Understand the fees on your merchant statement

01

What am I actually paying for when a customer taps their card?

You pay a merchant service charge (MSC), and it is the sum of three separate costs: interchange, scheme fees and your provider's margin.

When a customer pays by card, several companies handle the transaction, and each takes a cut. Your provider (also called the acquirer or payment service provider) collects those costs from you and passes most of them on. Some providers show the three parts separately on your statement. Others combine them into one rate, so the breakdown is hidden.

This matters because two providers can quote very different headline rates for the same underlying costs. The difference is almost always the margin, and how clearly it is shown.

02

What is interchange, and is it capped?

Interchange is the fee your provider pays the customer's bank for every card payment. In the UK it is capped at 0.2% of the transaction for consumer debit cards and 0.3% for consumer credit cards.

The caps come from the Interchange Fee Regulation, which the UK kept after leaving the EU. They apply to domestic consumer cards. They do not cap every card: business and commercial cards, and cards issued outside the UK, can carry higher interchange.

Cross-border cards are the main exception. Visa and Mastercard raised their fees on online payments at UK businesses made with European Economic Area cards from 0.2% to 1.15% for debit and from 0.3% to 1.5% for credit during 2021 and 2022. The Payment Systems Regulator concluded in its 2024 market review that these increases were unduly high. In January 2026 the High Court confirmed the regulator has the power to cap them. The cap level and timing were still being decided when this guide was updated, so check the latest position.

03

What are scheme fees, and why do they keep rising?

Scheme fees are charges from Visa and Mastercard for running their networks. They are set by the schemes, not by your provider, and your provider passes them on.

Scheme fees are made up of several smaller items, and they change from time to time. The Payment Systems Regulator's card-acquiring market review found that scheme fees rose over the period it studied, and it found some evidence that providers may have passed higher scheme fees on to merchants.

You cannot negotiate the scheme fees themselves. What you can do is choose a pricing model that shows them. If you are on a blended rate, you may never see whether a change in scheme fees has altered what you pay. Ask your provider how a scheme fee change would affect your rate.

04

What is the difference between blended, IC+ and IC++ pricing?

Blended pricing gives you one rate for everything. IC+ separates interchange from the provider's margin. IC++ separates interchange, scheme fees and the margin, so every cost is itemised.

The Payment Systems Regulator recognises these three models in its own rules for providers, so the terms are used consistently across the industry. Providers sometimes use their own names, so check what is meant.

No model is automatically cheaper. A blended rate can suit a small business with predictable takings. IC++ tends to show its value as volumes grow. What matters is that you can see what you pay and compare it with another quote on the same basis.

05

What other charges can appear on a card machine statement?

Besides the merchant service charge, statements commonly include a per-transaction authorisation fee, terminal rental or lease costs, monthly or annual service fees, and charges for chargebacks or ending a contract early.

Names vary between providers, so use this as a checklist when you read your statement. Add up each line, not only the headline rate.

• Authorisation fee: a small fixed amount per transaction, sometimes charged on declined payments too.
• Terminal rental or lease: a monthly fee for the card machine, often under a separate contract from your processing agreement.
• Early termination fee: charged for leaving before the minimum term ends. Check this before you sign.

Terminal contracts deserve special attention. The Payment Systems Regulator now limits terminal lease and rental contracts for smaller merchants to a maximum of 18 months, with no more than one month of notice after any renewal. Look at the start date, the end date and the notice period on every terminal contract you hold.

06

How do I work out whether I am overpaying?

Calculate your effective rate: divide the total fees on a month's statement by your total card takings for that month, then multiply by 100.

The effective rate rolls every cost into one number, including the fixed fees, so you can compare your current provider with a quote on equal terms. A provider advertising a low headline percentage can still cost more once monthly fees and per-transaction charges are added.

1. 01
   Get one full statement

   Use a recent month that is typical for you, not an unusually quiet or busy one.

2. 02
   Add up every fee

   Include processing charges, authorisation fees, terminal rental and service fees. Leave out VAT so you compare like with like.

3. 03
   Find your card takings

   Use the total value of card payments processed in that month.

4. 04
   Divide and compare

   Fees divided by takings, times 100, gives your effective rate. Ask any new provider to price the same month.

07

What protections do small UK businesses have when shopping around?

Large acquirers must send smaller businesses a summary box of key prices, prompt them to shop around, and limit terminal contracts to 18 months. These rules came from the Payment Systems Regulator's 2022 remedies.

The regulator found that card-acquiring did not work well for businesses with annual card turnover up to £50 million. It listed opaque pricing and indefinite contracts among the barriers to switching. Its final decision in October 2022 set three remedies.

• Summary boxes: providers must send each business a summary of its key price and non-price terms, and show it in the online account. Businesses can use it alongside online quotation tools to compare providers.
• Trigger messages: providers must prompt businesses to shop around, linked to the end of the minimum contract term. Where there is no end date, they must send a message at least once every 30 calendar days.
• Terminal contracts: terminal lease and rental contracts are limited to 18 months, with a maximum of one month's notice after any renewal.

The summary box and trigger message rules apply to 14 directed providers and their associated companies and contracted independent sales organisations, for businesses with card turnover up to £50 million. The terminal contract rules apply for businesses up to £10 million. If your provider is not on that list, the rules may not apply to you, so ask.

The regulator is being merged into the Financial Conduct Authority, and its rules can change. Treat this section as a summary and check the current position before relying on a specific requirement.

08

Which five questions should I ask any card machine provider?

Ask for the pricing model, the total monthly cost on your volumes, the contract length and exit costs, the terminal terms, and how a scheme fee change would affect you.

1. 01
   Which pricing model is this?

   Ask whether it is blended, IC+ or IC++, and what is included in the rate.

2. 02
   What would I have paid last month?

   Ask them to price your recent statement. This gives you an effective rate you can compare.

3. 03
   How long is the contract, and what does leaving cost?Full step in the download ↓
4. 04
   What are the terminal terms?Full step in the download ↓
5. 05
   What if scheme fees change?Full step in the download ↓

Written answers protect you. If a provider will not put a figure or a term in writing, treat it as unconfirmed.

09

What can I realistically negotiate, and when is it worth switching?

You can negotiate your provider's margin, terminal terms and contract length. Interchange and scheme fees are set elsewhere, so a better deal comes from a lower margin, a clearer pricing model or fewer extras.

Switching is worth considering when your effective rate is above what another provider will quote for the same month, when a terminal contract is ending, or when your statement does not make it clear what you pay. Check your current contract first: minimum term, notice period and any exit costs shape the timing.

Reeve Consult is an authorised DOJO partner, so we can review a statement and compare options. We may receive a referral fee from a provider if you go ahead, and it never costs you anything or changes the comparison. You can also request a quote from any other provider. The method in this guide works for any of them.