Are you concerned that the credit card transaction fees your business is currently paying to its merchant services provider are too high?
You probably should be. As we’ll demonstrate in this article, the most expensive widely-available tariff on the market costs nearly three times as much as the cheapest.
A credit card transaction fee is like an invisible tax on every sale you make from the banking system.
And it’s the duty of every business owner to keep as much cash in their company as possible.
One way you can do this is by shopping around for the best value merchant services provider.
In this article, we show you:
- the three main types of credit card transaction fees,
- who the five providers in the chain are who benefit when you pay your fees,
- the current standard debit and credit card fees for the most common three types of transaction from 16 of the UK’s leading merchant services providers,
- a league table of the merchant services providers whose rates we’ve listed ranked from cheapest to most expensive by credit card transaction fees, and
- how to make sure you get the best deal for your company on debit and credit card transaction fees.
Welcome to BusinessCostSaver, the website whose sole aim is to reduce our readers’ costs while increasing the amount of profit they generate.
If you want our help finding the best debit and credit card transaction fees for your company as part of an value-for-money merchant services account, please fill in the form at the top of the page.
We’ll ask you a few questions about your company, its current level of turnover, how much you think your turnover will be in the future, and your mix of online and offline sales.
Using this information, we’ll then present you with one or more recommendations for the most suitable merchant services account for your business.
We’re not tied to any merchant services provider meaning that our advice is impartial and free from commercial bias. Our service is also free of charge and there’s no obligation on you to accept any of the proposals we present to you.
The three main types of fees you’ll pay to your merchant services account provider
To be able to accept debit and credit cards for your company, you’ll need to find a merchant services account provider.
And there are three main types of debit and credit card transaction fees you’ll pay your merchant service account provider.
1. Percentage transaction fees
Percentage transaction fees are the fees you pay on sales where you take the payment from your client by credit or debit card.
The actual fee is normally a percentage of the value of the transaction being processed – for example, 2%.
Most merchant service account provider charge the same for debit and credit card transactions however a minority have differing rates for each.
2. Flat fees
Occasionally, a merchant services provider will charge an additional flat fee in excess of the percentage transaction fee – sometimes up to 30p.
If you see something like “1.75% + £0.20” on a merchant service transaction rate card, this means that you’ll pay both a percentage transaction rate and a flat fee on every debit or credit card payment you take.
3. Event-related fees
Many merchant services companies make no charge for either:
- refunds to a customer’s credit or debit card account if they return the product to you or
- chargebacks – when a customer who has bought from you by debit or credit card contacts their bank without asking you first asking them to reverse the payment.
However, many do charge for one or both of them so please make sure that you understand the potential financial implications of these charges to your business prior to signing up with a merchant account provider.
The chain of five providers levying card processing fees
There are up to five companies involved in a debit or credit card transaction, all of which receive a proportion of the percentage transaction fees (plus flat fees) you pay.
1. Credit card associations
The three most famous credit card associations in the UK are American Express, Mastercard, and Visa.
These are the companies which create “credit card networks”.
2. Credit card issuers
Credit card issuers provide their clients with accounts linked to the credit card networks.
Sainsbury’s, Santander, and HSBC belong to both the Mastercard and Visa networks and they’re able to issue cards to their customers connected to either network.
American Express is unusual in that it does not allow third parties to issue cards on its behalf.
3. Credit card processors
Credit card processors are responsible for passing authorisation requests and funding information between merchant account providers and credit card issuers.
They are the companies providing the technical back end to the credit card network meaning that customers’ payments are taken successful and that their payments arrive safely in your bank account.
You may here some refer to credit card processors as “acquirers” or “acquiring banks”.
4. Merchant account providers
Within the chain of companies involved in handling debit and credit card purchasers, your only likely contact will be with your merchant account provider.
Normally working with acquiring banks, they’re responsible for managing debit and credit card payments for “merchants”.
You are the “merchant” – the company wanting to give its clients the ability to pay by card.
5. Payment gateways
Payment gateways, sometimes referred to a online payment gateways, are like middlemen for internet payments – they are responsible for sending details of your online orders to the acquiring banks.
Current debit and credit card transaction fees
Our team have researched the current total debit and credit card transaction fees charged by sixteen of major UK merchant account services providers.
We’ll show you what we found for the three main types of card transactions occurring in the UK:
- cardholder present transactions,
- online credit card merchant fees, and
- debit and credit card transaction charges for electronically sent invoices.
A quick caveat – the transactions referred to in these tables are for UK- or EU-issued consumer credit and debit cards.
These providers’ business credit, debit, and charge card transaction fees may be different whether or not those cards were issued by UK or EU banks.
Another quick caveat – the advertised and gleaned rates shown above may be negotiable so you should consider them as the absolute maximum you’re likely to pay in most cases.
Cardholder present credit card transaction charges
Cardholder present transactions, sometimes referred to as card present transactions, describe in-store transactions where a customer hands their card over to you for payment in a retail or similar setting.
| Credit card transaction fee | Debit card transaction fee | |
| izettle | 1.75% | 1.75% |
| SumUp | 1.69% | 1.69% |
| Square | 1.75% | 1.75% |
| Paypal | 3.40% + £0.30 | 3.40% + £0.30 |
| WorldPay | 2.75% | 0.75% |
| Barclaycard | 1.25% | 1.25% |
| Shopify | 1.50% | 1.50% |
| myPOS | 1.75% | 1.75% |
| TakePayments | 1.50% + £0.01 | 1.50% |
| PaymentSense | 1.30% + £0.15 | 1.30% + £0.15 |
| PayZone | 1.55% + £0.15 | 1.55% + £0.15 |
| Elavon | 3.00% + £0.15 | 3.00% + £0.15 |
| Retail Merchant Services | 2.65% + £0.19 | 2.65% + £0.19 |
| Quickbooks | 1.45% + £0.30 | 1.45% + £0.30 |
| HSBC | 2.00% + £0.25 | 2.00% + £0.25 |
Cardholder present transactions not made through contactless payment or chip and PIN payment may be charged at higher rates.
Online credit card merchant fees
Online debit and credit card transaction rates shown below refer to the charges made by the providers shown for payments made through an online gateway.
| Online credit card transaction fee | Online debit card transaction fees | |
| izettle | 2.50% | 2.50% |
| SumUp | 2.50% | 2.50% |
| Square | 2.50% | 2.50% |
| Paypal | 3.40% + £0.30 | 3.40% + £0.30 |
| WorldPay | 2.75% | 1.75% |
| Barclaycard | 1.25% | 1.25% |
| Shopify | 1.60% + £0.20 | 1.60% + £0.20 |
| myPOS | 2.25% | 2.25% |
| TakePayments | 1.50% + £0.01 | 1.50% |
| PaymentSense | 1.30% + £0.15 | 1.30% + £0.15 |
| PayZone | 1.55% + £0.15 | 1.55% + £0.15 |
| Elavon | 3.00% + £0.15 | 3.00% + £0.15 |
| Retail Merchant Services | 2.65% + £0.19 | 2.65% + £0.19 |
| Quickbooks | 1.45% + £0.30 | 1.45% + £0.30 |
| Payline | 2.10% + £0.07 | 2.10% + £0.07 |
| HSBC | 2.00% + £0.25 | 2.00% + £0.25 |
Electronically sent invoice payment credit card transaction fees
A growing number of merchant service providers allow you to issue invoices electronically to and request payment from your customers via an email or SMS message.
When your customer receives the email or SMS message, it contains a link taking them to a secure web page at which they can make payment to you.
| Credit and debit card transaction fees for electronically sent invoices | |
| izettle | 2.50% |
| SumUp | 2.50% |
| Square | 2.50% |
| Paypal | 3.40% |
| WorldPay | As other rates |
| Barclaycard | As other rates |
| Shopify | As other rates |
| myPOS | 2.25% |
| TakePayments | As other rates |
| PaymentSense | As other rates |
| PayZone | As other rates |
| Elavon | As other rates |
| Retail Merchant Services | As other rates |
| Quickbooks | As other rates |
| Payline | As other rates |
| HSBC | As other rates |
Which providers are more expensive than others on credit card transaction fees?
We’ve just listed the credit and debit card transaction charges currently levied by sixteen major UK merchant services provider.
But how can you use that to your advantage?
Our team created a fictional business with a turnover of £150,000 per annum to test out how much the debit and credit card transaction fees of each provider would be over the course of a year.
For our fictional company, half of that £150,000 turnover was through face-to-face cardholder present transactions and the other half was from online transactions.
For each, we imagined that half of each transaction type had been made using credit cards and the other half had been made using credit cards.
And this is what we found…
| Merchant service provider | Face to face CC | Face to face DC | Online CC | Online DC | Total | %age T/O |
| Barclaycard | £937.50 | £937.50 | £937.50 | £937.50 | £3,750.00 | 1.25% |
| PaymentSense | £1,050.00 | £982.50 | £982.50 | £982.50 | £3,997.50 | 1.33% |
| TakePayments | £1,130.00 | £1,125.00 | £1,125.50 | £1,125.00 | £4,505.50 | 1.50% |
| Quickbooks | £1,237.50 | £1,102.50 | £1,102.50 | £1,102.50 | £4,545.00 | 1.52% |
| Shopify | £1,125.00 | £1,125.00 | £1,210.00 | £1,210.00 | £4,670.00 | 1.56% |
| PayZone | £1,237.50 | £1,170.00 | £1,170.00 | £1,170.00 | £4,747.50 | 1.58% |
| WorldPay | £2,062.50 | £562.50 | £2,062.50 | £1,312.50 | £6,000.00 | 2.00% |
| myPOS | £1,312.50 | £1,312.50 | £1,687.50 | £1,687.50 | £6,000.00 | 2.00% |
| HSBC | £1,625.00 | £1,512.50 | £1,512.50 | £1,512.50 | £6,162.50 | 2.05% |
| Payline | £1,535.00 | £1,503.50 | £1,578.50 | £1,578.50 | £6,195.50 | 2.07% |
| SumUp | £1,267.50 | £1,267.50 | £1,875.00 | £1,875.00 | £6,285.00 | 2.10% |
| izettle | £1,312.50 | £1,312.50 | £1,875.00 | £1,875.00 | £6,375.00 | 2.13% |
| Square | £1,312.50 | £1,312.50 | £1,875.00 | £1,875.00 | £6,375.00 | 2.13% |
| Retail Merchant Services | £2,082.50 | £1,997.00 | £1,997.00 | £1,997.00 | £8,073.50 | 2.69% |
| Elavon | £2,325.00 | £2,257.50 | £2,257.50 | £2,257.50 | £9,097.50 | 3.03% |
| Paypal | £2,700.00 | £2,565.00 | £2,565.00 | £2,565.00 | £10,395.00 | 3.47% |
On fees alone, there is a significant difference between top and borrow.
Barclaycard’s transaction fees came to £3,750 – one-and-a-quarter percent of our fictional company’s turnover.
The most expensive was PayPal which took nearly three-and-half percent of turnover.
There are some important caveats to share with you however about this information.
We have not factored in any sign-up charges, machine charges, or monthly fees.
We have selected individual tariffs from each provider on which to base this comparison and they may offer cheaper tariffs than we used in our comparison.
Some of the providers shown above use easy-in, easy-out contracts meaning you can leave whenever you want without penalty whereas others tie you into a contract for up to three years.
The transaction fees shown in the table above are the advertised or gleaned rates for standard UK-issued consumer and business credit and debit cards. Charges may be the same or higher for non-standard UK-issued consumer and business credit and debit cards as well as for cards issued overseas.
What about Amex merchant fees in the UK?
Amex merchant fees have not been included in the above tables. Amex merchant fees are generally higher than other credit and debit card brands with most merchant service providers.
Getting the best credit card transaction fees deal for your company
We hope that we’ve clearly demonstrated to you in this article just why it’s worth shopping around for the best value and most suitable merchant services account for your business.
If you do decide to switch from your current provider, please make sure that you take your business to a competitor offering the best debit and credit card transaction fees for the type of business you actually do.
If you sell mainly online, there’s no point in choosing a provider whose cardholder present transaction fees are competitive but whose online transaction fees aren’t.
If you’d like free, professional, and impartial assistance on selecting the right merchant services account for your company, please leave your contact details with us by filling out the form at the top of the page.
Our service is free and there’s no obligation on you to accept any proposals we recommend to you.