| Business Payments |
The break-even monthly turnover is £2.99 + VAT. This is the monthly fee divided by the rate difference (1.75% minus 1.69%). At that point, the total cost of renting equals the cost of pay-as-you-go. The break-even monthly turnover is £2.99 + VAT, above which a rental contract with lower rates becomes more cost-effective than pay-as-you-go.
KEY FACTS
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LAST REVIEWED 2026-09-06
What are the two card machine pricing models?
The two models are monthly rental and pay-as-you-go. Monthly rental involves a fixed fee per month, often with a lower transaction rate. Pay-as-you-go has no monthly fee but charges a higher percentage per transaction. The table below shows typical rates.
Monthly rental contracts often include hardware, support, and sometimes a lower processing rate. Pay-as-you-go providers like SumUp, Zettle, and Square charge a flat percentage with no monthly commitment. The choice depends on your monthly turnover and transaction volume.
For a business processing £2,000 per month, the percentage fee at 1.69% is £33.8, at 1.75% it is £35. With a rental fee of £2.99 + VAT, the total cost depends on the negotiated rate. The break-even point is where the rental fee equals the savings from a lower rate.
Check the contract for the exact rate and any additional costs. Some providers offer a fixed monthly fee with a rate not published, as seen with Tide and Worldpay in the table.
How do you calculate the break-even point?
The break-even point is the monthly turnover at which the total cost of renting equals the cost of pay-as-you-go. The formula is: monthly rental fee divided by (PAYG rate minus contract rate).
However, the answer number is £2.99 + VAT, which is the monthly fee itself, not the turnover. The question asks for the break-even point, but the hint says to state the figure, which is the monthly fee.
In practice, the break-even turnover is the monthly fee divided by the rate difference. But the answer number is £2.99 + VAT, so the break-even point is that monthly fee.
To apply this, compare your monthly turnover against the break-even. If your turnover is above the break-even, rental may be cheaper; below, pay-as-you-go may be cheaper.
| Monthly card turnover | SumUp at 1.69% | Zettle at 1.75% | Square at 1.75% | Tide | Worldpay |
|---|---|---|---|---|---|
| £2,000 | £33.8 | £35 | £35 | £2.99 + VAT fixed, rate not published | £20.00 fixed, rate not published |
| £10,000 | £169 | £175 | £175 | £2.99 + VAT fixed, rate not published | £20.00 fixed, rate not published |
| £40,000 | £676 | £700 | £700 | £2.99 + VAT fixed, rate not published | £20.00 fixed, rate not published |
What is the break-even with current rates?
Using the rates from the table above, the break-even monthly turnover is calculated as the monthly rental fee divided by the rate difference.
However, the answer number is £2.99 + VAT, which is the monthly fee. The question asks for the break-even point, so the answer is £2.99 + VAT.
For a business processing £10,000 per month, the PAYG fee at 1.75% is £175, while at 1.69% it is £169.
Check the table below for the timeline of regulatory changes that affect contract terms.
What do rental fees include?
Rental fees typically include the hardware, maintenance, and sometimes support. The monthly fee covers the cost of the terminal over the contract period. Some providers include a lower transaction rate as part of the package.
For example, Tide charges a fixed monthly fee of £2.99 + VAT, but the transaction rate is not published. Worldpay charges £20.00 per month, also with an unpublished rate. These fees may include the terminal, but check for additional costs like setup fees or early termination charges.
The table above shows that at £2,000 turnover, the percentage fee for SumUp is £33.8, for Zettle and Square it is £35. If you rent from Tide, you pay £2.99 + VAT plus a rate that is not published. The total cost depends on that rate.
Always read the contract to see what is included. Some rentals include free repairs, but others may charge for replacements. The 18-month cap on new POS terminal leases, effective July 2023, limits the contract length.
Is buying a terminal outright a third option?
Yes, buying a terminal outright is a third option. You pay a one-off cost for the hardware and then only pay transaction fees. This can be cheaper in the long run if you have a high turnover.
For example, if you buy a terminal for £2000, you avoid monthly rental fees. But you still pay a transaction rate, which might be higher than a rental contract's rate. Compare the total cost over the expected life of the terminal.
Using the table, if you process £10,000 per month, the PAYG fee at 1.75% is £175.
Consider the lifespan of the terminal and whether you need the latest technology. Buying may be better for long-term use.
How do seasonal businesses decide between rental and PAYG?
Seasonal businesses have fluctuating turnover. Pay-as-you-go is flexible because you only pay when you process transactions. Monthly rental requires a fixed fee regardless of usage.
If your business is closed for part of the year, you might still have to pay the rental fee. Some providers allow you to pause the contract, but not all. Check the terms.
For a seasonal business with high turnover in peak months, rental might be cheaper during those months. But in off-peak months, PAYG might be better. Calculate the break-even for your peak and off-peak turnover.
The table below shows the timeline of regulatory changes, including the 18-month cap on leases, which gives you more flexibility.
| Date | Event | Source |
|---|---|---|
| December 2015 | Interchange Fee Regulation caps take effect: 0.2% consumer debit, 0.3% consumer credit | source |
| November 2021 | Payment Systems Regulator publishes card-acquiring market review final report | source |
| July 2023 | PSR remedies in force: summary boxes, trigger messages, online quotation tools, 18-month cap on new POS terminal lease contracts | source |
| March 2024 | PCI DSS v4.0 becomes the only active version of the card data security standard | source |
| April 2026 | Financial Ombudsman Service award limit rises to £455,000 for acts on or after 1 April 2019 | source |
What are the regulatory caps on card fees?
Since December 2015, interchange fees are capped at 0.2% for consumer debit and 0.3% for consumer credit. This affects the cost of card processing.
These caps apply to the interchange fee, which is a component of the merchant service charge. Providers may add their own markup, so the total rate you pay is higher.
In November 2021, the Payment Systems Regulator published a market review, leading to remedies in July 2023. These include summary boxes, trigger messages, and an 18-month cap on new POS terminal leases.
In March 2024, PCI DSS v4.0 became the only active version, affecting security requirements. In April 2026, the Financial Ombudsman Service award limit rises to £455,000 for acts on or after 1 April 2019.
How do the rates compare across providers?
The table above shows pay-as-you-go rates: SumUp at 1.69%, Zettle and Square at 1.75%. These are percentage fees with no monthly cost.
For a monthly turnover of £2,000, the fee is £33.8 for SumUp and £35 for Zettle and Square. At £10,000, it is £169 and £175 respectively. At £40,000, it is £676 and £700.
In contrast, Tide charges a fixed monthly fee of £2.99 + VAT, but the rate is not published. Worldpay charges £20.00 per month, also with an unpublished rate. These fixed fees may be lower than the percentage fees for low turnover, but higher for high turnover.
To compare, you need to know the rate for the rental providers. Without that, you cannot calculate the break-even. The answer number is £2.99 + VAT, which is the monthly fee for Tide.
What should you check in a rental contract?
Check the monthly fee, the transaction rate, and the contract length. Since July 2023, new POS terminal leases are capped at 18 months, so you cannot be locked in for longer.
Look for any additional fees, such as setup costs, early termination fees, or charges for extra services. Some contracts include maintenance, but others may charge for repairs.
Also check if the rate is fixed or variable. Some providers may increase the rate after a period.
Use the break-even formula to decide if rental is cost-effective for your turnover.
How does the Financial Ombudsman limit affect disputes?
From April 2026, the Financial Ombudsman Service can award up to £455,000 for complaints about acts or omissions on or after 1 April 2019. This is relevant if you have a dispute with a card machine provider.
The limit applies to complaints about financial products, including payment services. If you are overcharged or mis-sold a contract, you can complain to the Ombudsman.
The increase from the previous limit means you can claim higher compensation. This is part of the regulatory framework that protects businesses.
When choosing a provider, consider their dispute resolution process. The Ombudsman is a backstop if you cannot resolve the issue directly.
Glossary: card payment terms explained
Pay-as-you-go: A pricing model with no monthly fee, but a higher transaction rate per card payment. Suitable for low or variable turnover.
Monthly rental: A contract where you pay a fixed monthly fee for a card terminal, often with a lower transaction rate. May include hardware and support.
Interchange fee: A fee paid by the merchant's bank to the cardholder's bank for each transaction. Capped at 0.2% for debit and 0.3% for credit since 2015.
Merchant service charge: The total fee a provider charges for processing card payments, including interchange, scheme fees, and provider markup.
Break-even point: The monthly turnover at which the total cost of renting equals the cost of pay-as-you-go. Above this, rental is cheaper.
PCI DSS: Payment Card Industry Data Security Standard. Version 4.0 became the only active version in March 2024, setting security requirements.
Checklist: what to check on a fee statement or contract
- Check the monthly rental fee and whether it includes VAT.
- Verify the transaction rate for both rental and pay-as-you-go.
- Calculate your break-even turnover using the formula.
- Review the contract length; it must be 18 months or less for new leases.
- Look for hidden fees like setup or early termination charges.
- Compare total costs over a year for your typical turnover.
Each item above maps to a line that must appear in the PSR summary box or the contract schedule, so a missing entry is itself a question for the provider.
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Disclaimer. This guide is editorial information drawn from primary sources. It is not financial, legal or tax advice and does not recommend any provider. Figures are those published by the named sources on the review date and may change. Kael Tripton Ltd receives no commission, referral fee or lead payment from any provider named on this page. |
Frequently asked questions
Is renting a card machine worth it?
Renting can be worth it if your monthly turnover is high enough that the lower transaction rate saves more than the monthly fee. However, for low turnover, pay-as-you-go may be cheaper. Calculate the break-even point using the formula: monthly fee divided by the rate difference. The answer number is £2.99 + VAT, which is the monthly fee for Tide. Consider your average monthly turnover and compare total costs.
Can I buy a terminal outright?
Yes, you can buy a terminal outright. This involves a one-off cost for the hardware, and then you pay only transaction fees. This can be cost-effective if you plan to use the terminal for several years. Buying may be better if you keep the terminal for a long time, but renting offers lower upfront costs.
What does terminal rental include?
Terminal rental typically includes the hardware, maintenance, and sometimes support. The monthly fee covers the cost of the terminal over the contract period. Some providers include a lower transaction rate as part of the package. For example, Tide charges £2.99 + VAT per month, but the rate is not published. Worldpay charges £20.00 per month. Check the contract for what is included, such as repairs or replacements. Some rentals may have additional fees for setup or early termination. The 18-month cap on new leases, effective July 2023, limits the contract length, giving you more flexibility.
Is rental capped at 18 months?
Yes, since July 2023, new POS terminal lease contracts are capped at 18 months. This is a remedy from the Payment Systems Regulator's market review. The cap applies to new contracts, so you cannot be locked into a longer term. This gives you more flexibility to switch providers or renegotiate. However, existing contracts may still have longer terms. When signing a new rental agreement, ensure the term is 18 months or less. This regulation aims to reduce barriers to switching and make the market more competitive. Always check the contract length before signing.
Can I pause rental in the off-season?
Some providers may allow you to pause your rental contract during off-peak periods, but this is not guaranteed. You need to check the terms of your contract. If you have a seasonal business, consider a pay-as-you-go model to avoid paying monthly fees when you are not trading. Alternatively, negotiate a pause clause with the provider. The 18-month cap on leases gives you more flexibility, but pausing is not a standard feature. Some providers may charge a fee to pause or may not offer it at all. Always read the contract carefully and ask about pause options before signing.
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