Learning • 8 min read

Authorisation Fees Explained: The Silent Cost of Small Transactions

What per-transaction authorisation fees are, how much they add up to for low-ticket UK businesses, and how to include them properly in your effective rate.

By Card Payment Connect editorial teamReviewed by Matt McCarthy, FounderLast updated 8 July 2026

What an authorisation fee is

An authorisation fee is a small fixed charge — typically 1p to 5p in the UK — applied to every card transaction on top of the percentage rate. It covers the acquirer's cost of routing the authorisation request to the card scheme and back, and it's charged whether the transaction is approved, declined or cancelled.

On a £100 transaction a 3p authorisation fee is invisible. On a £3.20 coffee it adds nearly 1% to the cost of accepting that payment, on top of the percentage rate.

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How authorisation fees stack up in practice

The impact depends almost entirely on your average transaction value (ATV). The table below shows the effective uplift a 3p authorisation fee adds at different ATVs, before any percentage rate.

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

Assumes a 3p authorisation fee; some UK contracts charge 1p, others up to 5p. Use your own contract's figure.

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.

Conversely, businesses with high ATV — furniture retailers, garages, B2B suppliers, hotels — barely notice authorisation fees and should focus their negotiation on the percentage rate instead.

What to check on your contract

Auth fee amount

Anywhere from 1p to 5p in the UK. On a small-ticket business, 1p vs. 3p is a bigger deal than most percentage-rate differences.

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

Most UK acquirers charge a second authorisation fee on the refund transaction. Return-heavy sectors should model this.

Refund of original fees

Ask whether the original transaction auth fee is refunded when the underlying transaction is refunded. Usually no; sometimes yes.

Frequently asked questions

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

Because the acquirer still had to route the authorisation request through the card scheme, which itself charges the acquirer regardless of outcome. Some providers absorb this cost; most pass it through.

Are auth fees the same as scheme fees?

No. Scheme fees are Visa's and Mastercard's own network charges, expressed as a percentage plus small fixed amounts per transaction. Authorisation fees are the acquirer's own per-transaction charge. Both can appear on the same statement.

How can I reduce my authorisation fees?

Negotiate the fixed per-transaction fee alongside the percentage rate; consider a flat-fee provider if your ATV is under £10; batch small transactions where the payment method allows (e.g. tabs in hospitality); and switch to a modern terminal with lower auth fees where the incumbent won't negotiate.

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.
●Auth fees usually apply to declined and refunded transactions too — check your contract.
●Low-ticket businesses should negotiate the per-transaction fee first, percentage second.

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Topic cluster

Merchant statements & fees

Everything on your monthly statement — line by line — and how to spot overcharging.

Start with the pillar: Understanding Your Merchant Statement: A Line-by-Line UK Guide