What you pay: three prices in one coat

Card machine fees in the UK are three prices added together

The merchant service charge on your statement is interchange, plus scheme and processing fees, plus your provider’s markup. The first goes to your customer’s bank and is capped by law for UK consumer cards. The second goes to Visa or Mastercard and is not capped. The third is what your provider keeps, and it is the only part a quote is really about.

Why the three parts matter before you compare any quote

1. Interchange is set by regulation for UK consumer cards: 0.2% on debit, 0.3% on credit. No provider can do better on it, so a quote that sounds cheap cannot be cheap here.
2. Scheme and processing fees are set by the card schemes. They rose at least 25% in real terms between 2017 and 2023, and your provider passes them on one way or another.
3. The markup is set by your contract. It is the whole negotiation, and under a single blended rate you cannot see where it begins.

Task before opening time. Take last month’s statement. Add every card charge, including terminal rental and any monthly minimum, and divide by that month’s card turnover. That one percentage is your effective rate, and it is the number every other note on this board takes apart.

Take a quote apart in three lines

Example figures. A shop takes £10,000 a month, 70% on UK consumer debit and 30% on UK consumer credit, and is quoted a blended 1.1%. That is £110 a month.

Interchange on that mix cannot exceed £14 on the debit and £9 on the credit, so £23 at most. The other £87 is scheme fees and markup together. You cannot split that £87 from a blended quote, and that is exactly the problem: next year it can grow and you will not know which half grew.

Cards are most of what your shop takes

61% of all UK payments were made by card in 2023, and cards carried almost 86% of the value of retail transactions. For most shops the merchant service charge is not a small line: it is a fee on nearly everything that comes through the till.

Four questions about what you pay

What is a merchant service charge?

It is the total your provider takes from each card sale. Inside it are three separate fees: interchange for the card issuer, scheme and processing fees for Visa or Mastercard, and your provider’s own margin.

Why do two providers quote such different rates for the same business?

Interchange and scheme fees cost them roughly the same. The difference is almost entirely the margin, plus how many fixed monthly charges sit outside the percentage.

Can I pass card fees on to my customers?

Not on UK consumer cards. On business cards you may, limited to your actual cost. Our case note on surcharging walks through the regulations line by line.

What is a good effective rate?

There is no single number, because it depends on your card mix. The useful comparison is your own rate this year against last year, and the margin part of it against another quote.