The Three Charges Behind One Line
Every card payment a UK business accepts is really three separate charges wearing one disguise. The invoice from your payment provider shows a single line, but that line is built from interchange, scheme fees and a processor markup, and only one of those three is something you can actually negotiate.
Interchange: The Capped Cost
Interchange goes to the bank that issued your customer’s card. It’s capped by law in the UK: 0.2% of the transaction for a UK consumer debit card, 0.3% for a UK consumer credit card, set under the Interchange Fee Regulation since December 2015. Business and corporate cards sit entirely outside these caps, which is one reason B2B card payments often carry a noticeably higher rate than the same amount paid on a personal card.
Scheme Fees: Visa and Mastercard’s Cut
Scheme fees go to Visa or Mastercard themselves, for running the network that authorises, routes and settles the payment. Between them, the two schemes handle 99% of UK debit and credit card payments, according to the Payment Systems Regulator (PSR), and that near-total dominance is exactly why scheme fees aren’t capped the way interchange is. The PSR’s own market review found that scheme and processing fees paid by UK acquirers rose substantially between 2014 and 2018, and that a significant share of that rise couldn’t be explained by any change in transaction volume or card mix. In May 2024, the PSR provisionally concluded the market for these fees was not working well for merchants, and its review of remedies is still ongoing.
Provider Markup: The Part You Can Negotiate
The third piece, the processor markup, is what your payment provider (Teya, Worldpay, Dojo, or whoever you’re with) adds for running your merchant account, terminal and support line. This is the only one of the three you can push back on. When a provider quotes a single flat rate like 1.75%, they’ve blended all three costs into one number, which makes it hard to see how much is regulated interchange and how much is their own margin sitting on top.
Why This Matters For Your Statement
If your business takes mostly UK-issued debit cards from everyday consumers, but you’re on a flat-rate plan built to cover more expensive card types, you may be overpaying to subsidise transactions you rarely actually see. Interchange-plus pricing, where you pay the real interchange cost plus a transparent, separately-shown markup, tends to suit steady, local, mostly-debit businesses better. One thing worth checking on your own statement: your Merchant Service Charge is the sum of all three components. If your provider can’t break that total down into its three parts on request, that’s worth raising directly, since fee transparency is precisely what the PSR has flagged as one of this market’s weakest points.
Curious how much of your own rate is markup? Compare your fees free, no obligation.