Card processing fees are easy to underestimate because the headline rate rarely tells the whole story.
A percentage can look small on a single sale. Across hundreds or thousands of transactions, it becomes a regular operating cost.
The Payment Systems Regulator has also raised concerns about value and transparency in card acquiring. Its market review found that the supply of card acquiring services did not work well for many small and medium sized merchants.
That does not mean cards are bad for business. Cards are popular, familiar and convenient.
However, every business should understand what accepting them actually costs.
What current card processing fees look like
Pricing varies by provider, transaction type and card origin.
As checked on 23 July 2026, Stripe lists a standard rate of 1.5% plus 20p for standard UK cards. Square lists 1.75% for in person UK card payments and 1.4% plus 25p for online UK card payments. SumUp lists 1.69% for most in person payments on its standard pay as you go option and 2.5% for online payments.
Those rates can change. Therefore, businesses should always check current provider pricing before making a decision.
Still, they show why card processing fees UK merchants pay can differ before contracts, hardware or extra services enter the picture.
The method of payment matters too.
An in person card tap may cost less than a manually entered transaction. A UK card may cost less than an international card. An online transaction may include both a percentage and a fixed pence charge.
That fixed charge matters more on low value sales.
A simple cost example
Consider a business taking 1,000 online payments each month at an average value of £20.
At 1.5% plus 20p per payment, the percentage part would be £300. The fixed charge would add another £200.
The total would be £500 before any other relevant costs.
Now consider a business taking 100 payments at £200 each.
The total payment value is still £20,000. The percentage part remains £300, but the fixed charge falls to £20 because there are fewer transactions.
The same monthly sales value can produce different card processing fees.
That is why businesses should calculate fees using their real transaction profile rather than a headline percentage.
Look beyond the transaction rate
Card processing fees can also include costs outside the basic rate.
Depending on the provider and contract, a merchant may need to consider hardware, terminal rental, gateway fees, minimum monthly charges, chargeback costs, international card fees and instant transfer fees.
Not every provider charges all of these.
Modern payment companies often use simpler pricing. Traditional merchant acquiring contracts may use more complex structures.
The Payment Systems Regulator found that pricing structures can make comparison difficult. It also found that many smaller merchants do not regularly search, switch or negotiate, even where better deals may be available.
That makes regular review important.
A payment provider should not become a forgotten utility that a business keeps paying without checking.
Fees affect different businesses differently
- A cafe, consultant and building contractor can process the same annual sales value and still need different payment setups.
- A cafe may process many small transactions. Fixed pence charges can matter.
- A consultant may send a smaller number of large invoices. A percentage fee on each payment can become significant.
- A tradesperson may need to accept payment at different locations. Hardware and mobile connectivity matter.
- An online retailer may need strong checkout conversion and fraud controls.
The cheapest headline rate is not automatically the cheapest overall solution.
A payment method that creates customer confusion can cost sales. A provider with weak reconciliation can cost staff time. Slow access to funds can create cash flow pressure.
Therefore, businesses need to compare cost with operational value.
Can direct bank payments reduce costs
Open banking and Pay by Bank have created more interest in account to account payments.
These methods can offer a different cost structure because the payment does not follow the same card processing route.
However, businesses should avoid assuming that every direct bank payment is free.
Providers still need to build technology, manage security, support merchants and operate within regulation. They may charge per payment, use subscriptions or apply other commercial models.
The useful question is not whether a payment method has no cost.
The useful question is whether the total cost is better for the business and the customer.
That includes fees, settlement, reconciliation, refunds and conversion.
How to review your payment costs
- Start with real data from the last three months.
- Record total payment value, number of transactions, average transaction value and payment channel.
- Then add every fee connected with acceptance.
- Include transaction charges, monthly charges, terminal costs, gateway costs and any regular extras.
- Next, calculate the total payment cost as a share of revenue.
- Finally, compare providers and payment methods using the same transaction profile.
This gives you a more useful picture than comparing one advertised percentage with another.
Why Paycilo is interested in the cost question
Paycilo is being developed at proof of concept stage.
One area we are researching is whether independent businesses want a simpler way to present direct payment choices without rebuilding the customer journey each time a new payment method becomes relevant.
Cost is part of that research.
For some businesses, card processing fees may be a major frustration. For others, the bigger problem may be settlement time, reconciliation or accepting payment outside a website.
We are speaking directly with businesses because the problem needs to be measured before the product is built around it.
Cards will remain important.
The opportunity is not to declare war on cards. It is to give businesses better control over when another payment method makes more sense.
