How card-payment pricing works

When a business accepts a card payment, the money is routed to it by an acquirer. The acquirer deducts a charge before settling the funds, and that charge is the merchant service charge (MSC). Visa describes the MSC as a fee deducted by the retailer's bank that incorporates a number of component fees, including the interchange fee, the services provided by that bank such as guaranteed payment, and the technology used to accept card payments. Visa also states that this rate is negotiated directly between the retailer and its bank.

The Payment Systems Regulator's card-acquiring market review uses the term acquirer net revenue for the acquirer's own part of that charge, defining it as the costs the acquirer incurs other than interchange fees and scheme fees to provide card-acquiring services, plus the acquirer's margin. Put together, that gives three underlying building blocks: interchange, scheme and processing fees, and the acquirer's own charge.

Statements do not all present these blocks the same way. Some providers show a single percentage covering everything; others itemise interchange, scheme fees and their own margin separately. Neither approach is inherently better, but the presentation changes how easy it is to see what you are paying.

Interchange is the element paid to the bank that issued the customer's card. Visa explains that when a cardholder's bank sends the payment to the retailer's bank, a small fee is retained by the issuer, and that Visa itself does not receive any of this fee. Visa sets the level of interchange for Visa transactions, and it has traditionally varied by transaction type, product and country.

Since 9 December 2015, European interchange regulation (Regulation (EU) 2015/751) has imposed caps on most consumer product types, and Visa publishes a current schedule of UK domestic multilateral interchange fees. In the February 2026 schedule, for example, Visa Consumer Debit secure transactions are listed at 0.20% capped at £0.50, while business and commercial products sit on separate, higher published rates.

The practical consequence is that the card mix a business takes changes its interchange cost. A business taking mostly consumer debit cards and a business taking mostly commercial or non-UK cards do not face the same underlying cost, even on the same contract.

Separately from interchange, the card schemes charge fees for the scheme and processing services they provide. These are a distinct cost category: the Payment Systems Regulator treated them as their own subject and published a market review final report into card scheme and processing fees in March 2025, after having already examined the supply of card-acquiring services in its November 2021 final report.

On an itemised statement these usually appear as pass-through lines. On a single-rate statement they are absorbed into the headline percentage, which is one reason a headline rate on its own tells you very little.

The remaining element is what the acquirer earns. Using the regulator's definition, this covers the acquirer's own costs of providing card-acquiring services, other than interchange and scheme fees, plus its margin. Because Visa's guidance is explicit that the merchant service charge is negotiated directly between the retailer and its bank, this is also the part of the price that is genuinely open to discussion.

That is why two businesses with almost identical card mixes can pay noticeably different amounts. The regulated and pass-through elements move in the same direction for everyone; the acquirer's element does not.

Beyond the per-transaction pricing, merchant statements commonly carry service and equipment charges. Which of these apply, how they are named and how they are grouped varies between providers, so treat the list below as things to look for rather than a standard format.

An advertised percentage usually describes one card type under one set of conditions. The amount a business actually pays depends on the mix of cards presented, whether transactions are card-present or card-not-present, any per-transaction charges, and the fixed monthly charges that apply regardless of volume.

The way to cut through this is to work out the effective rate: take every charge on the statement for a period, divide by the card turnover processed in that same period, and express the result as a percentage. That single number is directly comparable between providers in a way headline rates are not, and it is the figure a quote should be tested against.

Fixed charges matter more at lower volumes. The same monthly charge is a small overhead on high turnover and a significant one on low turnover, which is why the cheapest published rate is not automatically the cheapest arrangement.

Providers package the same underlying costs in different ways. Under a single blended rate, one percentage is applied across card types and the components are not separated. Under interchange-plus style pricing, interchange (and often scheme fees) are passed through and the acquirer's element is stated separately. Some providers quote a flat rate with no separate equipment agreement.

None of these is automatically better. A structure that separates the components makes the acquirer's element visible and therefore easier to negotiate; a single rate is simpler to reconcile. What matters is whether the structure you are on produces a competitive effective rate for the way your business actually trades.

A quote cannot be judged against a headline rate alone. Compare the complete statement against the complete agreement: the rates by card type, the per-transaction charges, the fixed monthly charges, the equipment terms, and the notice and termination provisions in the contract. Details differ by provider, so check the specific documents you have been given rather than assuming a market standard.