Guide to Card Machine & Merchant Fees in the UK (2026 Guide)

Merchant fees are the charges a business pays to process card payments. They're a necessary cost of trading, but without a clear understanding of how they work, they can quietly reduce your margins.

What's more, the rate you're quoted from a payment provider is rarely the full picture. Terminal rental, monthly minimums, authorisation fees, and contract exit charges can all push your real cost well above the headline figure. This guide explains what card machine fees and merchant fees are, everything that makes up your total cost of acceptance (not just the transaction rate), and the practical steps UK businesses can take to find the lowest fees for them.

What are merchant fees?

"Card machine fees" and "merchant fees" are largely used to describe the same thing: the cost a business pays to accept card payments. You might also see them called merchant processing fees or merchant service fees. Every time a customer taps, inserts or pays online, several parties are involved in processing that transaction, and each takes a small fee for their role.

These card machine transaction fees are typically charged as a percentage of the transaction value. The exact amount depends on the card type, payment method and your provider's pricing model. Credit card merchant fees, for example, are usually higher than debit. On top of the transaction fee, merchant fees can also include hardware, set-up and ongoing account fees. That's where a lot of businesses get caught out comparing providers on rate alone. Zeller is different: you pay a low rate on every transaction, with no set-up fees, monthly fees or terminal rental. Buy your Zeller Terminal outright, and it's yours to own and use forever.

It's worth separating merchant fees from general bank charges. Merchant fees relate specifically to accepting customer payments: card processing, card machine costs and chargebacks. Bank charges cover unrelated banking services, like monthly account fees, overdraft interest or international transfer fees. The two sometimes appear together on a merchant statement, but they're charged for different things and worth reviewing separately.

For most businesses, accepting cards isn't optional; it's how the large majority of customers expect and prefer to pay. According to UK Finance's 2026 Payment Markets Report, cards were used for 64% of all payments in the UK in 2025, with debit cards alone making up 54%, while cash fell to just 8%. So, this is what merchant fees pay for: the infrastructure that makes the convenience and security of paying by card possible.

What makes up a merchant fee?

A typical merchant fee is made up of three main components:

• Interchange fees - Paid to the customer’s card-issuing bank. These vary depending on factors such as card type (debit, credit, or premium), transaction method (in person or online), and whether the card is domestic or international.

• Card scheme fees - Charged by card networks such as Visa, Mastercard, and American Express. These cover the cost of maintaining payment infrastructure and network security.

• Merchant service fees - Charged by your payment provider for processing transactions and providing hardware, software, reporting, and support.

Understanding how these components fit together makes it easier to compare providers and identify hidden costs.

Why do merchant fees vary between businesses?

Two businesses with the same provider and plan can still end up paying noticeably different effective rates. The main factors behind this are:

• Merchant Category Code (MCC) - Every business is given an industry code when it opens a merchant account. That code can affect the interchange rate applied to your transactions.

• Industry risk profile - Sectors with higher rates of chargebacks or fraud, such as travel, ticketing or high-value retail, are often charged more, because providers price in the added risk.

• Transaction volume and value - Higher-volume businesses can often negotiate lower rates or get custom pricing. Very small and very large individual transactions also carry their own costs.

• Payment method - Card-not-present transactions (online, over the phone or MOTO) generally cost more than in-person tap or chip and PIN payments, because the fraud risk is higher.

• Card mix - In the UK, where the UK interchange fee caps apply, interchange on consumer cards is capped at 0.2% for debit and 0.3% for credit. Business credit cards, international cards and American Express aren't capped. Under variable pricing at least, a business whose customers mostly pay with UK debit cards will pay a lower blended rate than one seeing lots of business, international or Amex cards.
  
  That's one reason simple pricing like Zeller's has become popular with UK businesses. You pay 1.3% on domestic Visa and Mastercard payments in person, whatever your industry or transaction size. There's no separate rate for credit or debit, and no surprises when your card mix changes.

  
  

  

  Card machine, hardware and other hidden fees

  The transaction rate is only part of what it can cost to accept card payments. Depending on the provider, you may also pay for hardware, set-up, subscriptions, your account, refunds and more. These are the other card machine fees to check before you sign up with a provider:

  • Card machine rental and purchase fees. This is the cost of the physical device you use to take payments. Some providers sell card machines outright as a one-off purchase. Others charge an ongoing monthly rental, typically £14–£35 a month and often tied to a contract of two years or more. Dojo, for example, charges around £15–£25 a month to rent a terminal depending on the device model. A rental that looks cheap month to month can easily cost more than buying outright: £20 a month over a 3-year contract is £720, for a device that typically costs under £150 to buy. With Zeller, you buy your card machine outright from £99 + VAT, so there are no ongoing rental fees.

  • Set-up fees. Some providers charge a one-off set-up fee to get your card machine up and running, sometimes per device. If you use several card machines, these costs can quickly add up. Some providers also charge a separate fee to connect your card machine to your point-of-sale (POS) system. Zeller has no set-up fees, so you can get started without these extra costs.

  • Monthly account fees and minimum monthly service charges (MMSC). Some providers charge a monthly merchant account fee on top of transaction fees. Many also apply a minimum monthly service charge: if your fees for the month come in under a set amount, you pay the difference. Lloyds Cardnet, for example, has a £10 minimum monthly charge, and across the market these can run to £20–£25. That hits seasonal and smaller businesses hardest. Zeller has no monthly account fees and no minimum monthly charge, so you only pay when you take a payment.

  • Software and add-on subscriptions. A low transaction rate can come with a growing list of paid extras. Some providers charge monthly subscriptions for features you might expect to be included, such as point-of-sale software, invoicing, a business account with more than one card, or a lower "pay monthly" transaction rate. For example, at the time of writing, SumUp charges £39 a month for POS software, £8 a month + VAT for its Invoice Plus plan, £15 a month + VAT for Business Account Plus, and £19 a month for its Payments Plus rate. Add a few of these together and you could be paying more than £80 a month before you've taken a single payment. With Zeller we keep things simple with subscription fees: POS software, invoicing, Virtual Terminal and the Zeller Business Account are all included.

  • Authorisation and gateway fees. Some providers add a small fixed fee to every transaction on top of the percentage rate. Lloyds Cardnet, for example, charges 3p per authorisation. A few pence sounds like nothing, but across 1,000 transactions a month it's another £30. Every Zeller transaction is covered by one percentage rate, with nothing added per payment.

  • Refund and chargeback fees. Some providers charge a fee each time you process a refund, or when a customer disputes a transaction. Chargeback fees typically run to around 0.30 - 0.50 each, whether you win the dispute or not. Refunds and chargebacks are free with Zeller, so a dispute won't cost you more than the sale.

  • Variable fees by card type. Some providers charge different rates depending on whether a customer uses a UK debit, credit, business, international or American Express card. This makes your costs hard to predict, because your effective rate depends on your customers' card mix. Zeller keeps it simple with two clear rates: 1.3% for domestic Visa and Mastercard payments in person, and 1.99% for Amex, business and international cards, with custom rates available.

  • Foreign exchange and currency conversion fees. If you accept payments from customers using cards issued overseas, some providers add currency conversion fees on top of the standard transaction fee. International cards are covered by Zeller's 1.99% rate, with nothing extra for conversion.

  • PCI compliance fees. Businesses that accept card payments must comply with the Payment Card Industry Data Security Standard (PCI DSS). Many providers include basic compliance support. Others charge a separate monthly fee, typically £5–£20, and some add penalties for non-compliance. Zeller includes PCI DSS compliance as part of its service, with no separate compliance fee.

  • Lock-in contracts and early termination fees. Some providers require a minimum contract term and charge an early termination fee if you decide to leave, which can make switching expensive even when a better deal comes along. We cover how these fees are calculated below. Zeller has no lock-in contracts, so you stay because it suits your business, not because you're tied in.

  • Replacement fees. If your card machine is lost, damaged or stolen, some providers charge a replacement fee, particularly when you're renting rather than owning it. Because you buy your Zeller Terminal outright, it's your hardware, not a rental. And if something does go wrong, our UK-based support team is on hand to help you get back up and running quickly.

  • Accessories. Some providers charge separately for receipt paper, card machine stands and cables. Digital receipts can cut the ongoing cost of paper rolls, so it's worth checking what comes with your card machine. Zeller Terminals include the essential hardware you need to start taking payments, with digital receipts available to help reduce paper use.

How are merchant fees calculated?

The way your fees are calculated depends on the pricing model used by your payment provider. Common models include:

• Transaction rate pricing (Zeller) - You pay a percentage fee on each transaction amount. Rates can vary by card type, but the costs are transparent, which makes your expenses easier to forecast.

• Interchange-plus pricing - You pay the exact interchange fee for each transaction, plus a fixed margin charged by your provider (e.g. interchange + 0.30%). It's a transparent model that many UK providers use, but your fees will change month to month depending on the cards your customers use, which makes budgeting harder.

• Tiered pricing - Transactions are grouped into tiers (e.g. qualified, mid-qualified and non-qualified), each with a different rate. This model is often less transparent and harder to predict.

Merchant fees can also vary depending on how a payment is made. In-person transactions are typically lower-risk and therefore cheaper to process, while online or manually entered payments often incur higher fees. International cards can also cost more due to additional processing and currency considerations.

How to find the cheapest card machine fees for your business

There's no single "cheapest" card machine provider, because every business has different needs. But if you're looking for the lowest card machine fees for your business, a few principles hold true:

1. Add up 12 months of costs, not just the transaction rate. A slightly higher transaction fee with no rental can beat a lower rate plus a monthly hardware fee. Use our card machine fees calculator to compare your total cost of acceptance side by side.

2. Compare transaction rate pricing with interchange-plus against your real card mix. If many of your customers pay with Amex, business or international cards, a simple transaction rate may be cheaper than variable pricing.

3. Check for minimum monthly charges and volume requirements. A great advertised rate is meaningless if you don't process enough to qualify for it, or if a minimum monthly service charge tops up your bill in quieter months. For seasonal and small businesses, a card payment machine with no monthly fees is usually the safer choice.

4. Look beyond the rate for add-on subscriptions. POS software, invoicing and business account upgrades can quietly add £50 or more to your monthly bill. Check what's included as standard before you compare card machine fees.

5. Factor in refund and chargeback fees, especially if your business processes a higher-than-average number of returns.

6. Confirm there's no lock-in contract, so you're not stuck if a cheaper or better option comes along. If you're already in one, check your notice period and exit fee before you switch.

7. Review your merchant statements regularly. If your pricing isn't clear, ask your provider for a full breakdown. Bundled or unclear merchant account fees are often where the real cost is hiding, and reviewing them is one of the simplest ways to reduce your credit card merchant fees.

8. Check POS and software compatibility before you commit. A cheap rate doesn't help if the card machine doesn't integrate with the point-of-sale or accounting software you already use. Factor in any integration or gateway fees this might involve.

Compare merchant fees in the UK

How much could I save?

Enter your monthly revenue to see how much you could save with Zeller.

Monthly revenue

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Estimated monthly fees

Provider	Fees	Monthly cost
Zeller	1.3%	—
Square	1.75%	—
SumUp	1.69%	—
PayPal	1.75%	—
Teya	1.59%	—

Terms

*Price comparison based on publicly available information on provider websites as of September 2026.

Debit vs credit card fees: what’s the difference?

Debit cards generally attract lower interchange fees than credit cards, because the money comes straight from the customer's bank account. In the UK, where the UK interchange fee caps apply, interchange is capped at 0.2% for consumer debit cards and 0.3% for consumer credit cards.

Business credit cards, cards issued outside the UK and American Express tend to cost more to process, because they fall outside these caps or use their own pricing.

Should your business accept American Express?

American Express is often associated with higher-spending customers, which makes it an attractive payment option for many businesses. Amex merchant fees have traditionally been higher than Visa or Mastercard, because Amex runs its own network and sets its own rates. Some UK businesses still choose not to accept it as a result.

With Zeller, Amex is charged at a simple 1.99% for in-person payments, with no separate Amex merchant agreement to set up. If your business takes a high volume of Amex payments, we can offer custom rates. Speak to our sales team to find out what you could save.

Accepting Amex can:

• Help increase your average transaction value

• Improve convenience for customers who prefer to pay with Amex

• Help you capture spend from international visitors and business travellers

How do card machine fees compare to Buy Now, Pay Later?

Buy Now, Pay Later (BNPL) services like Klarna, Clearpay and PayPal Pay in 3 are a different category of payment method to card acceptance, but they're often compared side by side because businesses use both to reach customers. BNPL providers typically charge higher merchant fees than cards. Klarna's Pay in 3, for example, costs merchants around 5.99% + 20p per transaction, while standard debit and credit card merchant fees in the UK usually sit under 2%.

Despite the higher cost, many businesses still offer BNPL because it can lift average order values and attract customers who wouldn't otherwise complete a purchase. Since 15 July 2026, certain forms of Buy Now, Pay Later, including Deferred Payment Credit provided by third-party lenders, have come within FCA regulation. Whether it's worth it depends on your margins and your customers. It's rarely a like-for-like substitute for accepting cards, but rather an extra option on top.

Do merchant fees have VAT?

The VAT treatment of merchant fees can vary depending on the nature of the service being provided. Businesses should check their provider's fee documentation or invoice to understand the VAT treatment that applies.

If you're VAT-registered and unsure how to record merchant fees on your VAT return, speak to your accountant or refer to HMRC's guidance on card handling services.

Pay low transparent fees with Zeller.

• Simple, transparent pricing 

• No hidden contracts or lengthy paperwork

• No subscriptions or hardware rental costs

• Reliable, modern hardware

• 24/7 customer support via phone, email, and SMS

• Real-time reporting from desktop or mobile app

• No chargeback fees

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