Card Processing Fees Cost UK Businesses Over £1.2 Billion Annually — But Most Don’t Realise

As the cost of doing business in the UK continues to rise, new data suggests companies could be losing hundreds of millions of pounds unnecessarily each year not from energy bills or rent, but from card processing fees.

Recent figures show UK retailers and SMEs are collectively spending over £1.26 billion annually on card transaction fees. Yet industry insiders believe many businesses are unaware they’re overpaying and few are actively comparing what they could be saving.

This silent drain on cash flow is particularly acute in consumer-facing sectors like retail, hospitality, travel, and professional services, where card payments are now the default. But there is a growing movement among savvy business owners to push back, driven by price comparison services such as Compare Card Fees.

The True Cost of Accepting Cards

Card payments now account for over 60% of all UK transactions. While that’s great for convenience and customer experience, it comes at a cost to merchants, one that often goes unnoticed.

Visa and Mastercard charge fixed interchange fees of around 0.2% for debit cards and 0.3% for credit cards, but these are just the start. Payment processors layer on additional fees, often reaching 1.5% to 3.5% or more depending on the business type, turnover, and risk category. Add in terminal rental charges, PCI compliance fees, chargeback penalties and monthly service fees, and the real cost balloons further.

A typical SME with £750,000 in annual card takings could be spending £18,000 to £25,000 a year on fees, a cost that’s often buried in dense monthly statements.

Billions Lost in Unchecked Fees

In 2022, the British Retail Consortium reported that retailers alone spent £1.26 billion on card processing fees. That figure doesn’t include service sector businesses, travel agencies, cafés, or online merchants, which means the total burden across UK SMEs is likely significantly higher.

Worse still, many of these fees are avoidable. According to industry comparisons, thousands of UK businesses are paying 0.5% to 1% more than necessary simply by remaining on outdated pricing or rolling monthly contracts with high mark-ups.

That unnecessary 1% on a £1 million turnover? It’s £10,000 lost in margin.

How Compare Card Fees Helps Businesses Take Control

This is where services like Compare Card Fees step in. Unlike traditional brokers or tied sales reps, the platform gives businesses an impartial breakdown of their current charges and offers access to better-value merchant account providers based on actual transaction volumes, business type, and risk profile.

The savings are real and immediate. Businesses using the service typically cut their processing fees by 20% to 40% savings which, for many, translate directly into improved cash flow or reinvestment into staff and growth.

“We were paying 2.9% per transaction without realising it,” says Ben Hunter, owner of an e-commerce retail store in Manchester. “After using Compare Card Fees, we dropped to 1.6%. That’s saving us over £14,000 a year and we didn’t have to change how we take payments.”

Compare Card Fees is free for businesses to use, and the service is paid by the acquiring banks that win new business so there’s no upfront cost or obligation.

Time to Act, Especially in a Tough Economy

With inflationary pressure on wages, energy, and logistics, there’s never been a more critical time for businesses to review every line of expenditure. Yet many still fail to scrutinise their merchant service charges assuming they are fixed or that switching is too complex.

That misconception is costing UK businesses hundreds of millions of pounds a year in unnecessary fees.

Financial advisers increasingly recommend that card processing statements be reviewed at least annually, particularly as many businesses grow or shift their sales channels from in-person to online. Pricing structures can change quickly, and what worked two years ago might now be wildly uncompetitive.

The Bottom Line

Card processing is a necessary part of doing business in the modern economy but paying too much for it isn’t. In many cases, a simple review using a transparent, data-led comparison service like Compare Card Fees can recover thousands in profit that would otherwise be lost to hidden charges and over-inflated rates.

For businesses serious about protecting their margins, it’s an easy win.