Headline rate vs effective rate
An advertised rate may apply to a defined card category, channel or plan; another offer may use a blended rate. Ask exactly which payments qualify, which cost more and whether fixed charges sit outside that percentage.
For an all-in cost comparison, divide total card-payment costs by the matching card sales and multiply by 100. Include separately billed equipment, gateway and account costs, but do not add charges already included in another rate. Convert annual charges to monthly equivalents and use the same VAT basis. Keep one-off switching costs visible separately.
The cost pattern changes by business type
High street retail
Often weighted towards in-person consumer cards. Check card mix, terminal rental and authorisation charges.
Hospitality
Lower average transaction values can magnify per-item charges. Check device count, tipping, settlements and business-card mix.
E-commerce
Online pricing can include fixed per-transaction amounts, gateway charges and different domestic or international rates.
B2B and professional services
Higher transaction values may come with a heavier commercial and corporate-card mix, which sits outside consumer interchange caps.
Mobile and on-the-go traders
Pay-as-you-go pricing can reduce fixed commitment. Compare it with a tailored quote at your actual monthly volume.
Blended pricing vs Interchange Plus
Blended pricing combines underlying costs into quoted rates, which may still differ by card category or channel. Do not assume one advertised percentage covers every payment.
Interchange Plus and Interchange++ offers separate out more cost components, but the labels are not enough to compare quotes. Ask how interchange, scheme charges, provider margin and per-item charges are shown, which can vary, and whether anything is bundled. Model the resulting pounds on the same transaction mix.
Neither model is automatically better. The right answer depends on your card mix and how much transparency you want.
How to sense-check your own rates
Pick your most recent statement and calculate the effective rate. Then apply the same card turnover, card mix and transaction count to every complete written quote.
If the quoted total differs, identify what explains it: transaction pricing, terminal rental, monthly fixed fees, authorisation charges, settlement or contract terms. This is more dependable than comparing against a generic range.
Our free review can start with a conversation or figures you choose to share. You do not need to upload a statement to enquire; a precise comparison will need the full costs and assumptions checked before a recommendation.
Interchange caps are not a cap on your total bill
The PSR explains that, where the UK interchange caps apply, they are 0.2% for consumer debit and 0.3% for consumer credit. Their scope depends on the transaction, including the location of the merchant, issuer and acquirer. They are not maximum merchant service charges and should not be applied indiscriminately to international or commercial cards.
How those costs appear depends on the pricing model and provider. If your arrangement has not been reviewed for some time, recalculate the effective rate from a current statement rather than assuming the original quote still describes the total.
Key takeaways
- Compare effective rates, not headline rates. The headline number rarely reflects what you actually pay.
- There is no single reliable UK effective-rate benchmark; use your own card mix and complete quotes.
- Terminal hire, monthly account fees and authorisation fees often explain more of a high rate than the transaction percentage itself.
- Older arrangements are worth recalculating because pricing components and the business itself may have changed.
Want to understand what you are actually paying?
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