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Card Processing Fee Calculator

Work out the real cost of taking card payments, and see what a different rate would mean over a year.

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What would my costs be at a different rate?

Total annual processing cost

£4,620.00

Percentage cost
£320.00 / month
Transaction fees
£40.00 / month
Fixed monthly charges
£25.00 / month
Total monthly cost
£385.00
Effective rate
1.93%
Cost at the alternative rate
£3,588.00 / year

Potential annual saving: £1,032.00 on the same volume.

What this means

Taking card payments costs about £385.00 a month, £4,620.00 a year. Your effective rate is 1.93% of card turnover — higher than the headline percentage once fixed fees are included. The effective rate is the number worth comparing between providers, because it captures per-transaction and monthly charges as well as the percentage.

Quick answers

How are card processing fees calculated?
Most UK providers charge a percentage of the transaction value plus a small fixed fee per transaction, often with a separate monthly terminal or platform fee. The total of all three, divided by turnover, gives your true cost.
What does 1.5% processing cost on £10,000?
£150 a month, or £1,800 a year, if 1.5% is the only charge. Add any fixed per-transaction fee or monthly terminal fee on top, and the real cost — and effective rate — will be higher.
What is an effective processing rate?
It is total monthly card processing cost divided by monthly card turnover, expressed as a percentage. It captures the percentage fee, per-transaction fees and any monthly charge in one comparable figure, unlike the quoted percentage alone.
How can processing fees affect gross margin?
Card fees are a variable cost that comes out of each sale, so they reduce the contribution and gross margin on every card transaction. A product priced on a tight margin can see that margin significantly eroded once card fees are deducted.

Small fee differences can add up

Percentage charges, per-transaction fees and terminal or gateway charges each pull in a different direction, so the lowest headline rate is not always the lowest cost overall.

Compare on your own mix of transaction sizes and volume rather than on the advertised rate.

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How we calculated it

Percentage cost = monthly card turnover × the percentage rate. Transaction fee cost = number of transactions × the fixed fee per transaction. Fixed monthly cost = terminal or platform fee + any other charges.

Effective rate = total monthly cost ÷ monthly card turnover × 100. The comparison uses the same turnover and transaction count so only the pricing changes.

Assumptions

One blended rate across all card types. In practice, commercial, international and card-not-present transactions often cost more, and interchange-plus pricing varies by card. Chargebacks, refunds, PCI fees and terminal hire contracts are not included.

How this calculator works

Card processing is usually priced as a percentage of each sale plus a few pence per transaction, often with a monthly fee for a terminal or payment platform. Where your average transaction is small, the fixed pence per transaction can matter more than the percentage: 5p on a £3 coffee is 1.7% on its own.

That is why the effective rate is the fairest comparison. Work it out for your current provider, then run the same numbers at a quoted rate to see the annual difference before switching. We cannot name or rank specific providers here, since tariffs change and no verified comparison data is built into the site — use the calculator with the actual rates you have been quoted.

Card fees are a variable cost, so they reduce the contribution on every sale. If you price using margin or markup, feed the processing cost into the margin calculator or the break-even calculator so it is reflected in the numbers you are pricing from.

Worked examples

£10,000 of card turnover at a flat 1.5%

With no fixed per-transaction fee or monthly charge, 1.5% of £10,000 costs £150 a month, or £1,800 a year. The effective rate here equals the quoted rate exactly, because there are no other charges to widen the gap.

Adding transaction and terminal fees

The same £10,000 of turnover across 500 transactions at 1.5% plus 5p a transaction, with a £20 monthly terminal fee: percentage cost £150, transaction fees £25, terminal £20 — £195 a month, £2,340 a year. The effective rate is £195 ÷ £10,000 = 1.95%, noticeably higher than the quoted 1.5% once the fixed elements are included.

Café comparing two quotes

A café takes £20,000 a month across 800 transactions at 1.6% plus 5p, with a £25 terminal fee. Percentage cost is £320, transaction fees are £40, and the terminal adds £25 — £385 a month, or £4,620 a year. The effective rate is 1.93%. A quote of 1.2% plus 5p with a £19 monthly fee would cost £299 a month, £3,588 a year — an annual saving of £1,032 on the same volume.

Key terms explained

Effective processing rate
Total monthly card processing cost — percentage fees, per-transaction fees and any monthly charge — divided by monthly card turnover, expressed as a percentage. It is the fairest single figure for comparing providers.
Fixed transaction fee
A flat pence-per-transaction charge applied regardless of the sale amount. It has a bigger proportional effect on small transactions than on large ones.

Common mistakes

  • Comparing only the headline percentage

    A lower percentage rate with a higher monthly or per-transaction fee can cost more overall for a lower-volume business. Compare effective rates on your own turnover and transaction count instead.

  • Ignoring the fixed fee for low-value sales

    A 5p fixed fee is trivial on a £50 sale but is 5% of a £1 sale. Businesses with many small transactions should weight this fee heavily when comparing providers.

  • Forgetting the monthly terminal or platform fee

    A quoted percentage rate often excludes the separate monthly charge for the terminal or software. Add it in before working out your true monthly and annual cost.

  • Assuming card fees are a fixed cost

    Card fees scale with turnover, so they are a variable cost for pricing and break-even purposes, not a fixed one. Treating them as fixed will understate your true cost per sale.

Common questions

What is a good card processing rate for a small business?

Rates depend on your volume, average transaction size and whether payments are in person or online. Rather than chasing the lowest headline percentage, compare effective rates — total monthly cost divided by card turnover — because fixed fees can outweigh a small percentage difference.

Can I charge customers a card surcharge?

Surcharging consumers for using most debit and credit cards is banned in the UK. You can set your prices to reflect your costs, but you cannot add a fee at the till for a consumer card payment.

Why is my effective rate higher than my quoted rate?

Because the quoted percentage ignores the per-transaction pence and any monthly terminal or platform fee. Those fixed elements are spread over your turnover, so the smaller your card takings, the bigger the gap between quoted and effective rates.

Are card fees tax deductible?

Yes, card processing charges are a normal business expense and are deductible against your profits in the usual way. Keep the provider statements with your records.

How do I compare two processing rates fairly?

Run both quotes through the same turnover and transaction count and compare the effective rate and annual total, not just the headline percentage. This calculator does that side by side so fixed fees and monthly charges are included on both sides.

Why do fixed transaction fees matter more for some businesses?

A fixed fee per transaction is the same whatever the sale value, so it takes a bigger bite out of small transactions. A business with many low-value sales should weigh the fixed fee more heavily than the percentage rate when comparing providers.

Last reviewed: 7 September 2026. This calculator is information only and is not tax, accounting or financial advice.