Complete guide to merchant account fees in the UK

If your UK business is planning to sell goods or services online, you’ll need to find cost-effective and efficient ways to accept electronic payments from customers. This also means that you’ll need to sign up for a merchant account and pay the relevant payment processing fees.

In this guide, we’ll give you the lowdown on what merchant account fees are and how they work. Plus, some tips on keeping costs down, and a look at what popular merchant account providers such as Stripe, Square, PayPal, Revolut Business, Amazon Pay and GoCardless tend to charge in payment processing fees.

We’ll also throw in an alternative way to get paid - using a Wise Business account, you can use invoices, QR codes and payment links as an easy way to accept electronic payments in multiple currencies from customers all over the world.

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What are merchant account fees?

Merchant fees are the charges for electronic payment processing, when you open a merchant account with a provider and use it to accept online payments from your customers.

Different providers use their own pricing models, but most generally charge a percentage per transaction, plus a small fixed fee. For example, 1.5% + £0.20.

While you may see just one charge showing in your account or on your statement, there are often a few different types of merchant fee all bundled up together. This includes:¹

• Payment processor fees - these are charged by the company processing the payment (i.e. Stripe)
• Interchange fees - these may be charged by the bank or other provider which issues the customer’s debit or credit card
• Assessment fees - these are charged by the credit card network, such as Visa, Mastercard or American Express.

Alongside debit and credit card merchant account fees, there may also be additional charges to pay.

These can include payment gateway fees for accepting payments on your website or checkout, and fees for setup and equipment. For example, you may need to pay an initial and then an annual fee for point-of-sale (PoS) equipment like card readers or a monthly subscription for software so that you can accept in-person payments.¹

Some providers also charge monthly statement fees, chargeback fees (when customers dispute a transaction and a refund needs to be issued) and early termination fees.¹

How merchant fees work in the UK

Before you can open a merchant account and start accepting payments, it can be useful to understand a little about how online payments work in the UK. And crucially, at which stages merchant fees are applied.

Here’s the process in brief:

1. Your business gets set up with a payment processing provider and a payment gateway (this may be the same company, or two separate companies whose services integrate with each other). There may be one-off or recurring setup costs to pay, such as to order equipment or install software.
2. On your website or an online marketplace, the customer enters their debit or credit card details to make a purchase
3. The payment is processed by a payment gateway, and payment gateway fees are charged
4. The transaction is routed to the card network (i.e. Visa, Mastercard or American Express) and assessment fees are charged - these are usually a percentage of the total transaction amount
5. Your business (as the merchant) will receive funds from the transaction, minus all the fees that have been charged so far
6. The transaction is finalised by the payment processor, which charges its own fees
7. The funds are authorised by the card issuer (i.e. the customer’s bank, which issued the card), which also collected interchange fees.

How to save on merchant fees

The costs of accepting online payments can quickly start to mount up, and small businesses in particular can find them very expensive. This is why it’s important to find ways to minimise fees wherever possible, so that you’re maximising the value of every sale and transaction for your business.

Here are some tips for saving on merchant account fees:

Compare payment processors and merchant account providers carefully

This means looking very closely at all the terms, conditions and crucially, the fees. Consider all of the services your business may use, and how much each transaction will cost. It could even be worth costing up a typical month of transactions to see exactly how much you’ll pay in fees with each provider.

Contact providers to discuss reduced rates

If your business has a high volume of transactions, it may be possible to negotiate on fees. It’s always worth asking, just in case it’s possible to get a better deal.

Encourage your customers to pay with debit rather than credit cards

Although it can vary between providers, credit card payments are typically more expensive to accept in terms of fees.

Minimise or avoid chargebacks

Chargebacks, which happen when customers dispute a transaction and need to be refunded, are best avoided - as they come with hefty fees of around £15 every time it happens.

You can reduce or eliminate chargebacks through a number of methods, such as offering great customer service, putting in-depth fraud prevention measures in place and being clear and explicit with your returns/refunds policies. You may also want to use an address verification service (AVS) as this can lower the risk of fraud in online payments - which could help to reduce chargebacks.

Set a minimum transaction amount for card payments

Many payment processing providers charge fees which include a fixed amount (i.e. 1.5% + £0.20), which isn’t cost effective for very small transactions. You can maximise cost-effectiveness by setting a minimum transaction amount for card payments.

However, you’ll need to balance this against convenience for customers, especially if you sell goods or services which individually have a very low price. You don’t want to risk putting off potential customers and losing sales due to your card payment policies.

Process transactions by batch, not individually

If it’s possible to set this up with your payment processor, try to adjust your settings so that payments are processed altogether in one batch - for example, at the end of the working day. This can often be more cost-effective than processing them one by one, as they come in.

Other tips to try:

• Use standardised and widely supported hardware and software for payment processing
• Review your merchant account statements regularly, to make sure there are no billing errors or unexpected charges
• Ensure you’re meeting all Payment Card Industry Data Security Standard (PCI DSS) compliance standards
• Find a payment processor with off-peak processing rates, and process payments in batches during those off-peak times.
• Consider offering other payment methods, such as bank transfers - as these can have lower processing fees.
• Speed up payment processing by upgrading to efficient point of sale (PoS) systems and payment technologies.

Merchant fees compared for UK sellers

Now, let’s look at how much you can expect to pay in merchant fees when selling online as a UK business.

Below, we’ve compared some of the most popular providers in the UK, offering a mix of payment gateway and payment processing services.

We’ll look at what they each currently charge per transaction and any currency conversion fees, which is useful to know if you’re looking to sell internationally. We’ve also included monthly fees and chargeback costs so that you can do an accurate comparison of providers.

When choosing a provider for merchant services, price will always be a crucial factor to consider. But while it’s undoubtedly important, it isn’t the only key thing to bear in mind.

You should also look for a provider that suits your business type and typical transaction volume, or that is a specialist in your particular industry.

Does it support the payment methods your customers prefer to use, and can it be integrated with your existing software or POS systems? The easier the integration, the quicker you can be up and running - while also minimising setup costs.

Lastly, consider your future - if you have plans for global expansion, you need a provider which supports international and multi-currency payments, while also meeting local compliance rules in each country you’re operating in.

Simplify online payments with Wise Business

Complex payment gateway integrations are in the past, you can start accepting credit and debit card payments in 18+ currencies in minutes with Wise, no code required.

Just send a payment link, invoice, or QR code to your customers, and let Wise handle the rest, ensuring timely payments and improving your cash flow. This streamlined approach wipes out the technical challenges and time-consuming setup associated with traditional payment gateways, allowing you to focus on what truly matters: growing your business.

Say goodbye to high and complex payment processing fees. Wise Business offers a transparent, low-cost solution with just 1% fee for domestic cards and 2.9% for international and business cards.

And once the payment is done you can manage multiple currencies effortlessly, all in one account. Enhance your customer relationships and support your business's global expansion with a payment solution that prioritises simplicity and efficiency.

Get started with Wise Business 🚀

And that’s about it - your essential guide to merchant account fees in the UK. We’ve covered all the important stuff, including what merchant fees are and how they work, and tips to keep costs to a minimum. Plus, an idea of what specific fees to expect from popular merchant account providers such as Stripe, Square, PayPal and more.

After reading this, you should be all set to choose a provider and optimise the way you sell and get paid online. Just remember to do your homework and compare fees and conditions carefully, to ensure the very best deal for your business.

Sources used:

1. Stripe - Merchant fees – the basics: What they are, how they work and how to minimise your costs
2. Stripe - Pricing
3. Square - Pricing
4. Square - Help - Learn about Square fees
5. Amazon Pay - Country-specific fee schedules
6. PayPal - PayPal Merchant Fees
7. Revolut Business - Business Account Pricing
8. Revolut Business - Payment acceptance pricing
9. GoCardless - Pricing

Sources last checked on date: 23-Sep-2025