What is the cheapest way to take card payments in the UK?
Date: 17/06/26
As more customers choose to pay by card, accepting card payments has become essential for UK businesses. But while card payments can help increase sales and improve customer convenience, they also come with costs.
If you're wondering about the cheapest way to take card payments, the answer depends on your business type, transaction volume, and how you intend to accept payments. Understanding the different fee structures and payment solutions available can help you reduce costs and maximise profits.
What does it cost to take card payments in the UK?
Every time a customer pays by card, several fees may apply. While the exact amount varies between providers, most businesses will encounter some combination of:
- Transaction fees
- Merchant service charges
- Card machine rental or purchase costs
- Monthly account fees
- Chargeback fees
- Payment gateway fees (for online payments)
For many small businesses, transaction fees typically account for the largest portion of card payment costs. Industry data suggests businesses commonly pay between around 0.7% and 3.4% per transaction, depending on the provider, card type and pricing model. Some providers also charge a fixed fee per transaction.
The key to finding the cheapest way to take card payments is understanding exactly which fees you're paying and whether they're appropriate for your business.
Different ways to accept card payments
There are several ways UK businesses can accept card payments, each with its own cost structure. Traditional card machines remain the most common option for retailers, hospitality businesses and service providers.
These can be:
Depending on the provider, you may rent the equipment monthly or purchase it outright. Mobile card readers often have lower upfront costs and are popular with smaller businesses.
If you sell online, you'll need a payment gateway that allows customers to pay through your website.
Online payment providers typically charge a percentage fee for each transaction, sometimes alongside a monthly platform fee. However, because there's no physical hardware involved, online payments can be a cost-effective option for some businesses.
Businesses can also accept card payments over the phone using a virtual terminal.
This can be useful for service-based businesses, although transaction fees are often slightly higher because the card isn't physically present.
Many modern payment providers allow businesses to send payment links via email, text message or online invoices.
This can be a low-cost way to accept occasional card payments without investing in additional hardware.
Pay As You Go vs Monthly Subscription
One of the biggest decisions when choosing a card payment provider is whether to use a pay as you go model or a monthly subscription.
With pay as you go pricing, you only pay when a transaction is processed. This can help benefit small businesses as there is often no monthly commitment, low startup costs and is flexible for seasonal businesses. The trade off with pay as you go though, is that the transaction fees are often higher than those using monthly subscriptions.
Monthly subscriptions on the other hand charge a fixed monthly fee to use the services, but usually have lower transaction rates. This can help benefit businesses with higher, more regular volumes through lower processing costs per transaction, and a more predictable monthly expense for the business directly.
If a business is taking more regular card payments, a monthly contract can often work out cheaper for businesses overall, rather than paying higher transaction fees per sale.
What to look for in a card machine provider
When comparing providers, price is important, but it shouldn't be the only factor.
Look for a provider that offers transparent pricing, fast settlements and reliable support.
Before taking out a contract with a new provider, you should clearly understand the providers; transaction fees, monthly charges, additional fees and the length of the contract itself. Avoid providers that make pricing difficult to understand.
So, what is the cheapest way to take card payments?
There isn't a single answer that suits every business. For businesses with low transaction volumes, a pay as you go card reader can often be the cheapest way to take card payments due to the removal of monthly fees.
For established businesses processing larger volumes, a monthly subscription with lower transaction rates and a fixed monthly fee may deliver far greater savings over time.
The most cost effective solution is usually the one that balances transaction fees, monthly costs, hardware expenses and service quality based on your specific business needs. By understanding the true cost of card payments and comparing providers carefully, you can ensure you're not paying more than necessary to accept card payments from your customers.
