Around 95% of UK merchants pay a single flat rate for every card transaction regardless of card type. That is blended pricing. Here is how it works, why it exists, and how it compares to interchange plus.
When you accept card payments, you pay a merchant service charge (MSC) to your payment provider. But how that charge is calculated varies enormously between providers. The most common model in the UK is blended pricing. Here is what it means, why it exists, and how it compares to the alternatives.
Blended pricing means you pay a single flat rate on every card transaction, regardless of card type. It does not matter whether your customer pays with a basic Visa debit card or a premium Mastercard business rewards card: you pay the same percentage.
For example, if your blended rate is 1.59%, you pay 1.59% whether that is a contactless debit tap or a foreign-issued corporate card.
This simplicity is why blended pricing dominates the UK market. According to Merchant Savvy's UK Payment Statistics research, approximately 95% of UK merchants process card payments under some form of blended or fixed-rate pricing.
The reason blended pricing exists is that the underlying cost of processing a card transaction varies by card type. These underlying costs are called interchange fees, set by Visa and Mastercard (and by Amex for its own network).
Post-Brexit, the UK has regulated interchange fees under the Interchange Fee Regulation (IFR):
Because your provider knows your card mix will vary week to week, they calculate a weighted average of these costs, add their margin, and quote you one number. That is your blended rate.
Not all merchants are on blended pricing. Larger businesses often use interchange plus (IC+) or interchange plus plus (IC++) pricing.
Interchange Plus (IC+): You pay the actual interchange rate for each card type, plus a fixed markup from your provider. For example: "interchange + 0.30%". This is more transparent because you see the actual underlying cost per card type. But your monthly statement becomes significantly more complex, with dozens of line items for different card tiers.
Interchange Plus Plus (IC++): An even more granular version that also shows card scheme assessment fees (Visa and Mastercard network charges) separately from the acquirer markup.
IC+ and IC++ pricing is generally only accessible to businesses with annual card turnover above approximately £10 million. For smaller businesses, the complexity outweighs any pricing benefit, and most providers will not offer it below this threshold.
Fixed-rate payment facilitators (PayFacs) like SumUp, Square, and PayPal POS offer a simplified version of blended pricing. Their model is a single flat rate for all in-person transactions, with higher rates for card-not-present transactions, no contracts, and no monthly fees on base plans. Examples: SumUp 1.69% PAYG (or 0.99% on their paid plan), Square 1.75%, PayPal POS 1.75%.
These providers bundle acquiring, card scheme fees, interchange, and their margin into one rate with no itemisation. This is a form of blended pricing, optimised for simplicity and lower-volume businesses.
Your provider calculates your blended rate based on your expected card mix. A business that mostly processes consumer debit cards (low interchange cost) will get a lower blended rate than a business handling a lot of premium commercial credit cards (higher interchange cost).
Your effective blended rate is simply: total card processing fees divided by total card turnover. This is the most useful number when comparing providers, because it accounts for your specific card mix.
For most UK businesses processing under £10 million per year in cards, blended pricing is the practical choice: simple to understand, predictable monthly cost, and no need to decode a complex statement with dozens of interchange tiers.
For larger businesses above £10 million in annual card turnover, IC+ may yield savings if your card mix skews towards low-interchange debit cards.
To find your true effective blended rate, upload your last statement to our free calculator at klipy.uk/calculator. We will calculate the real rate you are paying today and show how it compares.
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