Learning • 4 min read

Authorisation Fees Explained

What the per-transaction authorisation fee is, and why it matters more for low-value, high-volume businesses.

What is an authorisation fee?

An authorisation fee is a small fixed charge - typically a few pence - applied to every card transaction in addition to the percentage rate. It covers the cost of routing the transaction request to the card scheme.

On a £100 transaction it's barely noticeable. On a £3 transaction it can double the cost of accepting that payment.

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Who is most affected

Businesses with high transaction volume and low average transaction value - coffee shops, food trucks, salons, newsagents - pay proportionally more authorisation fees relative to turnover than businesses with high-value, low-volume sales.

Key takeaways

  • ●Authorisation fees matter more at low average transaction values.
  • ●Always factor them into the effective rate calculation.

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