Credit card processing fees in the UK: a complete guide for 2025

Processing fees are charged whenever customers pay for your goods or services with a credit card. Such purchases bring in money, but the charges invariably erode your cut. 

Here is everything you need to know about credit card processing fees.

What are credit card processing fees?

Processing fees apply when a customer buys goods or services with their credit card. Given the mass appeal of credit cards, these fees are largely unavoidable and can gnaw away at your profits, unless you factor the costs into your charging structure. This is a tricky balancing act, as increasing your prices can make your offerings less attractive. 

Why do credit card processing fees exist?

Credit card companies and others involved in the payment process impose fees to ensure transactions are safe and secure. In return, they cover transaction verification and smooth payment processing, while also ensuring compliance with the PCI DSS (Payment Card Industry Data Security Standard), which protects card users’ details.

Who charges credit card processing fees?

Any small business is likely to face card processing fees from one or more of the following:

• The credit card issuer or provider, such as Lloyds or Capital One 

• The payment processor, also known as a card scheme provider, such as American Express, Mastercard or Visa

• The merchant service provider, which operates a payment platform. Examples include Amazon Pay and PayPal

What are the different types of credit card processing fees?

As a small business, you can expect to face certain charges. These typically include several of the following, either as individual charges or grouped within a contract:

• Interchange fees: A service charge of up to 0.3% per transaction that’s passed to the customer’s credit card provider to cover transaction costs. The fee is set by the process provider

• Authorisation fees: Charged whenever a payment processor verifies and approves a credit card transaction 

• Assessment fees: A charge made by the payment processor to help fund its network infrastructure 

• Payment gateway fees: A charge to process online and in-person transactions between a customer and the business using an electronic payment process

• Payment click fee: Charged on a per-transaction basis where tap-to-pay is used

• PCI compliance fee: Payment card industry compliance fees, which ensure all payments adhere to industry standards

• Set-up fees: Sometimes imposed to cover the cost of issuing a merchant payment account

• Monthly fees: Sometimes charged to provide a breakdown of credit card transactions

• Terminal rental fee: Typically charged at around £15 to £35 a month  

How much do credit card processing fees cost?

Merchant service providers charge around 1.5% to 3.4% per transaction. These fees typically include some of those mentioned above, such as monthly charges and terminal rentals. They also include customers’ statements and chargeback claims. 

To this outlay, you add payment processor fees, including authorisation fees. These can be 2p per transaction, but it depends on the card used and your contract.  

You can also expect to pay £20 or more per month in payment gateway fees – the exact cost depends on factors such as the number of transactions and the gateway provider’s charges. The portal enables safe, encrypted online transactions. Likewise, PCI compliance fees can cost around £3 a month.

What do merchant service providers charge?

You have limited control over what Visa, Mastercard or American Express charge each time your customers use their credit cards. Equally, you can’t control what credit card providers, such as Halifax or HSBC, charge you when a customer makes a credit card purchase. 

But you do have a say over which merchant service provider you use to process customer payments. Here’s a rundown of five of the main operators and their charging structures:

• Amazon Pay charges an interchange fee of 0.2% on all purchases and a merchant service charge of 2.5%. It also tags on an authorisation fee of 30p, meaning a £10 transaction would cost you 57p.

• PayPal imposes a range of charges for commercial transactions. For instance, QR code transactions worth £10 or less attract a 2% charge, plus a fixed fee that differs depending on currency. QR code payments worth more than £10 see a 1.5% fee added, plus a fixed fee that depends on the currency used. All other commercial transactions attract a 2.9% charge and a fixed fee.

• Revolut Business charges a processing fee of 1% from Mastercard and Visa transactions — rising to 1.7% for American Express transactions — plus a flat fee of 2p per transaction. There is also a 1% online transaction fee or a 0.8% in-person charge on Mastercard or Visa, and a 1.7% fee on American Express transactions. The same charge rates apply on tap-to-pay transactions.

• Square is popular with businesses in the hospitality, retail and restaurant sectors. It charges 1.75% per in-person transaction and 2.5% per manually keyed-in transaction. There is a 1.4% fee, plus 25p for UK card transactions. For non-UK cards, the fee is 2.5%, plus 25p.

• Stripe charges a rate of 1.5% plus 20p per UK card transaction, rising to 2.5% plus 20p for EU cards. There are no set-up fees, monthly fees or other hidden charges.