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A Guide to Card Machine Charges and Fees

Stephen Hart

Stephen Hart

Founder - Cardswitcher

Former - Chief Financial Officer @ Worldpay

While card spending has almost always accounted for the majority of retail spending, this was the first year that credit and debit also accounted for more than half of all retail transactions. So not only do consumers spend more with cards than cash but they spend with them more often.

With consumers increasing moving towards a cash-free lifestyle, businesses must accept different payment methods if they want to stay competitive.

With that in mind, a few common questions we receive from merchants is:

How much does a credit card machine cost?

How do card readers work?

Unfortunately, we can't give you a definite answer. Quite how much you'll have to pay depends on your business, your requirements and your card turnover.

For an estimate of your card processing fees, jump over to our quote page and pop in some details.

While we can't give you a set-in-stone figure, we can take an example business, get a couple of real-world quotes and show you exactly how much a pdq machine could cost.

Let's get started.


A Typical Business

For this article, we’re going to look at a typical small business that turns over £200,000 a year with an average transaction value of £100.

Of that £200,000, the business takes £160,000 by credit card and £40,000 by debit cards. Operating out of a warehouse, Alan needs just one fixed terminal at his check out.

Let’s call this business Alan’s Office Supplies.

Coming to the end of his merchant services contract, the company’s director Alan starts to look about for a new deal.

Next, we’ll look at two different real-world quotes to show you how much deals can vary.


The Bad Deal

Since Alan has been dealing with his bank quite a lot recently, he decides to ask his relationship manager about what the bank can offer.

This, as we’ve explained in an earlier blog, is a big mistake.

Banks just partner with a card processor and resell their service so buying through a bank tends to mean higher processing rates.

Here’s a real quote we got from a major high street.

Payment TypeRateMonthly Cost
Debit Card0.70%£23.33
Credit Card1.3%£173.33

On top of your processing costs, you’ve got the terminal rental (£20 per month), PCI compliance (£3.50 per month), authorisation fees (3.95p per transaction or around about £6.58 per month) and a £100 setup fee.

Ignoring the one-off fee, you’re looking at a monthly cost of £226.74.

That gives us a good baseline and an idea of how much you’d spend if you walked straight into your bank and bought their off-the-shelf merchant services products.

Up next, we look at what sort of deal you can get if you shop around.


The Good Deal

To get this deal we went to an Independent Sales Organisation (ISO).

An ISO is a sales agent that works on behalf of a payment processor that is authorised to offer discounted rates. Buying merchant services through an ISO is commonly 40% cheaper than buying through other channels.

Because they are authorised to issue discounts, ISOs are typically 40% cheaper than their competitors.

Here’s the real quote we got from a leading ISO.

Payment TypeRateMonthly Cost
Debit Card0.25% + 5p£10.00
Credit Card0.82%£109.33

Just like the first deal, you’ve got some extra charges too. You’ve got the terminal rental (£14.99 per month), PCI compliance charge (£3.90 per month) and authorisation charges (£1.67 per month).

There’s also a minimum monthly service charge of £17.50 but with Alan’s turnover he should be well above that.

With the Good Deal, Alan’s total estimated monthly cost is around about £124.90.


Comparing Costs

It really is astonishing that terminal costs can vary so much but with customers largely unaware of the choice on the market, card processors will continue charging what they can get away with.

Here's a reminder of what Alan would pay, per month, with the Good and the Bad Deals.

The Bad Deal


The Good Deal


That’s a saving of £101.84 per month or £1,222.08 per year! And because of the difference in transaction fees, that saving will keep growing as your business expands.

With the Bad Deal, it’ll cost you £6,500 to process £500,000 on credit cards. With the Good Deal, however, it’ll cost you just £4,100, a saving of £2,400!

To see what the payment industry has to offer you, jump over to our comparison engine and fill out some simple details about your business. We’ll compare some of the best card readers and ISOs and on the market and show you how much cash you could be saving. Click here to get started.

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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.