Interchange fees remain one of the most misunderstood costs in card payment processing. Here is what every UK merchant should know about how they work and what they actually pay for.
Interchange fees remain one of the most misunderstood costs in card payment processing. For UK merchants processing card payments, these fees represent a significant portion of their total cost of acceptance, yet many business owners could not explain what they are paying for or why.
When a customer pays by card, the merchant's acquiring bank pays a fee to the cardholder's issuing bank. This is the interchange fee. It is set by the card schemes (Visa, Mastercard) and varies based on several factors including card type, transaction method, and merchant category.
Since the UK's departure from the European Union, interchange fee caps have remained broadly consistent with EU levels for domestic transactions. Consumer debit cards are capped at 0.2% and consumer credit cards at 0.3% for domestic transactions. However, cross-border transactions from EU-issued cards are no longer subject to these caps, which has increased costs for merchants with significant European customer bases.
The most practical step is to ensure your payment provider is transparent about interchange costs. Look for providers offering interchange-plus pricing rather than blended rates, as this gives you visibility into exactly what you are paying. Encouraging contactless payments where possible can also help, as these typically attract lower interchange rates than chip-and-PIN or manual entry transactions.
References:
Disclaimer: This article is published by Klipy UK Limited for informational purposes only and does not constitute financial advice. Klipy UK is an authorised partner of Teya (acquirer). For specific guidance on your payment processing costs, please contact editor@klipy.uk.
Found this helpful? Share with your network:
This content is published by Klipy UK, a Teya-authorised reseller of payment solutions. The views expressed are for informational purposes only and do not constitute financial advice. All content is the intellectual property of Klipy UK. Reproduction without permission is prohibited.
See exactly how much you could save. Upload your statement or enter your monthly turnover-instant results, no obligation.
Try Calculator