Credit card payment processing fees

If your business accepts credit or debit card payments from your customers, your payment processing provider will charge merchant fees for handling card transactions.

There’s no average card processing fee. Instead, you’ll be charged a percentage amount of every card transaction your business makes. You cannot pass these fees to customers, but they are tax deductible. The EU Payment Services Directive banned all consumer card surcharges in January 2018.

There are three main types of card processing fees:

• Transactional fees
• Flat fees
• Incidental fees

Who are the key payment processing players?

There are many stakeholders involved in the credit card transaction process.

Credit card associations: the companies that create credit cards, like Visa, Mastercard and American Express. They’re sometimes called credit card networks.

Credit card issuing banks: banks like HSBC, Santander, and Sainsbury’s Bank that issue cards to customers. Some card associations like American Express issue their own cards.

Credit card processors: sometimes called acquiring banks or acquirers. These institutions act as the middleman between merchants and credit card associations. They pass funding information and authorisation requests along so that merchants can complete transactions.

Merchant account providers: the companies that manage credit card processing for merchants, usually with the help of an acquirer.

Payment gateways: used in e-commerce, these are online payment portals that send transactions from the merchant to the acquirer.