Card Machine Transaction Fees

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Libby James
Merchant Services Expert

Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.

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Card machine charges have decreased in recent years, yet navigating the costs can still be a complex task for business owners. To secure the best deal, you must consider various factors, such as pricing structures, contract terms, and additional expenses. Let’s delve into the various options for card machine costs and how pricing breakdowns typically occur. At MAS, we’re dedicated to simplifying the complex world of financial services for businesses. Our mission is to provide free, unbiased advice in a language that businesses can easily understand. By empowering you with the knowledge your company needs, we enable informed decisions that align with your unique needs and goals. Whether it’s deciphering card machine costs, navigating banking options, or understanding payment processing, we’re here to offer clarity and support every step of the way. With MAS, businesses gain the confidence to make smart financial choices and thrive in today’s dynamic marketplace.

Understanding Card Machine Transaction Fees

Credit card processing fees are the charges businesses face when accepting credit card payments. Understanding these fees and their components is essential for managing costs effectively. 

Interchange fees: Set by card networks like Visa and Mastercard, paid to the cardholder’s bank for transaction processing. 

Assessment fees: Also set by card networks, paid directly to them for card usage. 

Processor markup: Retained by payment processors for services such as transaction processing, equipment rental, and customer support. 

Fees vary based on factors like card type, transaction volume, and processing method. Clear comprehension of these components is crucial for businesses to optimise financial operations.

For small businesses, understanding credit card processing fees is essential to managing costs effectively. On average, these fees typically consist of interchange fees, assessment fees, and processor markup. Interchange fees, determined by card networks such as Visa, Mastercard, American Express, and Discover, are a percentage of each transaction’s value. They vary based on factors like card type (debit, credit), transaction volume, and processing method (online, in-person). Assessment fees, also set by card networks, are a flat rate charged per transaction and contribute to the overall cost. 

Across different card networks, variations in fees exist. Visa and Mastercard generally have similar fee structures, with interchange rates varying by card type and transaction details. American Express and Discover, on the other hand, often have higher interchange rates but may offer distinct benefits or rewards programs for cardholders. These variations underscore the importance of comparing rates and negotiating with payment processors to secure the best deals for small businesses. With a clear understanding of these fees and network differences, businesses can make informed decisions to optimise their payment processing strategies and minimise expenses.

Different Pricing Models for Transaction Fees

Various pricing models exist in the realm of credit and debit card processing, each tailored to different business needs and preferences. Flat-rate pricing offers simplicity, charging a fixed percentage for all transactions regardless of type. Interchange-plus pricing, on the other hand, provides transparency by adding the actual interchange fees plus a markup. Membership pricing structures involve paying a monthly fee for access to discounted transaction rates. Tiered pricing categorises transactions into different tiers based on factors such as volume and risk, with each tier incurring different fees. Depending on the types of transactions, businesses may also face additional costs like PCI compliance fees, gateway fees, and charges imposed by credit card companies. Understanding these pricing models is crucial for businesses to select the most cost-effective option while ensuring compliance and financial efficiency.


  • Flat-rate pricing: Offers simplicity with a fixed percentage charged for all transactions, regardless of type. Example: Square charges 2.6% + 10p per transaction. Suitable for: Small businesses with low transaction volumes or those seeking straightforward pricing structures.
  • Interchange-plus pricing: Provides transparency by adding the actual interchange fees plus a markup. Example: Stripe charges interchange + 0.5%. Suitable for: Businesses processing high volumes of transactions, as it offers transparency and potentially lower costs.
  • Blended rates: Averages out the interchange fees across all transactions, simplifying pricing. Example: PayPal charges a blended rate of 2.9% + 30p per transaction. Suitable for: Small to medium-sized businesses with moderate transaction volumes, seeking simplicity and ease of use.
  • Membership pricing: Involves paying a monthly fee for access to discounted transaction rates. Example: Payment Depot offers membership plans with fixed transaction fees. Suitable for: Businesses with predictable transaction volumes looking to reduce per-transaction costs.
  • Tiered pricing: Categorises transactions into different tiers based on factors like volume and risk, with each tier incurring different fees. Example: Worldpay’s tiered pricing includes qualified, mid-qualified, and non-qualified rates. Suitable for: Businesses with varying transaction volumes and risk profiles, although it can be less transparent than other models.

Finding the Best Pricing Structures – the Pros and Cons

  • Flat-rate pricing:
    • Pros: Simplicity, easy to understand, no hidden fees. Suitable for small businesses and startups.
    • Cons: Higher costs for businesses with high transaction volumes or larger ticket sizes. Not always the most cost-effective option.
    • Impact on transaction costs: Can be beneficial for businesses with low transaction volumes or irregular sales patterns. However, may result in higher overall transaction costs for businesses processing large volumes.
  • Interchange-plus pricing:
    • Pros: Transparency, lower costs for businesses with high transaction volumes or larger ticket sizes.
    • Cons: Complexity in understanding interchange rates and markups.
    • Impact on transaction costs: Typically results in lower overall transaction costs for businesses processing high volumes, especially for transactions with higher interchange rates.
  • Blended rates:
    • Pros: Simplicity, easy to understand.
    • Cons: Lack of transparency, may result in higher costs for businesses with varying transaction types.
    • Impact on transaction costs: Can be suitable for businesses with moderate transaction volumes and similar transaction types, but may lead to higher overall costs for businesses with diverse transaction types.
  • Membership pricing:
    • Pros: Predictability, potential for lower transaction costs with high transaction volumes.
    • Cons: Monthly fees may not be cost-effective for businesses with low transaction volumes.
    • Impact on transaction costs: Can be beneficial for businesses with predictable transaction volumes, offering potential savings for businesses with high transaction volumes.
  • Tiered pricing:
    • Pros: Flexibility, potential for lower costs for businesses with specific transaction profiles.
    • Cons: Lack of transparency, higher costs for businesses with non-qualified transactions.
    • Impact on transaction costs: May result in lower costs for businesses with consistent transaction patterns, but could lead to higher overall costs due to non-qualified transaction fees, chargeback fees, and other additional charges depending on the acquiring bank and the type of card used (e.g., credit, debit, contactless).

Factors Affecting Card Machine Transaction Fees

Several factors influence card machine transaction fees, impacting businesses’ overall costs and profitability. One crucial determinant is the type of card used for the transaction, whether it’s a credit or debit card. Typically, credit card transactions tend to incur higher processing fees than debit card transactions due to the higher risk associated with credit. The transaction method plays a significant role; card-present transactions (in-store purchases) generally have lower fees compared to card-not-present transactions (online or over-the-phone purchases) due to the increased risk of fraud.

Additionally, various additional charges contribute to transaction fees. For instance, e-commerce transaction charges are levied for online purchases, reflecting the added risk and processing requirements of online transactions. Digital wallet processing fees apply when customers use services like Apple Pay or Google Pay, adding convenience but also incurring additional costs. Contactless payment charges may also apply, especially for NFC-enabled transactions.

Providers often impose additional fees such as monthly fees, online transaction fees, and keyed-in transaction fees. For example, Square may charge a flat-rate fee per transaction alongside a monthly subscription fee for its services. PayPal also levies fees for online transactions and keyed-in transactions, varying based on transaction volume and type.

It’s important to note that chargeback fees can significantly impact businesses’ costs, particularly in cases of disputed transactions. These fees are incurred when a customer disputes a transaction, leading to administrative costs for resolving the dispute.

The acquiring bank plays a crucial role in determining transaction fees, as different banks may offer varying fee structures and pricing models. Overall, businesses must carefully consider these factors and negotiate with providers to minimise transaction costs and maximise profitability.

How to Choose the Right Card Machine and Pricing Model

Choosing the right card machine and pricing model is critical for businesses to effectively manage transaction costs while providing convenient payment options for customers. Business owners should consider several factors when making this decision.

Firstly, assess your business size and transaction volume. Smaller businesses with lower transaction volumes may benefit from flat-rate pricing models, offering simplicity and ease of understanding. Conversely, larger businesses processing higher volumes may find interchange-plus pricing models more cost-effective, providing transparency and potential savings.

Consider the payment options you want to offer to customers. Ensure your chosen card machine supports a variety of payment methods, including credit or debit cards, contactless payments, and digital wallets. This ensures flexibility for customers and maximises sales opportunities.

Take into account security standards and compliance requirements. Ensure your chosen card machine meets industry security standards such as PCI DSS compliance to safeguard sensitive customer data and minimise the risk of fraud or data breaches.

Be aware of additional costs associated with payment processing. Consider factors such as gateway fees, authorisation fees, and payment processing fees, which can impact overall transaction costs. Compare pricing models from different providers to identify the most cost-effective option for your business needs.

Merchant Advice Service (MAS) can assist businesses in navigating these complexities and making informed choices. Our expert advisors provide personalised recommendations tailored to your business requirements and budget. We offer impartial advice on card machine options and pricing models, ensuring you find the best solution for your business. With MAS’s assistance, business owners can confidently select the right card machine and pricing model to optimise their payment processing operations and enhance customer satisfaction.

Reducing and Managing Transaction Fees

To lower or offset credit card processing fees, understanding and negotiating processor markups is crucial. Business owners should compare providers on a pound-for-pound basis, ensuring transparency and competitiveness in pricing. Negotiating lower markups can significantly reduce transaction costs and boost profitability.

Exploring options for “zero-cost” processing and credit card surcharging can also mitigate expenses. Some providers offer “zero-cost” processing, where transaction fees are offset by spending on an expense card and opting in for reward schemes. This strategy shifts the burden of processing fees from the business to the consumer, effectively reducing costs. 


Regularly shopping around for payment processing services is essential for businesses to save costs. By periodically comparing pricing models and negotiating with providers, businesses can ensure they’re getting the best rates and terms available in the market, ultimately maximising savings and profitability.


Understanding and wisely choosing card machine transaction fees is paramount for businesses to optimise their financial operations. By comprehending the various factors affecting fees and selecting the most suitable pricing model, businesses can effectively manage costs and enhance profitability. For expert guidance and support in navigating the complexities of payment processing, businesses are encouraged to consult with Merchant Advice Service. Our team of experts provides personalised recommendations and impartial advice to ensure businesses make informed decisions that align with their needs and goals. With our assistance, businesses can confidently navigate the world of card machine transaction fees and optimise their payment processing strategies for long-term success.


Commonly Asked Questions
Pros and cons of flat-rate pricing?
Pros: Simple, easy to understand, no hidden fees. Suitable for small businesses. Cons: Higher costs for high transaction volumes, not always cost-effective.
Impact of flat-rate pricing on transaction costs?
Beneficial for low transaction volumes, but may lead to higher costs for high volumes.
Advantages of interchange-plus pricing?
Transparency, potentially lower costs for high-volume businesses.
What are the challenges with understanding interchange rates and markups?
Complexity in understanding the rates set by card networks and markups added by processors.
How does interchange-plus pricing benefit high transaction volumes?
Interchange Rates offer transparency, typically resulting in lower overall transaction costs for high volume merchants.
What are the benefits and drawbacks of blended rates?
Pros: Simplicity. Cons: Lack of transparency, may lead to higher costs for varied transactions.
How does blended rate pricing affect diverse transaction types?
Suitable for moderate volumes and similar transactions, but could raise costs for diverse types.
What are the advantages and disadvantages of tiered pricing?
Pros: Flexibility for specific transaction profiles. Cons: Lack of transparency, higher costs for non-qualified transactions.

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Libby James

Libby James Co-founded Merchant Advice Service alongside David Bird in 2016. Her finance background, coupled with retail and customer service experience, gave Libby the drive to bring transparency and non-biased advice to the world of merchant services. Having come from the heavily regulated mortgage and insurance industry, Libby found it puzzling that other financial sectors lacked regulation and transparency leaving customers confused and unable to make informed decisions when it came to accepting card payments. This was soon to become Libby’s obsession!

With the help of some of the industry’s best, Libby began to research acquiring banks, complex terminology/regulation, and the problems customers experience within merchant services and payment gateway markets. She spent years on sourcing solutions for complex clients, which previously others were unable to assist with. Libby established relationships with brokers and banks which would soon form the cornerstone of Merchant Advice Service. As a result Libby has been featured in high-profile publications across the web.

Libby is proud to be the entrepreneur’s champion, supporting start-up businesses regularly. Her industry insights can often be found on LinkedIn where she provides free of charge advice and money saving pointers. It’s safe to say she has her finger on the pulse of everything card payments related.

Libby speaks of her experience in founding and running Merchant Advice Service…

‘Merchant Advice Service is one of my greatest achievements to date. We help business owners to overcome card processing issues which can become detrimental to their business. We assist SME’s in finding suitable card payments solutions, helping them create their vision. Each and every day is different, exciting and fore filling. As technology advances I can’t wait to see the way in which the merchant services market advances, and I’m pleased that our business will play a part in educating company owners along the way.’

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