Why comparing providers is genuinely hard
Comparing UK merchant service providers is genuinely difficult. Providers present pricing in different formats, use different names for similar fees and may lead with a transaction rate that does not show the complete bill.
The result is that two businesses on paper-similar rates can pay wildly different effective rates once you add up terminal hire, PCI, minimums and authorisation fees. The framework below fixes that by forcing a like-for-like comparison across six dimensions.
The six dimensions to compare on
Effective rate
Total card-payment costs ÷ the matching card sales × 100. A useful cost measure when both quotes use the same activity and fee scope.
Contract terms
Length, notice period, auto-renewal and any price-increase clauses.
Terminal hire
Separate or bundled? Length? Hardware quality and replacement SLAs?
Settlement
How long until funds land? Any premium for faster settlement?
Support
Phone hours, escalation paths, replacement terminal SLAs, dedicated account manager.
Total cost of ownership
Recurring fees plus setup, hardware, exit and overlap costs over the same period. Check the price after any promotion ends.
Why headline rates are incomplete
A low headline percentage can sit alongside monthly minimums, PCI charges, terminal hire and per-transaction fees, making the real effective rate substantially higher.
Start with matching records of sales and costs: statements, dashboard exports, invoices or figures you have checked yourself. Include separately billed equipment and gateway charges, spread annual fees over 12 months, and use the same VAT basis for each offer. Check the provider's summary box where available, alongside the full fee schedule and agreement.
Give each provider the same card sales, transaction count, card mix, payment channels and number of terminals. Ask for a total monthly cost and the assumptions behind it. Repeat for a quiet month and a busy month; do not count a minimum-fee top-up twice.
A worked comparison
Here is a hypothetical example. Say your business takes £20,000 in card payments a month across 900 transactions. Provider A quotes 0.55% + £15 monthly + £25 terminal + 2p auth. Provider B quotes 0.95% + £0 monthly + £0 terminal + 0p auth (pay-as-you-go).
At £20,000 and 900 transactions, A costs £168 (£110 + £15 + £25 + £18), or 0.84%; B costs £190, or 0.95%. A is £22 less for this illustrative month. At £6,000 and 270 transactions—the same average sale—A costs £78.40 and B £57, making B £21.40 less. These fictional tariffs assume all sales qualify for the stated rate and exclude other fees.
Moving costs can change the decision again. If changing provider cost £264 upfront and saved £22 every month, simple payback would be 12 months. That is arithmetic, not a savings forecast: check seasonality, price changes and contract commitments before relying on it.
Non-price factors that still matter
Check support during your actual trading hours, the replacement process if equipment fails, and compatibility with your till or online checkout. Confirm settlement cut-offs, weekends, bank holidays and any conditions or charges for faster access to funds. Read notice periods and equipment return obligations separately from the processing agreement.
The cheapest provider on paper is not always the cheapest once you factor in the operational cost of poor service.
Key takeaways
- Compare effective rates, not headline rates.
- Account for contract length, terminal hire and recurring fees.
- Total cost of ownership matters more than month-one savings.
- Non-price factors (support, settlement, SLAs) belong in the comparison too.
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