Interchange Fees Explained: UK Rates, IC+ and IC++ Pricing

Quick summary

Interchange is one of the underlying costs involved when a business accepts a card payment. It usually sits alongside card-scheme fees, payment-provider margin and other processing charges within the overall amount paid by the merchant.

• For eligible UK domestic consumer card transactions, interchange is capped. Where the UK Interchange Fee Regulation applies, the current cap is 0.2% for consumer debit and prepaid cards and 0.3% for consumer credit cards.
• Those percentages are not your total card-processing rate. Scheme fees, acquiring or processor margin, authorisation charges, gateway fees and other costs may also apply.
• The caps are not universal. They apply to certain UK domestic consumer-card transactions. Commercial cards and cross-border transactions should not automatically be assumed to carry the same rates.
• Blended and Interchange++ pricing show costs differently. A blended rate combines underlying costs into a simpler price, while cost-plus models expose more of the individual components.
• IC++ does not automatically mean cheaper processing. Greater transparency and lower total cost are two different things.
• Your real card mix matters. The best way to compare payment pricing is to use actual transaction and merchant-statement data rather than one advertised percentage.

Merchant Advice Service is an independent UK payments information, comparison and provider-matching service that helps businesses understand how card-processing costs are structured.

Interchange is particularly important when comparing providers because it helps separate underlying card costs from provider margin and other charges within the wider processing arrangement. 

Interchange is one component of the overall cost of accepting card payments, rather than the total merchant-account price. Our Merchant Accounts guide explains how acquiring, payment providers, pricing and merchant-account requirements fit together.

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What is an interchange fee?

An interchange fee is an underlying card-payment fee that is generally paid by the merchant's acquiring side to the bank or financial institution that issued the customer's card.

In a typical four-party card transaction, the main participants are:

1. The cardholder — the customer making the payment.
2. The issuer — the bank or financial institution that issued the customer's card.
3. The card scheme — such as Visa or Mastercard.
4. The acquirer — the organisation providing acquiring services to the merchant.

The interchange fee flows between the acquiring and issuing sides of that payment chain. The merchant does not normally receive a separate interchange invoice from the customer's bank. Instead, interchange usually forms part of the wider cost of accepting the transaction.

The Payment Systems Regulator explains interchange and merchant charges for UK businesses.

This four-party explanation is most directly applicable to schemes such as Visa and Mastercard. Other card arrangements, including American Express, can operate differently.

Is interchange the same as your merchant service charge?

No.

This is one of the most important distinctions for businesses comparing card-processing costs.

Your merchant service charge, sometimes shortened to MSC, is the wider charge associated with accepting card payments.

Depending on your provider and pricing structure, card-processing costs can include:

• interchange
• card-scheme fees
• acquirer or processor margin
• authorisation fees
• gateway charges
• cross-border charges
• currency-conversion charges
• chargeback fees
• terminal or service fees
• other contractual charges.

The UK Interchange Fee Regulation caps certain interchange fees. It does not impose a general cap on the total merchant service charge that your payment provider charges you.

What are the UK interchange fee caps?

For consumer-card transactions that fall within the UK Interchange Fee Regulation, the current headline caps are:

Following the UK's withdrawal from the EU, these caps apply to relevant consumer-card transactions where the merchant, acquirer and issuer are all located within the UK.

The percentages are caps rather than a universal merchant processing price.

For example, if a customer spends £100 using an eligible UK consumer debit card, the interchange component cannot exceed 20p where the 0.20% cap applies.

That does not mean the merchant's total cost of processing the £100 transaction is 20p. Other payment costs may sit on top of interchange.

See the Payment Systems Regulator's current UK Interchange Fee Regulation guidance for the regulatory position.

Does the 0.2% or 0.3% cap apply to every card?

No.

The headline UK caps relate to consumer debit, prepaid and credit transactions within the scope of the UK Interchange Fee Regulation.

Businesses should not assume that every transaction they process will therefore have interchange of 0.20% or 0.30%.

Transactions can fall outside that straightforward domestic consumer-card position, including where:

• the card is issued outside the UK
• the acquiring arrangement is outside the UK
• the transaction is cross-border
• a commercial or business card is used
• a different scheme structure applies.

This is one reason the effective cost of accepting cards can be significantly different between two businesses even when their total processing turnover is similar.

What happened to interchange fees after Brexit?

Cross-border payments between the UK and the European Economic Area are particularly important for ecommerce and international businesses.

Following the UK's withdrawal from the EU, consumer cross-border transactions where the issuer or acquirer is outside the UK's jurisdiction are no longer covered by the UK domestic interchange caps in the same way.

Visa and Mastercard subsequently increased interchange fees on certain card-not-present consumer transactions between the UK and EEA from:

• 0.20% to 1.15% for debit cards
• 0.30% to 1.50% for credit cards.

The Payment Systems Regulator has carried out a market review into these UK-EEA cross-border interchange fees and concluded that certain card-not-present fees had risen to unduly high levels.

As at August 2026, the PSR is continuing work on the methodology for a potential longer-term price cap. It has decided not to introduce an interim cap while that work continues.

Businesses with significant European card volumes should therefore look carefully at their international card mix when comparing payment providers.

Read the PSR's latest cross-border interchange fee work.

What are card-scheme fees?

Interchange should not be confused with scheme fees.

Card schemes charge fees associated with using their payment networks and processing infrastructure. These are separate from the interchange fee associated with the issuing bank.

The distinction matters because a merchant can be quoted a pricing model that passes through both:

• interchange
• scheme and network costs
• the payment provider's own markup.

This is the basis of many cost-plus or Interchange++ pricing models.

The PSR has separately reviewed card-scheme and processing fees in the UK, including concerns around fee complexity and transparency.

What is blended card-processing pricing?

With blended pricing, the merchant generally pays an agreed rate without seeing every underlying network-cost component separately for each transaction.

A simple example might look like:

1.5% + 20p per transaction

The provider uses that price to cover the relevant underlying card costs and its commercial margin.

Blended pricing has some advantages:

• it can be easier to understand
• monthly costs may be simpler to forecast
• statements can be less complicated
• it can work well where simplicity is more valuable than granular cost analysis.

Its limitation is that the merchant has less visibility into how much of the charge relates to underlying card costs and how much relates to provider economics.

What is IC+ or interchange-plus pricing?

Interchange-plus is a cost-plus pricing structure where underlying card costs are passed through to the merchant and the payment provider adds its own agreed markup.

This can give a business greater visibility into how its processing costs are generated.

However, terminology differs between providers.

Some providers use terms including:

• IC+
• IC++
• Interchange++
• interchange plus
• cost plus
• network cost plus.

These terms are not always used identically across the industry.

For example, Stripe's current pricing policy says its IC+ model may also be referred to as Interchange++, Cost Plus or Network Cost Plus.

That means businesses should not assume that the number of '+' symbols tells them exactly what is included.

Ask the provider to show you precisely which costs are passed through and which element represents its own margin.

What does IC++ usually mean?

In common payments terminology, an Interchange++ structure is often explained as three broad components:

1. Interchange — the relevant interchange cost associated with the card transaction.
2. Scheme or network fees — charges associated with the card network.
3. Provider markup — the margin or processing fee charged by the acquirer, PSP or payment provider.

The attraction of this structure is transparency: the merchant can see more clearly how the cost of accepting different cards changes.

But because provider terminology varies, the contract and pricing schedule remain more important than the label itself.

Blended vs IC+ vs IC++

Is Interchange++ always cheaper than blended pricing?

No.

This is where businesses can easily confuse transparency with price.

An IC++ structure may make the individual components of payment processing easier to see, but that does not automatically mean the final bill will be lower.

The result depends on factors including:

• the provider markup
• the business's debit and credit card mix
• consumer versus commercial cards
• UK versus international cards
• card-present versus ecommerce transactions
• average transaction value
• scheme and network costs
• authorisation fees
• gateway charges
• other contractual fees.

A well-priced blended agreement can therefore cost less than an expensive IC++ agreement, and a competitive IC++ structure can cost less than a high blended rate.

The pricing label alone does not answer the question.

Interchange should not be confused with the total cost of accepting a payment. A merchant may also pay scheme fees, acquiring margin, gateway fees, authorisation charges and other payment-platform costs.

For online payments, see our Payment Gateway Fees UK 2026 guide for a breakdown of the wider payment-cost stack.

Merchant Advice Service view

Transparency and price are not the same thing.

Businesses often ask Merchant Advice Service whether moving from blended pricing to Interchange++ will automatically reduce their processing costs. Our view is that the comparison should start with the business's real transaction data rather than the pricing model.

A detailed pricing structure can make it considerably easier to understand where costs originate, particularly for higher-volume merchants. But the meaningful comparison is still the actual pound-for-pound cost of processing the same transaction mix through each proposed arrangement.

If one provider quotes 0.35% above interchange and another quotes a single blended percentage, those figures cannot be compared properly in isolation.

You need to know what each quote would have cost against the same cards, transaction values, payment channels and international mix.

Worked example: what does interchange cost on a £100 payment?

Consider a £100 transaction where the UK domestic consumer-card caps apply.

Those figures represent the interchange component only.

For example, a £100 UK consumer debit transaction subject to the cap could have a maximum interchange component of 20p, but the merchant may also pay scheme/network costs, its provider's processing margin and any other applicable transaction charges.

This is why it is incorrect to say that UK debit-card processing should cost merchants only 0.20%.

Can a merchant negotiate interchange fees?

Generally, a merchant does not negotiate the applicable scheme-set interchange category directly with its acquiring provider in the same way it may negotiate the provider's own commercial margin.

What businesses can often assess or negotiate includes:

• acquirer or processor markup
• blended merchant service charges
• per-transaction charges
• gateway pricing
• terminal costs
• settlement arrangements
• minimum monthly charges
• other provider-specific fees.

For larger businesses, relatively small changes in provider margin can become significant when multiplied across a high annual card turnover.

Read our guide to reducing payment fees when processing £1 million or more per month.

Why does your card mix matter?

Two businesses processing exactly £1 million a month can have very different payment costs.

One may predominantly accept UK consumer debit cards in person.

The other may process:

• international cards
• commercial cards
• consumer credit cards
• online transactions
• multiple currencies.

The underlying cost profile can therefore be different even before the payment provider's own margin is considered.

This is why Merchant Advice Service generally recommends using historical processing data when comparing provider quotes.

How to find interchange and processing costs on your merchant statement

The amount of detail shown on merchant statements varies according to provider and pricing model.

On a blended plan, you may primarily see aggregated transaction rates and charges.

Under a more detailed cost-plus arrangement, statements or reporting can contain far more information about card categories, network costs and provider charges.

When reviewing a statement, look for information relating to:

• total card turnover
• number of transactions
• debit and credit split
• consumer and commercial cards
• UK and international cards
• card-present and card-not-present payments
• merchant service charges
• authorisation fees
• gateway charges
• other fixed and variable charges.

Read our full guide to understanding merchant processing statements.

How should you compare two card-processing quotes?

The cleanest comparison uses the same underlying business data for both providers.

Ideally, compare quotes using:

• the same monthly or annual card turnover
• the same number of transactions
• the same average transaction value
• the same debit/credit mix
• the same UK/international card mix
• the same consumer/commercial card mix
• the same payment channels
• the same gateway and terminal requirements.

Then include all relevant charges rather than comparing only the most prominent percentage on the quote.

A useful question to ask a prospective provider is:

“What would this pricing model have cost me against my actual last three months of transactions?”

That is considerably more meaningful than asking which provider has the lowest advertised rate.

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Should I choose blended or Interchange++ pricing?

There is no single answer that applies to every business.

A smaller merchant may value a straightforward blended rate because it is simple to understand and reconcile.

A larger merchant or business with a varied card mix may place greater value on the visibility offered by cost-plus pricing.

Businesses with significant processing volumes may also be in a stronger position to negotiate provider margin and analyse the financial effect of small pricing differences.

The important point is to compare the total commercial outcome, not assume one pricing model is inherently better because it appears more sophisticated.

Interchange fees and choosing a payment provider

Interchange is only one component of payment-provider selection.

Depending on your business, you may also need to compare:

• payment gateway capability
• settlement times
• contract length
• terminal requirements
• international acquiring
• currencies
• recurring payments
• integrations
• provider risk appetite
• customer support.

For a broader comparison, read Compare UK Payment Providers.

About Merchant Advice Service

Merchant Advice Service is a UK business-to-business payments information, comparison and provider-matching service.

Founded in 2016, MAS helps businesses understand their payment requirements and identify payment providers or specialist partners that may be relevant to the way they operate.

We provide information and support across areas including:

• merchant accounts
• payment gateways
• integrated payments
• higher-risk merchant accounts
• international acquiring
• multiple currencies
• specialist payment integrations
• merchant finance
• more complex provider requirements.

Merchant Advice Service is not an acquiring bank, lender or payment processor and does not make final underwriting decisions.

The MAS information, matching and introduction service is free to businesses. MAS may receive commission or a referral fee from some commercial partners where an introduction results in a completed product or account.

For full information about how our service operates, provider matching, independence and commercial relationships, read How Merchant Advice Service Works.

Sources and further reading

• Payment Systems Regulator — The Interchange Fee Regulation
• Payment Systems Regulator — The IFR and merchants
• Payment Systems Regulator — The IFR and Brexit
• Payment Systems Regulator — Cross-border interchange fees market review
• Payment Systems Regulator — Card scheme and processing fees market review
• Visa — Fees and interchange
• Stripe — Pricing Policy and IC+ terminology

Editorial and commercial disclosure

Merchant Advice Service is an independent payments information, comparison and provider-matching service.

Our editorial content may reference payment providers, technology companies and financial institutions regardless of whether Merchant Advice Service has a commercial relationship with them.

Where providers are named for comparison, research or technical examples, inclusion does not constitute a recommendation and should not be taken to mean that Merchant Advice Service can introduce businesses to that provider.

MAS may receive commission or a referral fee from some commercial partners where a business chooses to proceed following an introduction. Commercial relationships do not determine which providers may be referenced within our independent educational content.

Providers have not paid for inclusion in this article unless explicitly stated.

Provider capabilities, pricing, integrations and acceptance criteria can change. Businesses should confirm current information directly with the relevant provider before making a decision.

Last reviewed: 14 August 2026.