Card machine fees in the UK: how they work

What makes up a card fee?

The Payment Systems Regulator (PSR) splits what you pay your card provider, the “merchant service charge”, into three parts:

• Interchange, which your provider pays to the bank that issued your customer’s card.
• Scheme fees, which go to the card scheme, such as Visa or Mastercard.
• Your provider’s own margin, which covers its costs and profit.

Interchange is capped for UK consumer cards. Scheme fees aren’t: the PSR found Visa’s and Mastercard’s scheme and processing fees rose by at least 25% in real terms in the years up to 2023. Your provider’s margin is the part you can negotiate.

What’s the difference between standard and IC++ pricing?

Standard pricing, often called a blended rate, means one or a few headline rates that bundle everything together. The PSR found more than 95% of merchants were on it.

With IC+ or IC++ pricing, interchange (and with IC++, scheme fees too) is passed through at cost, and your provider adds its margin on top. It’s more transparent but harder to read, and providers told the PSR it mainly suits large businesses.

What extra charges should you look for?

Headline rates are only part of the bill. The PSR found providers commonly charge for:

• Authorisation requests, a small fee on each payment.
• Terminal hire, usually a fixed monthly fee. In the PSR’s data, from before 2021, hire typically cost £10 to £40 a month per terminal.
• PCI DSS compliance, a monthly or yearly fee, with extra charges if you don’t complete it.
• Chargebacks and refunds.
• A minimum monthly service charge, if your takings fall below a level.

How long can a terminal contract tie you in?

Longer than you might think. The PSR found terminal contracts can run for three or five years, longer than the card processing contract, and may renew automatically. Early exit fees can include every payment left to the end of the term, and terminals usually can’t move with you to a new provider.

Since 6 January 2023, the providers the PSR directed (14 at first) must keep terminal contracts to an 18-month first term for businesses with card takings up to £10 million, then roll monthly with a month’s notice. Not every provider is covered, so read your own contract.

Which payments aren’t capped?

The interchange caps only apply when both your provider and your customer’s card issuer are in the UK. They don’t cover business cards, and they generally don’t cover three-party schemes such as American Express. Ask your provider what it charges for these cards.

Can you pass card fees on to customers?

Not on consumer cards. Surcharges have been banned since 13 January 2018. On business cards, any surcharge can’t be more than it costs you to accept the card.

Is it worth switching provider?

The PSR found the market doesn’t work well for businesses with card takings up to £50 million. New customers paid less on average than existing ones. Only about 1 in 5 merchants had ever tried to negotiate, but nearly 9 in 10 of those who did got a better deal.

Before you switch, check your notice period, exit fees and terminal contract. See how three big providers compare in Dojo vs SumUp vs Square, the providers we work with on our partners page, and other costs worth checking. Opening a new venue? Start with the bar opening checklist.