Compare Merchant Account Fees: A Guide for UK Businesses

Merchant account statements include a mix of card processing fees, one-time costs, and ongoing scheduled charges. On top of that, merchant account providers (the payment processors and POS companies that manage your card payments) use different pricing structures, which can make cost comparisons even more confusing.

Without understanding how these charges are calculated, it’s easy to agree to hidden markups, unnecessary add-ons, or long-term contracts that quietly reduce your margins. Even small percentage differences in processing rates can significantly impact your revenue over time.

This guide breaks down card processing fees, one-off and recurring charges, and the main pricing structures used by leading merchant account providers — so you can clearly understand your costs and choose the most cost-effective option for your business.

What Are Merchant Account Fees?

Merchant account fees include all the charges that appear on your merchant account statement when you accept card payments.

They cover the cost of maintaining your account, processing transactions and keeping your business compliant with card network rules. Understanding these fees is essential for managing business costs and choosing the right merchant account provider.

There are a few types of merchant account fees, and they generally fall into three categories: credit card processing fees (like interchange fees), one-off fees (like chargeback fees) and ongoing, monthly charges (like monthly account fees).

We’ll dive into each of these fee categories in detail so you can fully understand what you’re being charged for and why.

What Credit Card Processing Fees Should I Expect?

You pay credit card processing fees on every credit and debit card transaction, usually as a percentage of the transaction or a percentage plus a fixed amount, like 3% or 2% + £0.20, for example. While your merchant account statement may show a single fee per transaction, it’s actually made up of several types of fees, including the following:

• Interchange fees: Interchange fees are paid to the bank that issued your customer’s card. For example, if a customer uses a Visa card from Barclays, the interchange fee goes to Barclays. In the UK, rates are capped at 0.3% for credit cards and 0.2% for debit cards.
• Assessment fees: These are paid to the credit card network (Visa, Mastercard or American Express). They typically range from 0.07% to 0.12% of each transaction and cover the cost of processing through the card payment network.
• Processor fees: These fees are paid to your merchant account provider and cover the cost of processing transactions. They include a markup that generates profit for the provider. For instance, if your total fee is 3%, 0.3% might go to interchange, 0.1% to assessment, and the remaining 2.6% to the processor.
• Wholesale versus markup fees: Also known as interchange and assessment, wholesale fees are set by card companies and aren’t easily negotiable. Processor fees, on the other hand, are markup fees, which you can often negotiate with your provider.

What Scheduled Fees Should I Expect?

Scheduled fees are paid every month to your merchant account provider. These are typically real costs that your credit card processor has to pay in order to manage your merchant account. However, your account provider can also charge markups above and beyond the actual cost of each service.

Let’s take a closer look at common scheduled fees.

• Mastercard Merchant Location Fee: This fee is charged annually per business location through your merchant account provider. The base fee is £3 per year, but many processors mark this up to £15 per location. It’s a small fee, but it’s worth checking to avoid unnecessary markups if you operate multiple locations.
• Fixed Acquirer Network Fee (FANF): This is a quarterly fee imposed by Visa. The cost depends on the number of locations your business operates and your industry. For small businesses with 10 or fewer locations, it usually ranges from £2 to £5, but it can rise to £85 or more for businesses with hundreds or thousands of locations.
• Monthly or annual service fees: These fixed fees cover general services offered by your merchant account provider, such as customer support, online portals and account management tools. The rates vary widely between providers and can often be negotiated when signing your contract.
• PCI compliance fee: PCI compliance fees are paid to maintain compliance with the Payment Card Industry Data Security Standard (PCI DSS). Most merchant account providers handle compliance automatically and this fee covers the cost of their systems and monitoring. It ensures your business meets legal and security obligations for handling card payments.
• Minimum monthly service charge: Many processors require a minimum monthly fee for processing, ensuring they receive a baseline income even during slow sales periods. If your transactions don’t reach the minimum threshold, your provider will round up your fees to meet it.
• PDQ machine rental fee: This is charged if you rent or lease a credit card terminal. PDQ card machine costs range from £5 to £50 per month, depending on the model and provider. If you already own a machine, many providers allow you to use it, avoiding this fee entirely.
• Paper statement fee: Some providers charge for mailing physical statements, typically up to £10 per month. You can avoid this fee by using electronic statements through your provider’s online dashboard.
• Payment gateway fee: Some providers charge a monthly fee for enabling online card payments. This is becoming less common, as many providers now bundle online transaction processing into slightly higher per-transaction fees instead of charging an extra monthly fee.

Ongoing fees can vary depending on the provider, business size and industry. Some are unavoidable, but it’s important to note that many — such as service fees, PDQ rental or statement fees — can be negotiated with your provider.

What One-Time Fees Should I Expect?

Incidental fees are one-time fees that you may have to pay under certain conditions, such as falling out of compliance with your merchant account provider’s rules. Here are some of the most common incidental fees.

• Setup fee: Some merchant account providers charge a one-time setup fee when you open a new account. This usually ranges from £25 to £100. You may be able to negotiate this fee down or get your provider to eliminate it entirely, especially if you’re switching from another merchant account provider.
• Early termination fee: Many merchant account providers require long-term contracts, and the fees to get out of these contracts early can be steep. Expect to pay at least £200, and potentially more than £1,000, to end your contract early.
• Account closure fee: Account closure fees apply when you close your merchant account, whether early (in which case you may also have to pay an early termination fee) or at the end of your contract. Account closure fees can range from £15 to £70.
• Refund fee: Some merchant account companies charge a fee when you refund a customer. This fee may be a flat fee, in the range of £0.50 to £2, or it may be charged in the same way as if the customer were making a new purchase.
• Processing integrity fees: Processing integrity fees are charged by credit card networks (like Visa, Mastercard and American Express) for transactions that aren’t compliant with their rules. Processing integrity fees vary by network. Visa charges £0.10, Mastercard charges £0.04 and American Express charges 0.75%.
• Chargeback fee: Customers can dispute credit card transactions if they believe your business made an unauthorized charge on their card. This can be due to a mistake or because a customer’s card was used fraudulently. In addition to refunding the money for the purchase, your merchant account provider will typically charge you £15 to £25 per chargeback.
• PCI non-compliance fee: If your business falls out of compliance with PCI rules, your merchant account provider will charge a fee of around £30 for each month you remain out of compliance. You’ll also usually have to pay processing integrity fees and may face a greater number of chargebacks.

To avoid getting duped and paying out more than you need to, here are some chargeback fraud statistics to be aware of.

What Are the Different Merchant Account Pricing Structures?

Merchant account pricing structures determine how your transaction fees are calculated and presented. With interchange-plus, you see the real card costs plus a clear processor markup; with tiered or flat-rate pricing, those costs are bundled together, making pricing simpler but often less transparent and potentially more expensive.

We explain the most common pricing structures in our table below:

How Do Merchant Account Providers Compare on Fees?

Zettle by PayPal and Square both let you get started with simple, flat-rate pricing and no monthly fee, making them ideal for small or seasonal businesses keen on keeping overheads low. Both providers charge 1.75% for in-person card transactions and 2.5% for payment links and invoicing, keeping costs predictable. 

Learn more about how Zettle by PayPal and Square compare.

Retail Merchant Services and Dojo both charge as little as £10 + VAT for their cloud-based payment platform, but their transaction prices are more flexible.

Specifically, Retail Merchant Services advertises bespoke in-person rates (such as 0.79% + £0.10) and tailored online pricing, while Dojo’s rates range from 0.8% + £0.05 up to 2.49% + £0.05, depending on business type and risk profile, making the providers more cost-effective for established businesses processing higher volumes.

Barclaycard follows a similar model, with custom monthly fees and transaction rates starting at 1.6% or bespoke pricing. Like Retail Merchant Services and Dojo, it may offer better value than flat-rate providers for businesses able to negotiate lower rates, yet the ongoing monthly commitment makes it slightly less appealing for very low-volume merchants.