/Payment Processing Demystified: Card Fees, Interchange, and Hidden Costs in the UK

If you've ever asked a payments rep "so what will I actually pay per transaction?" and got a different answer every time you asked, you're not imagining it. UK card processing pricing is built to be hard to compare. Headline rates like "0.5%" are real numbers — they just don't include most of what you'll actually be charged. This guide breaks the fee stack into its real components, shows what's genuinely negotiable, and works through a true cost comparison for a mid-sized venue.

The three things you're actually paying for

Every card transaction has three separate charges bundled into what your statement calls the "merchant service charge" (MSC). Only one of them is negotiable.

1. Interchange — set by law, not by your provider

Interchange is paid to the customer's bank. For consumer debit and credit cards issued in the UK, it's capped by retained UK interchange fee regulation:

• Consumer debit: 0.2%
• Consumer credit: 0.3%

No provider can beat these caps — they're regulatory, not a rate anyone negotiates. Where costs diverge is commercial and corporate cards (the cards many business diners and account customers use), which are not capped and typically run 0.5–1 percentage point higher than consumer rates, sometimes up to 2.5% for purchasing/corporate cards. If a chunk of your covers are on expense accounts, this matters more than it looks.

2. Scheme fees — set by Visa and Mastercard

A smaller charge, roughly 0.05–0.20%, that goes to the card networks for running the rails. Also non-negotiable, and rarely broken out on your statement.

3. Acquirer markup — the only part you can actually negotiate

This is your payment provider's margin. It's where the real variation between providers lives, and it's the only line item worth pushing back on.

Add these three together and you get the real cost of a transaction — which is why a provider quoting "0.5%" is almost never quoting the full merchant service charge. Once interchange, scheme fees and markup are all included, small and mid-sized UK hospitality businesses typically see blended flat rates in the 1.4–1.75% range, or lower (0.3–0.7% plus a few pence) only at high volumes on interchange-plus pricing — a model that needs real transaction volume to be worth the added complexity.

The costs that don't show up in the headline rate

Beyond the percentage, watch for:

• Authorisation fees — a small charge per transaction for the bank verification step, sometimes itemised separately, sometimes folded in
• Terminal rental — commonly cited around £23/month, on top of the transaction rate, for machines you don't own outright
• PCI compliance charges — an annual or monthly fee for meeting card security standards, which some providers pass on
• Keyed/manual entry rates — noticeably higher than card-present or contactless (typically 2.5% vs 1.5–1.75% at several major providers), relevant if you take phone or deposit payments
• Currency conversion — often an additional ~2% on top of the base rate for non-GBP cards
• Chargebacks — frequently a flat fee (around £20) per dispute, win or lose
• Settlement speed — same-day or instant payout is sometimes a paid add-on rather than the default

None of these are hidden in the sense of being illegal — they're usually in the contract. They're hidden in the sense that they never appear in the number a salesperson leads with.

Integrated payments vs. a standalone card machine

This is the decision that matters more than which processor you pick.

Standalone terminal (Square, SumUp, a bank card machine, etc.) Your payments run through a separate box, separate app, and separate statement from your POS and ordering system. You can shop around freely and switch processor without touching anything else. The trade-off: transaction data, customer data and sales data live in different places. Reconciling a day's takings means cross-referencing the terminal, the till, and possibly a delivery platform — and your view of margin and performance is only as current as your last manual reconciliation.

Integrated payments (built into your POS/ordering platform) When payments run through the same system as your POS and online ordering — as with Toast, Lightspeed Restaurant, or Flipdish — every transaction lands in one ledger automatically. Profit and loss is visible in real time rather than after someone reconciles three systems at month-end, and a customer who orders online and pays in person shows up as one customer, not two data points in two platforms.

The trade-off runs the other way: you're generally tied to that platform's payment rate, and moving your customer and sales history to a different system later is more work than swapping a card machine. Integration buys you a unified view of the business; it costs you some of the shopping-around flexibility of a standalone terminal.

On data ownership specifically: this isn't unique to any one vendor — it's a structural feature of integrated platforms generally. A standalone processor gives you settlement data; it typically doesn't give you a joined-up customer record across ordering, loyalty and payment history. An integrated platform does, by design, because it's the same system end to end. Whether that's worth the trade-off depends on how much you value a single customer view versus maximum flexibility on who processes your payments.

True cost comparison: a £500k/year venue

Assuming £500,000 in annual card turnover and an average transaction of £35 (~14,285 transactions/year), here's what the published rates actually cost across a year. Figures are card-present rates only; keyed/manual transactions would run higher on every provider.

A few things stand out. Among the providers still publishing a straightforward per-transaction rate — SumUp, Square, Stripe, Flipdish — the spread is under £2,000 a year at this turnover: real money, but not the deciding factor for most operators. Toast's last published rate sits meaningfully higher, though it's also the oldest figure on this table and no longer appears on Toast's own pricing pages, so it should be treated as a starting point for a quote rather than today's number. And providers that don't publish a rate at all aren't necessarily more expensive — but you can't compare them against anything until you ask, which is the exact opacity this guide is trying to cut through.

How to actually choose

• If you're payments-only and already happy with your POS and ordering setup: compare card-present rates directly (Square, SumUp, Stripe) and negotiate the acquirer markup — it's the only part that moves.
• If you're running online ordering, delivery and in-person service across separate systems and reconciling by hand: the case for an integrated platform is about the reconciliation and reporting overhead, not just the transaction rate. Flipdish is a legitimate option here — POS, ordering and payments (1.4% + 10p) in one system, with real-time P&L and one customer record across channels — and it's worth putting alongside Toast or Lightspeed if you're evaluating this route.
• If a meaningful share of your covers pay on commercial/corporate cards: ask any provider for their commercial card rate specifically before you sign — this is where quoted headline rates diverge most from reality.
• Whoever you pick: ask directly about terminal rental, PCI fees, keyed-transaction rates, and settlement timing before signing. If a provider won't give you a straight answer on all four, that's informative on its own.

Related guides

• Best Restaurant Card Payment Machines in the UK (2026)
• Best restaurant POS systems in the UK
• Best all-in-one restaurant technology platforms
• Best QR code ordering and pay-at-table systems

Sources

• UK Interchange Fees Explained: Visa & Mastercard Rates 2026 — MerchantHQ
• Card Processing Fees Explained: A UK Business Guide (2026) — Business Expert
• Stripe Fees UK 2026: Complete Pricing Guide — We Are Founders
• Card Machine Fees: Dojo vs Teya vs Square vs SumUp — Credo FS
• Your Payment Processing Fees Are Probably Much Higher Than You Think — Flipdish
• Flipdish Pricing
• Toast POS Review (2026): Pricing, Features and Verdict for UK Restaurants — Business Expert
• Restaurant Payment System and Terminal — Toast UK