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What Credit Card Charges Do Small Businesses Pay?

Stephen Hart

Stephen Hart

Founder - Cardswitcher

Former - Chief Financial Officer @ Worldpay

More and more customers are moving away from using cash to pay for goods and services, and we are quickly evolving into a cashless society. So, it is within your best interests as a business owner to provide your customers with a payment solution that accepts card payments with ease.

As you know, accepting card payments is easy but never free. Processing card payments comes with a long list of fees, as you have to pay a provider to facilitate the transaction.

But, if you’re not careful, providers can get carried away with fees and aren’t clear about why you’re paying what you’re paying.

In this article, we’ll explain what businesses have to pay in order to accept card payments and then discuss how to find and buy the most competitive merchant service deals.

Let’s get started.

paying by card

Overview of Fees

The following table is a breakdown of all the services included in credit card processing, whether they’re an obviously advertised payment or more hidden, and what the average cost of the services are.

ServiceRegular or Hidden feeAverage Cost
Merchant Service ChargeRegular0.5% - 3%
Terminal Hire/Device Purchase CostRegular£28 + VAT
Payment GatewayRegular£20 - £75 (the average cost of a payment gateway is the total cost of the Set Up Fee, Monthly Fee, Transaction Fee, and Transaction Rate.)
Authorisation FeesRegular3p
Refund FeeRegular30p
Minimum Monthly Service ChargeHidden£5 - £25
Set Up FeesHidden£0 on average but some providers have charged £250
Chargeback feesHidden£15 (typically undisclosed)
PCI Compliance FeeHidden0.3%


Regular Fees Associated with Card Processing

As you can see from the table above, there are a plethora of fees card processing fees. We want to provide you with complete clarity but many providers will not be completely clear with their pricing.

There are some fees you can guarantee will be included by every provider as standard. So that you’re expecting the expected, below we have explained the regular fees associated with card processing.


Transaction fees

Transaction fees vary depending on the bank that has issued the credit or debit card, and which processing platform (i.e Ayden, Paypal etc.) you use.

Visa and Mastercard typically set the standard for transaction fees, with other cards like AMEX costing more - making the average transaction fee anywhere between 1% - 3%.


Interchange fees

Each time a card transaction is made, the acquirer (the bank or financial body that retrieves funds for its merchant (you) from a customer) pays the cardholder's bank an interchange fee. The business (you) then pays the fee back as part of the card processing fees.


Authorisation fees

Your chosen card processor is required to authorise the transaction with the issuing bank, which incurs a small authorisation charge for each sale.

The fee typically ranges from 1p - 3p.


“Card holder not present” fees

If the paying customer pays for the transaction online or via email or telephone, they are not physically present, incurring a “card holder not present” fee. This can make the transaction fee go up, as it poses a greater risk for the bank authorising a transaction. This is usually around 2%.


Hidden Fees Associated with Card Processing

Unfortunately, as we mentioned, there are a number of hidden fees commonly associated with card processing, and we want to make sure that you are not hit with any nasty surprises. Below we have explained the hidden fees that are typically associated with card processing.


Chargeback fees

In the circumstance that a customer requests a refund i.e. a chargeback, the bank that issued the payment card will reverse the transaction to the merchant. An admin fee is then charged for this, and is typically £10 - £20, but can sometimes be free.


Minimum monthly service charge

In order to turn a profit, most credit/debit card processors charge a minimum monthly service fee to their business customers.

Your payment processor will not add a service charge if your monthly transaction fees are higher than the minimum threshold. But, if your transaction charges are below the minimum monthly service charge, your supplier will add additional charges to boost your monthly fee up to the minimum.


PCI compliance fees

Highly sensitive data such as a customer's credit card details, are required, by law, to be protected. So when you are handling such data you must ensure that you are compliant with the Payment Card Industry Data Security Standards, and there are costs to ensure you are doing so.

Often a merchant account provider will offer PCI compliance for a small fee, which means they will handle all of the checks that your business will go through to ensure your customers are not at risk. The cost of this varies on the size of your business and how many transactions it makes annually. For small businesses processing <£1 million per year, fees are typically around £60.


Set up fees

Some credit card processing providers will try to catch you out with a hidden set up fee. This is typically free, but certain providers are known to have charged up to £250, so make sure you do your research, shop around and compare prices with CardSwitcher.


Early termination fees

If you are unhappy with your card payment processor and wish to terminate your contract early for whatever reason, you may be required to pay an early termination fee. The cost of which varies depending on your remaining contract length and who your provider is. Some providers allow you to terminate for free.

woman holding many credit cards

Card Processing Fees Comparison By Major Providers

Now that we have established which fees (both regular and hidden) you are likely to face when selecting a card processing provider, we’ve dived into the fees charged by some major providers:

Provider.              Processing Fee
Adyen£0.10 + Interchange++ (AMEX 3.95%)
BarclaycardFees charged on a case by case basis.
Square1.75% for credit/debit card payments.

2.5% for payments entered manually into the terminal and recurring online payments.

1.9% UK/EEA or 2.9% for non-UK/EEA for online services e.g. Square Online.

Stripe1.4% + £0.20 (UK cards).

2.9% + £0.20 (International cards).

Paypal1.2% + £0.30
Worldpay2.75% + £0.20
FondyUK based: debit & credit cards from 1.3% + £0.2 , alternative payment methods from 0.5% + £0.2 , bank transfers from 1.2% + £0.2
EU based: debit & credit cards from 1.3% + €0.25 , alternative payment methods from 0.5% + €0.25 , bank transfers from 1.2% + €0.25


If you are struggling to decide which provider to go with, we have a comprehensive list of the best card readers explaining fees, who they are best suited to and the features of each reader.


Merchant Services Fees

When it comes to providing your customers with the ability to pay for your goods or services via card, it’s up to you whether you opt for a merchant service package or get each service separately. Either way, you need merchant services, so we’ve explained each one, and if you want to know about the cheapest merchant services for small businesses, we’ve covered that too!


Merchant Account

In its simplest terms, a merchant account is a specific type of bank account that operates behind the scenes to receive and temporarily store payments made by customers via the payment gateway.

Having a merchant account allows your business to accept various payment forms such as credit and debit cards, eWallet (i.e. Google and Apple Pay) or standing orders. Merchant accounts are extremely easy to set up and are hugely beneficial to your business.


Merchant Services

Merchant services are also typically referred to as card processing services, and are basically the collective services that handle and process all electronic forms of payment.

Through card terminals, POS systems, payment gateways and merchant accounts, merchant services streamline the processing of all things payments.

If you want to know more, we explore what merchant services are in great detail in another article.


Card Machine Purchase Price/Monthly Rental

Card machines, or terminals, often come with a purchase price or monthly rental fee that is based on the type of hardware you choose. They can be fixed or portable, and can be equipped with a range of features and tech for an additional fee.

The fees vary by provider, with most just requiring a one time purchase fee. However, we recommend doing your own research to find the terminal best suited to your needs and budget.

business people saving money in piggy bank

Can I reduce my fees by surcharging customers?

If the fees being charged by your chosen provider are higher than expected or have suddenly crept up, you can’t surcharge your customers to subsidise this. It has been illegal in the UK since 2018.


How can I reduce the credit card charges for my small business?

After exploring the various fees incurred with accepting credit and debit cards, it’s clear to see that the costs can definitely rack up. So, it’s of no surprise that you may be looking for the best way to keep costs down.

As above, you can’t pass the cost on to your customers. The best protocol for reducing your credit card fees is to follow these simple steps:

  • Regularly review statements: Keep an eye on your monthly/annual bill to ensure that you are not being hit with hidden fees or unexpected increases.
  • Shop around: Regularly shop around to see who is offering the best bang for your buck. They all offer the same thing for different prices, so do your research.
  • Be secure and compliant: If you ensure you are regularly following PCI compliance regulations, you will reduce your risk of fines and regular chargebacks.
  • Add value via increased volume: The more business you have, the more business your provider has. This will make them want to keep you and in turn keep your fees down. Also by accepting more forms of payment, you will attract more customers.



It goes without saying that in an almost cashless society, it is key to your business’ success that you have a method of accepting various card payments.

We hope that our exploration of all the terms and potential regular and hidden fees you may face has educated and encouraged you to shop around for the best provider.

You can compare prices via CardSwitcher to find yourself the best deal at a price that suits you and the needs of your business!


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Written by:
Stephen Hart

Stephen Hart

Founder - Cardswitcher

Former - Chief Financial Officer @ Worldpay

Stephen brings a wealth of experience honed through years in the financial sector, particularly in the card processing payments industry. His illustrious career spans key roles at PwC, Natwest, and the role of CFO at WorldPay, before going on to found card processing comparison site, CardSwitcher. He is passionate about helping growing businesses to understand the card processing landscape so they can make savvy financial decisions.