Authorisation Fees Explained for UK Merchants

What an authorisation fee is

An authorisation fee is a charge for a payment authorisation request. Some tariffs list it separately; others include relevant processing costs within their pricing. The amount and the events that attract a charge depend on your agreement—not a universal UK tariff.

As a hypothetical example, a 3p fee adds 0.03% to a £100 payment but approximately 0.94% to a £3.20 coffee. That is why a small fixed charge deserves attention alongside the percentage rate.

How authorisation fees stack up in practice

The table uses an illustrative 3p fee and 1.30% transaction rate, with one billable authorisation per completed sale. These are examples, not market benchmarks or available quotes. Actual cost also depends on the number of billable requests, including any charged retries or declines.

Effective % uplift from a 3p authorisation fee, by average transaction value
Average transaction value	Auth fee as % of transaction	Uplift on a 1.30% headline rate
£2.50	1.20%	1.30% + 1.20% = 2.50% effective
£5.00	0.60%	1.30% + 0.60% = 1.90% effective
£10.00	0.30%	1.30% + 0.30% = 1.60% effective
£25.00	0.12%	1.30% + 0.12% = 1.42% effective
£75.00	0.04%	1.30% + 0.04% = 1.34% effective
£250.00	0.012%	1.30% + 0.012% = 1.31% effective

Illustration only; excludes fixed monthly charges and other fees. Use your own tariff and billable-event count. Percentages are rounded.

Who is most affected

The businesses that pay proportionally most in authorisation fees are those with high transaction volume and low ATV: coffee shops, food trucks, hair and beauty, newsagents, corner shops and quick-service restaurants. For these businesses, cutting the authorisation fee by 2p can be worth more than cutting the percentage rate by 20 basis points.

A fixed fee is a smaller percentage of a larger payment, but do not ignore its monthly total. Compare the pounds saved by changing each fee on the same activity: 2p less on 1,000 billable requests saves £20; a 0.20 percentage-point reduction on £10,000 of eligible sales also saves £20.

What to check on your contract

Auth fee amount

Ask for the amount per billable request and whether it is already included in another per-item charge. Multiply it by the relevant monthly event count, not automatically the successful sales count.

Whether it applies to declines

Some acquirers charge the auth fee on declined transactions too. Painful for card-not-present businesses with high decline rates.

Whether it applies to refunds

Ask whether refunds attract an authorisation charge, a separate refund fee, both or neither. Do not assume a refund has the same fee treatment as a sale.

Refund of original fees

Ask which original processing charges, if any, are returned when a sale is refunded. Confirm this separately from any new charge for handling the refund.

Key takeaways

Authorisation fees are fixed per transaction - their real cost is a function of average transaction value.
At ATVs under £10, the auth fee can matter more than the percentage rate.
Check the treatment of declines, retries and refunds rather than assuming every provider bills them alike.
Compare savings in pounds across the full tariff, including the cost of changing provider.

Want to understand what you are actually paying?

Send your latest merchant statement and Card Payment Connect will assess the charges, pricing structure and contract information available.

Get My Statement Reviewed

Official sources

Frequently asked questions

Why do I get charged an auth fee on declined transactions?

If your tariff charges for the authorisation request rather than only a completed sale, a decline may still be billable. Ask your provider to reconcile the billed request count with the transaction report and explain which outcomes are charged.

Are auth fees the same as scheme fees?

Do not treat the labels as interchangeable. A separately quoted authorisation charge is part of your merchant tariff; scheme charges relate to the card network. Ask which costs are included in your rate and which are billed separately so you do not count them twice.

How can I reduce my authorisation fees?

Compare complete quotes using your sales values and billable request counts. Ask whether the current tariff can be improved and check any higher percentage or monthly fee in a replacement offer. A newer terminal alone does not guarantee lower authorisation charges.

Authorisation Fees Explained: The Silent Cost of Small Transactions