Credit Card Process: How We Cut Your Costs And Simplify Card Payments

Credit card processing in the UK: what it is and why it matters

If you want to take card payments without overpaying in fees, we can help.

The credit card process is the chain of steps that moves money from your customer’s card to your business bank account. It sounds simple, but behind every tap, swipe or online checkout sits a complex network of banks, card schemes, credit card processors, and technology providers, each taking a slice of your revenue.

This process applies whether you run a countertop terminal in a café, use a point of sale system, accept credit card payments through an online checkout, take orders over the phone, or bill customers on a recurring subscription. Every UK business that handles credit card transactions relies on this same fundamental system. To accept payments, businesses must support various methods—such as credit/debit cards, NFC mobile wallets, and online or in-person transactions—and having a robust system to process card payments is essential for customer experience and sales.

Here is the critical point most business owners miss: small differences in how this process is set up can change your effective rate by 20% or more. The difference between a well-negotiated deal and a standard bank tariff can add up to thousands of pounds annually. Understanding how you process card payments can also impact your costs.

We are a specialist merchant services broker UK, and our job is to set up your card processing so you access “wholesale style” pricing rather than retail bank tariffs. We use the combined volume of our client base to negotiate rates that individual businesses simply cannot obtain on their own.

Upload a recent card processing statement and let us show you where the process is costing you money.

Key players in the credit card process

Every card payment in the UK involves a chain of actors, many of whom you never see. We deal with all of them on your behalf so you do not have to decode the jargon or chase multiple providers.

The main parties involved in a typical credit card transaction include:

• Cardholder: the customer who pays with their credit card or debit card
• Merchant (your business): the party accepting payments and delivering goods or services. A merchant services account is required to receive funds from card transactions.
• Issuing bank: the financial institution that issued the card to your customer
• Acquiring bank: the merchant bank that receives and settles your card payments
• Card schemes (credit card networks): networks like Visa, Mastercard and American Express that route transaction data and act as intermediaries in the authorization, clearing, and settlement processes
• Payment gateway providers UK: technology platforms that capture and encrypt card details online
• Payment processor: the company that moves authorisation messages and settlement files between parties
• Merchant services broker: specialists like us who compare options and negotiate on your behalf

Each party takes a slice of the fee. Our job is to minimise what you pay while keeping approval rates and uptime high. We work with the acquiring bank, negotiate with payment gateway providers UK, and ensure your credit card processing system is configured for maximum efficiency.

Speak to our team if you are unsure who your current acquirer or gateway is. We will identify it from your statement for free.

Issuing bank, acquiring bank and card schemes

The issuing bank is the customer’s bank that provides their credit card. When a customer pays with a Barclays Visa or an HSBC Mastercard, for example, those banks are the issuers. They extend credit to the cardholder’s account and are responsible for authorising (or declining) each transaction based on the customer’s credit limit and account status.

The acquiring bank sits on your side of the transaction. This is the merchant’s acquirer, the financial institution that receives card payments on your behalf and settles funds into your business’s account. Examples in the UK include Lloyds Bank Cardnet, Worldpay from FIS, and Elavon.

Card networks like Visa, Mastercard and American Express run the global infrastructure that connects issuers and acquirers. They set core interchange fees and scheme assessment fees, and they route every authorisation request through their networks. Visa alone processes around 24,000 transactions per second globally, which gives you a sense of the scale and speed involved.

You cannot negotiate interchange directly. These rates are set by the card association and capped by UK regulation at 0.2% for debit card payments and 0.3% for credit. However, we can influence your acquirer markup, how assessment fees are structured, and whether your contract terms actually suit your transaction volume and card mix.

Our team works with the vast majority of UK acquirers. We match the right bank to the right sector, which is especially important for high risk industries that face frequent rejections from mainstream providers.

Let us benchmark your current acquirer against alternatives in our panel.

Merchant services provider, gateway and processor

In practice, many UK firms deal with a “merchant services provider” brand that bundles the acquirer, gateway and processor into one contract. Names like Square, Stripe, SumUp or Zettle combine these functions, which can simplify setup but sometimes obscures exactly what you are paying for each component.

The payment gateway is the secure online connector that captures and encrypts card data from your website, virtual terminal or app. When a customer enters payment details on your checkout page, the gateway encrypts this payment information and transmits it securely to the processor. This is where PCI DSS compliance becomes critical, as the gateway handles sensitive card details that must be protected.

The processor moves data transmission through the appropriate card network and handles the authorisation request, chargebacks and settlement files. Think of the processor as the traffic controller that routes messages between your gateway, the schemes and the banks.

Different stacks suit different businesses:

Business Type	Best Fit
High volume eCommerce	Dedicated payment gateway providers UK with API integrations
Local retail shop	Cheapest card payment machine with integrated acquiring
Multi-channel retailer	Blended solution with separate in-store and online providers
Subscription SaaS	Gateway with tokenisation and recurring billing features

We compare these combinations for you, rather than leaving you to decode technical jargon and separate gateway, acquirer and POS terminal costs yourself. Our role is to find the configuration that delivers the lowest total cost and best approval rates for your specific situation.

Ask us to compare your current gateway and acquiring bundle against standalone options. We often find immediate savings without changing your bank.

Step by step: how the credit card process works

This section walks through a typical UK card transaction from tap to settlement.

Although it feels instant to the customer, there are two main phases: authorisation (which happens in real time, typically under two seconds) and settlement (which occurs in the following clearing cycles, usually one to three business days later).

Let us use a simple example: a £100 chip and PIN sale in a London retail shop on a Wednesday afternoon in 2025. In this scenario, the customer uses a physical card to initiate the transaction by inserting it into the card reader. We will trace exactly what happens behind the scenes and show where we optimise each stage to keep approvals high, chargebacks low and processing fees predictable.

Let us map your current flow and highlight exactly where margins and technical bottlenecks sit.

1. Initiation and data capture

The credit card process begins when the customer presents their card. Perhaps they tap a Visa credit card on your terminal in Manchester on a Saturday afternoon, or they enter card details on your website at 20:30 from their home.

At this point, the card machine or online checkout collects essential transaction data:

• Card number (PAN)
• Expiry date
• CVV security code
• Cardholder name
• Transaction amount

This data is encrypted immediately under PCI DSS rules. For in person transactions, this happens via a physical terminal, mobile card reader or integrated POS terminals. For online payments, it occurs via a hosted payment page, API integration or shopping cart plugin.

The initiation method matters more than most businesses realise. Keying in card details manually (known as card-not-present) carries higher processing costs and fraud risk than chip and PIN or contactless payments. We help clients choose the right initiation method for their sector, from countertop terminals for cafés to pay-by-link and virtual terminal solutions for trades and professional services.

In-person vs online initiation:

Channel	Data Capture Method	Typical Fee Impact
Contactless tap	Encrypted via NFC chip	Lower fees, lowest fraud
Chip and PIN	EMV chip verification	Low fees, strong authentication
Online checkout	Gateway encryption	Higher fees, 3DS authentication
Phone/MOTO	Virtual terminal	Higher fees, increased risk

If you are still keying cards manually, speak to us about safer, cheaper alternatives.

2. Authorisation request and fraud checks

Once the data is captured, the gateway routes an authorisation request through the processor to the acquiring bank, then on to the relevant card scheme.

The card network identifies the card issuer based on the BIN range (the first six digits of the card number) and forwards the request to the issuing bank. There, the bank performs several checks in milliseconds:

• Is the card valid and not blocked?
• Does the cardholder’s account have sufficient funds or available credit?
• Does the transaction trigger any fraud flags?
• Is the card reported lost or stolen?

For credit card online transactions, additional authentication layers apply. Strong Customer Authentication under UK regulations typically requires 3D Secure 2 verification, where the customer confirms their identity through their banking app or a one-time code. Device fingerprinting and behavioural analysis add further fraud screening.

This entire process takes just a few seconds. The issuing bank returns an approval code (or a decline reason such as insufficient funds or suspected fraud) which travels back through the card network to the processor and then to your terminal or website.

We work with acquirers and risk teams to tune fraud rules so UK businesses reduce unnecessary declines. This is particularly valuable for cross-border sales and high-ticket transactions, where overly aggressive fraud settings can reject legitimate customers spend and damage customer satisfaction.

Ask us to review your decline codes. We often lift approval rates without increasing fraud.

3. Clearing, batching and settlement to your bank

Approved transactions are stored throughout the trading day and later batched by your terminal or gateway, typically at the end of each business day in the UK time zone.

Your merchant’s acquirer submits these batches through the card schemes, which calculate what each issuing bank owes and what each acquiring bank receives. This clearing process reconciles transaction details across the entire network.

Typical settlement timelines for UK credit card transactions:

Provider Type	Settlement Speed
Traditional acquirer	2-3 business days
Modern PSP	1-2 business days
Premium arrangement	Next business day
High risk sectors	3-7 business days (plus reserves)

Funds are paid into your nominated bank account, sometimes net of fees (with charges already deducted) and sometimes gross (with fees invoiced separately). At the same time, the issuing bank posts the transaction to the cardholder’s account as part of cardholder billing, and the transaction amount appears on the cardholder’s credit card bill.

The contract structure affects your cash flow visibility, so understanding your funding model is essential.

We negotiate settlement speed and funding model on your behalf. This is vital for businesses with thin margins or high stock turnover, where waiting an extra day or two for funds can create genuine cash flow pressure.

Send us a recent statement and we will confirm your true funding timeline and whether faster options are available.

Credit card processing costs and how we reduce them

Every card transaction includes several layers of fees. Understanding them is the first step to paying less.

A typical effective rate for UK businesses might sit between roughly 1.5% and 3.5%, depending on your industry, card mix and deal structure. Premium cards, international transactions and high risk sectors push rates higher, while high volume domestic debit card payments sit at the lower end.

Credit card processing fees split into three main buckets, known as the main fees associated with credit card processing:

1. Interchange fees: paid to the issuing bank
2. Scheme/assessment fees: paid to Visa, Mastercard, etc.
3. Acquirer/processor markup: the profit margin for your provider

Additional costs often include terminal rental, monthly fee charges, PCI compliance packages, chargeback fee levies and gateway subscriptions.

Here is where our “volume leverage” works in your favour. We use the combined processing volume of our client base to secure better pricing from banks than most single merchants can obtain. Why pay retail rates when you can access our wholesale rates? We use our bulk buying power to secure a discount you cannot get directly.

Our brokerage service is 100% free to you. We do the hard work. You keep the savings. The bank pays us. This model means we are genuinely incentivised to find you the best possible deal, because that is what makes acquirers want to work with us.

Compare card processing fees with us. We aim to beat your current rate without reducing service quality.

Interchange and scheme fees

Interchange is the fee paid to the issuing bank for each transaction. It is set by the card schemes and varies based on:

• Card type (debit vs credit, consumer vs commercial)
• Transaction method (in person transactions vs card-not-present)
• Merchant category code
• Geographic region (domestic vs international)

Under UK regulations (Payments Services Regulations 2017), interchange is capped at 0.2% for consumer debit cards and 0.3% for consumer credit cards. However, commercial cards, international cards and certain premium products fall outside these caps.

Scheme fees (also called assessment fees) are charged by Visa, Mastercard and others for using their networks. These typically add 0.1% to 0.15% per transaction and cover network operations, security infrastructure and brand licensing.

These components are largely non-negotiable at the merchant level, which is why many UK providers treat them as base costs. The key is ensuring you are on the right pricing model for your volume and card mix.

Example breakdown of a £100 credit card sale:

Component	Amount	Notes
Interchange	£0.30	0.3% cap on consumer credit
Scheme fees	£0.12	Visa/MC assessment
Acquirer markup	£0.40	Negotiable element
Total fee	£0.82	Effective rate: 0.82%

This example shows a well-negotiated rate. Many businesses pay significantly more, particularly if they are on blended pricing that hides the true markup.

Let us decode the small print on your statement and show you exactly what you pay in each category.

Acquirer, gateway and terminal fees

Beyond interchange and scheme fees, your credit card processing company adds their own charges. These typically include:

Acquirer/processor markup:

• Per-transaction fixed fee (e.g., 5-20p per sale)
• Percentage markup (e.g., 0.2-1.0% on top of interchange)
• Monthly minimum charge
• Statement or account fees
• Annual PCI compliance fee

Gateway charges:

• Per-transaction gateway fee
• Fraud screening tool subscriptions
• 3D Secure authentication fees
• Tokenisation for recurring payments

Hardware costs:

• Terminal purchase or rental
• Mobile card readers
• Countertop units
• Integrated EPOS systems

The headline “cheapest card payment machine” offers often hide higher processing rates or lengthy contracts with punitive exit fees. A terminal advertised at £19.99 might lock you into a four-year agreement at 2.9% per transaction when a slightly more expensive unit could deliver 1.5% rates.

We look at the total cost of ownership, balancing machine price, rental, processing fees and contract length rather than focusing on a single low sticker price. Our goal is to reduce your blended card processing fees by double-digit percentages without demanding a change of bank account.

Ask us for a free, line-by-line cost breakdown of your current machine and gateway package.

Card processing and security: protecting your business and customers

When it comes to accepting credit card payments, security is non-negotiable. Every business that handles card payments must ensure their credit card processing system is robust enough to protect both their own interests and their customers’ sensitive data. A secure payment gateway is the first line of defense, encrypting card details and transaction data from the moment a customer enters their payment information—whether in person or online.

To stay ahead of evolving threats, it’s essential to keep your payment systems and software up to date. Regular updates help close security gaps and ensure your business remains compliant with the latest industry standards, such as PCI DSS. This not only safeguards your business from potential data breaches and fraud but also reassures your customers that their credit card information is handled with the highest level of care.

By prioritizing card processing security, you reduce the risk of costly incidents, maintain customer trust, and protect your business’s reputation. Investing in a secure credit card processing system and a reputable payment gateway is a proactive step that pays dividends in customer confidence and long-term business success.

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High risk industries and complex credit card processes

Certain UK sectors are labelled “high risk” by banks. This classification affects everything from approval rates to pricing to contract terms.

Industries commonly flagged as high risk include:

• Travel and ticketing
• Subscription and membership services
• CBD and wellness products
• Online gaming and gambling
• Nutraceuticals and supplements
• Adult content
• Cryptocurrency services
• Coaching and consulting
• Digital downloads

These sectors often face higher processing fees (4-6% is not uncommon), rolling reserves where 10-20% of revenue is held back for months, longer settlement periods, and frequent application declines when approaching mainstream acquirers directly.

The underlying credit card processing work is similar to standard retail, but risk rules and compliance requirements are stricter. Acquirers worry about chargebacks, refund rates and regulatory scrutiny, so they price accordingly or refuse to take on the risk entirely.

We have experience placing high risk merchant account cases. True “instant approval” is rare despite what some providers advertise, but we know which acquirers move fastest and which specialise in specific verticals. Our team helps structure applications properly to reduce rejections, negotiate lower rolling reserves and set realistic chargeback thresholds.

If your industry has already been refused by a bank, send us the details and we will place it with a more suitable acquirer from our UK and international network.

Rolling reserves, chargebacks and compliance

A rolling reserve is a percentage of your card revenue held back by the acquiring bank as security against future chargebacks or refunds. For example, a high risk eCommerce business might have 10% of each day’s takings held for 180 days before release.

This protects the bank but creates significant cash flow pressure for the merchant. Imagine processing £50,000 monthly and having £5,000 locked away for six months. That is £30,000 tied up that could otherwise fund stock, marketing or growth.

Chargeback ratios matter enormously. Card schemes monitor dispute rates closely:

Chargeback Ratio	Consequence
Below 0.5%	Normal operations
0.5% – 0.9%	Enhanced monitoring
0.9% – 1.0%	Warning, potential fines
Above 1.0%	Account termination risk

Compliance covers multiple frameworks:

• PCI DSS: Payment Card Industry Data Security Standard for protecting card details
• KYC: Know Your Customer checks for onboarding
• AML: Anti Money Laundering regulations
• SCA: Strong Customer Authentication under UK/EU rules
• Sector-specific: Gambling Commission, FCA, MHRA depending on industry

We work with acquirers to justify lower reserves over time as you prove a clean processing history. A subscription business that maintains low chargebacks for six months, improves customer satisfaction and reduces cancellation disputes can often renegotiate from 15% reserve down to 5% or even release entirely.

Let us review your current reserve and dispute levels. We may be able to negotiate softer terms for you.

Credit card disputes and resolution: handling chargebacks and customer claims

Handling credit card disputes and chargebacks is a reality for any business that accepts credit card payments. When a customer questions a transaction, the process can quickly become complex and costly if not managed correctly. If a dispute escalates to a chargeback, your business may be required to refund the transaction amount and pay a chargeback fee, impacting your bottom line.

To minimize the risk of chargebacks, it’s crucial to set clear expectations from the start. Make sure your refund and cancellation policies are easy to find and understand, and always provide accurate descriptions of your products or services. Transparent communication helps prevent misunderstandings that can lead to disputes.

Maintaining detailed records of every transaction—including payment information, transaction amount, and any correspondence with the customer—can make all the difference when responding to a claim. If a dispute arises, prompt and thorough documentation can help resolve the issue in your favor and reduce the likelihood of financial loss.

By understanding the credit card dispute resolution process and taking proactive steps to prevent chargebacks, you can protect your revenue, maintain positive customer relationships, and avoid unnecessary fees. A well-managed approach to disputes not only saves you money but also reinforces your reputation as a trustworthy business.

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Choosing and setting up your credit card processing with us

Selecting card processing is not just about getting the cheapest headline rate. It is about finding the right blend of cost, approval rates, support and features for your specific UK business.

We are a merchant services broker UK that manages the entire procurement process for you at no cost. The acquiring bank pays our fee, so you keep 100% of the savings we negotiate.

The core decision areas we evaluate include:

• In-person vs online acceptance (or both)
• Domestic vs cross-border transaction mix
• One-off payments vs recurring billing
• Integration with your existing accounting, EPOS or eCommerce systems
• Risk profile and industry classification

We compare card processing fees across banks and independent acquirers, evaluate payment gateway providers UK and advise on terminal or ePOS options. We have access to over 90% of UK merchant services providers, which enables businesses to see the full market rather than just whoever advertises most aggressively.

Our process usually starts with a free cost analysis using your last one or two card processing statements. From there, we build a shortlist of tailored options showing projected savings, service differences and contract terms. You make the final decision with full visibility.

Start your free cost review today by uploading a recent statement. Our team will respond with clear options and projected savings.

In person, online and recurring payments

Different businesses need different acceptance channels, and the right mix affects both your costs and your customers’ experience.

Key acceptance channels:

Channel	Best For	Typical Features
Chip and PIN	Retail, hospitality	Countertop terminals, low fees
Contactless payments	Quick-service retail	NFC terminals, digital wallets
Online checkout	eCommerce	Payment gateway, 3DS authentication
Pay-by-link	Trades, invoicing	SMS/email payment requests
Phone/virtual terminal	Bookings, deposits	Keyed entry, MOTO rates
Recurring/direct debit	Subscriptions	Tokenisation, auto-retry on declines

Different gateways and acquirers are stronger in different channels. Some specialise in retail terminals with fast settlement, while others excel in subscription billing with intelligent retry logic that reduces failed renewals.

We design blended solutions where needed. A single UK business can use one provider for physical shops and another for worldwide eCommerce if that combination delivers better overall value. We also configure recurring billing and tokenisation so you reduce card declines on renewals and make refunds simple and compliant.

For example, a multi-site restaurant group might use integrated EPOS terminals in each location while running online ordering through a separate gateway optimised for delivery apps. An online coaching platform might prioritise recurring payment reliability over in-person capability entirely.

Tell us how you take payments today and how you would like to in 12 months. We will build a roadmap for you.

Terminals, gateways and integration with your systems

“Cheapest card payment machine” searches often ignore integration costs and staff time. Double-keying transaction data into your accounts software or manually reconciling bookings creates hidden expense and error risk.

We review your existing tools and recommend gateways and terminals that integrate cleanly:

• Accounting: Xero, QuickBooks, Sage, FreeAgent
• eCommerce: Shopify, WooCommerce, Magento, BigCommerce
• Hospitality: Square, Lightspeed, Toast, Zettle
• Custom platforms: API integrations, webhooks, white-label solutions

Our priorities when recommending solutions:

1. PCI DSS compliant infrastructure
2. Support for contactless and mobile wallets (Apple Pay, Google Pay)
3. Easy staff training and intuitive interfaces
4. Reliable uptime and responsive support
5. Transparent pricing with no hidden fees

We can often arrange trials, short-term agreements or low-commitment pilots, especially for larger organisations that want to test before full rollout. This reduces your risk and lets you validate the customer pays experience before signing a multi-year contract.

Our role continues after go-live. We monitor fees, authorisation rates and chargebacks to keep your credit card process optimised over time. If your transaction volume grows, your card mix changes, or your provider underperforms, we renegotiate or move you to a better option.

Data shows that 80% of UK SMEs overpay by around 1% due to legacy contracts they never revisit. When customers spend more money with you, your processing should become cheaper per transaction, not more expensive. We ensure your rates reflect your actual volume.

Speak to our team today and let us take ownership of your card processing setup so you can focus on running your business.

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Best practices for credit card payments

To get the most out of accepting credit card payments, it’s important to follow industry best practices that enhance security, transparency, and customer satisfaction. Here’s how you can optimize your card payments process:

• Display payment options clearly: Make it easy for customers to see which credit card and card payment methods you accept, both in-store and online.
• Use a secure payment gateway: Ensure your payment pages are encrypted and your credit card processing system is compliant with industry standards to protect payment information.
• Implement fraud prevention tools: Use address verification, CVV checks, and other security measures to reduce the risk of fraudulent transactions.
• Review your fees regularly: Stay on top of your credit card processing fees and card processing fees to ensure you’re getting competitive rates and there are no hidden charges.
• Offer multiple payment options: Cater to customer preferences by accepting contactless payments, digital wallets, and traditional credit and debit cards.
• Keep your systems updated: Regularly update your payment software and hardware to maintain security and compliance.
• Be transparent with policies: Clearly communicate your refund, cancellation, and privacy policies to build trust and reduce disputes.

By following these best practices, you not only improve customer satisfaction but also streamline your card processing, reduce processing fees, and position your business as a reliable and secure place to make payments. Prioritizing convenience, security, and transparency helps you stand out and encourages customers to pay with confidence.

Key takeaways

• The credit card process involves multiple parties (issuing bank, acquiring bank, card schemes, gateways, processors) who each take fees from your transactions
• Understanding how credit card processing work flows helps you identify where you are overpaying
• Interchange and scheme fees are largely fixed, but acquirer markup, gateway fees and terminal costs are negotiable
• High risk industries face additional challenges including rolling reserves and stricter compliance, but specialist acquirers exist
• We use volume leverage to access wholesale rates that individual businesses cannot obtain directly
• Our service is free to you because the acquiring bank pays our commission

Ready to reduce your card processing fees?

We work with businesses across the UK to improve customer satisfaction with faster terminals, reduce processing costs by double-digit percentages, and simplify the complexity of accepting credit cards.

Upload your recent statement for a free, no-obligation cost analysis. We will show you exactly what you are paying, identify trends in your transaction data, and present alternatives that could save you more money every month.

Start your free cost review with us today.