents.
- Payouts. Reconcile the provider's settlement report with the bank credits; payout amounts may already have fees or adjustments deducted.
To express a defined set of fees as a percentage of sales, calculate:
Fees for the period ÷ card-sales value for the same period × 100
Be consistent about what you include when comparing offers. An all-in calculation including rental is different from a transaction-only processing rate. A quiet month's percentage may be higher simply because fixed charges are spread across fewer sales.
You can use our Card Statement Analyser as a starting point. Check extracted information against your source documents.
The Fee Questions to Ask Before Signing
| Item | Ask the provider |
|---|---|
| Processing rates | Which cards and payment channels does each rate cover? |
| Authorisation fees | Do they apply to declined attempts as well as successful payments? |
| Hardware | Is the device bought, rented or included in a subscription? |
| Monthly minimum | Which charges count towards the minimum, and how is any shortfall calculated? |
| PCI support | What assistance and validation work are included? |
| Refunds | Is there a refund fee, and are original processing fees returned? |
| Disputes | What handling fees and response deadlines apply? |
| Payouts | What is the schedule, cut-off and cost of any faster option? |
| Contract | What are the term, notice requirements and exit costs for each agreement? |
Request the fee schedule and full terms in writing. A verbal statement may not capture all the conditions you need to assess, so resolve any difference before accepting.
A minimum monthly charge is not always added on top of all processing charges. Some agreements charge only the difference between eligible fees and the minimum. Use the actual contract formula to avoid counting costs twice.
Contract Terms and Exit Costs
Terminal hire and card processing may be covered by separate agreements.
Under PSR Specific Direction 16, qualifying terminal hire contracts for merchants with annual card turnover up to £10 million using directed providers have a maximum initial term of 18 months. The rules also cover relevant third-party terminal arrangements. After the initial term, continuing contracts must use terms of no more than one month, with one month's notice on the merchant's side. New in-scope contracts must have cost-based, transparent exit fees explained before signing.
Do not assume the same limits set the length of a separate acquiring or software contract. Ask which agreements and rules apply to your package.
Check:
- The start and end dates, renewal arrangements and notice method for each agreement.
- Any price-change clause and the rights available if charges change.
- Equipment ownership, return arrangements and whether a new provider can use the terminal.
- The written calculation of any proposed early termination charge.
Start reviewing with enough time to meet the actual notice deadline. There is no single renewal window that fits every provider.
PCI Support, Refunds and Disputes
The Payment Card Industry Data Security Standard (PCI DSS) is intended for merchants of every size. The required validation depends on your environment and the card brands or acquirer. A provider's support service can help, but paying its fee does not itself establish compliance. Read PCI's guidance for small merchants.
Refund and dispute charges also vary. Check whether a refund returns any original processing fee and whether a dispute fee is retained if you successfully challenge the claim. Use your own refund and dispute history in the comparison; avoid assuming a standard charge applies.
See our security and dispute FAQs for practical questions to raise with your provider.
Common Comparison Mistakes
Using the headline rate alone. A lower transaction percentage can be outweighed by hardware or recurring costs.
Assuming one pricing model wins. Blended and itemised offers need to be compared against the same card mix.
Missing separate invoices. Rental, software or support costs may sit outside the merchant statement.
Confusing payout and cost. A smaller bank credit might include refunds or other adjustments, not simply higher fees.
Ignoring features. Check terminal connectivity, receipts and compatibility with your electronic point of sale (EPOS) system. A cheaper offer is only useful if it supports the way you trade.
Before You Compare
Gather representative statements, separate rental invoices and your contract documents. List your required payout timing, payment methods and EPOS setup. That gives you a sound basis for comparing the full cost and practical fit.
