Payments
Card processing fees explained: understanding the full payment cost
Your transaction rate can combine bank, scheme and provider charges, while equipment and other fees appear separately. Learn how the parts fit together and how to compare your own bill.
Written by Jessica Gardner, In-house Editor, Reeve Consult · 2 min read
Updated
What are card processing fees?
They are the charges your provider applies for accepting card payments. Transaction pricing covers interchange, scheme costs and the provider’s service, either bundled or itemised. Equipment, account and event-related charges may be separate. The total depends on your agreement and payment activity, so compare proposals using the same turnover, card types and transaction count.
- An interchange cap does not cap the complete cost of a card payment.
- Fixed charges affect the overall percentage more in a quiet month.
- Settlement timing and support can matter alongside the fee calculation.
Accepting a card involves bank, network and provider services. Your contract describes how those costs reach the bill, and which equipment or additional charges sit alongside them.
How do the three main components fit together?
Interchange is a fee between the acquiring side and the card issuer. Scheme charges relate to the network, and the provider prices its processing and service. They can be bundled into transaction rates or shown separately.
Domestic interchange caps cover specified qualifying consumer-card transactions. They do not cap the whole merchant bill. A business taking commercial or cross-border cards needs the applicable treatment checked separately.
What does a pricing label tell you?
Blended pricing combines relevant costs into quoted rates. Interchange-plus separates defined pass-through costs and a provider charge. Neither label establishes the complete price or proves one plan will cost less for your business.
Ask which card types and channels the rates cover. In-person, online and manually entered payments can have different pricing and requirements.
Find out what each charge pays for, how to calculate your overall rate and which questions to ask your provider.
Why do fixed and per-transaction fees matter?
An illustrative 2p fee on 1,000 transactions adds £20. A £20 monthly fee adds another £20 regardless of the transaction count in that example. Those costs affect the overall percentage differently as takings and purchase size change.
Equipment, online services and event-related charges may also need including. The agreement determines which apply.
How do you compare your overall cost?
Add the complete fees for a defined period and divide by the matching card takings. State which charges are included so the calculation is reproducible. A 1.2% overall result can include fixed fees and is not necessarily the contractual transaction rate.
Price each competing proposal against the same volume, count, card mix and channels. Include setup and exit costs over the period being compared where relevant.
What else should the business assess?
Settlement timing, equipment suitability, till support and help during trading hours affect the service. A low fee does not resolve a connection that cannot perform a required task.
As an authorised DOJO partner, Reeve Consult can discuss a statement and a written proposal. The merchant statement walkthrough gives you a way to organise the existing figures before the comparison.
Frequently asked questions
Straight answers
Why can two businesses with equal turnover pay different fees?
Does an overall percentage equal the contractual rate?
Next step
Which part of your payment setup would you like to improve?
Tell us where customers pay, which till you use and which charges you want explained. We can discuss the options and arrange a statement review.
Request a payment reviewJessica Gardner is the in-house editor at Reeve Consult. She writes and edits every guide, blog post, and resource published on the site, making sure the writing is plain-English, the facts check out, and the advice is genuinely useful for the UK independent business owners we work with. Jessica spent eight years in editorial roles across UK trade and business publications before joining Reeve Consult.