Business Card Machines UK: Fees, Contracts, Providers and Machine Types Explained

LAST REVIEWED 2026-09-05

What a business card machine costs in the UK

For UK small and medium enterprises, the headline cost of taking card payments typically lands between 1.5% and 2% of each transaction. That figure is far above the regulated interchange caps of 0.2% for consumer debit and 0.3% for consumer credit, which apply under the Interchange Fee Regulation (IFR). The gap arises because the headline rate bundles three separate layers: interchange, scheme fees, and the acquirer’s margin.

Beyond the per-transaction percentage, businesses face fixed costs. A countertop terminal may be purchased outright or leased, with rental contracts now limited to an initial term of 18 months under Payment Systems Regulator (PSR) remedies. Mobile card readers often involve a one-off hardware cost, while online payment gateways charge a monthly subscription plus a transaction fee. Some providers offer ‘free’ terminals, but these are typically tied to higher transaction rates or longer notice periods.

Additional charges can include a monthly service fee, PCI compliance fees, and charges for chargebacks or refunds. Businesses should compare the total cost of acceptance, not just the headline rate. The PSR now requires providers to show summary boxes and trigger messages, making it easier to see the true cost before signing.

The three parts of every card fee

Every card transaction in the UK is priced as a blend of three components. Understanding each helps a business see why the headline rate is higher than the regulated caps.

Interchange is the fee paid by the acquirer to the cardholder’s bank. Under the IFR, the cap for consumer debit cards is 0.2% and for consumer credit cards 0.3%. Commercial cards are not capped and can be significantly higher.

Scheme fees are set by Visa, Mastercard, and other card schemes for use of their networks. These are not regulated by the IFR and vary by scheme, product type, and transaction type. They are typically a small percentage plus a fixed pence amount.

Acquirer margin is what the payment service provider (PSP) or acquirer adds on top to cover its own costs and profit. This margin can vary widely between providers and is the main reason headline rates differ.

The table below shows the anatomy of a typical fee, with sources for each layer.

For a typical SME, the sum of these parts results in a headline rate of 1.5% to 2%, as noted in the introduction.

Contract rules since the PSR remedies

In July 2023, the Payment Systems Regulator introduced remedies under its card acquiring market review. These rules apply to providers of point-of-sale (POS) terminal leasing and rental contracts, and they aim to make it easier for businesses to switch or exit.

The most significant change is that the initial term of a POS terminal contract is now capped at 18 months. Previously, some contracts locked businesses in for four years or more. After the initial term, the contract may continue on a rolling basis, but the business must be able to terminate without penalty.

Providers are also required to give summary boxes at the point of sale, setting out key terms such as the monthly fee, the contract length, and any termination charges. Trigger messages must be sent before the end of the initial term, reminding the business that the contract is about to end and explaining their options.

In addition, the PSR mandated that providers offer online quotation tools, allowing businesses to compare prices more easily. These remedies apply to contracts entered into after July 2023, but existing contracts may also be affected if they are renewed or varied.

Businesses should check whether their provider is complying with these rules. If a contract offers a longer initial term, it may be a sign of non-compliance. The PSR has the power to enforce these remedies, and businesses can report non-compliant providers.

Types of card machine

Card machines come in several forms, each suited to different business needs. The main types are countertop terminals, portable terminals, mobile card readers, and softPOS (software point of sale) solutions.

Countertop terminals are the traditional fixed units found at retail checkouts. They require a power source and a phone line or internet connection. They are reliable and can handle high volumes, but they are not portable.

Portable terminals are battery-powered and connect via Wi-Fi or 4G. They are often used in restaurants where the card machine is brought to the table, or in market stalls. They offer more flexibility than countertop models but may have a higher upfront cost.

Mobile card readers are small devices that plug into a smartphone or tablet via Bluetooth or the headphone jack. They are popular with sole traders and small businesses because they are cheap and easy to use. The reader itself may cost from around £20 to £100, and the accompanying app handles the transaction.

SoftPOS turns a smartphone into a card terminal using NFC technology, so no separate reader is needed. This is the newest option and is ideal for very low-volume sellers.

Each type has different fee structures. Mobile readers often charge a flat percentage per transaction, while countertop terminals may have a lower percentage but a monthly rental fee. Businesses should consider their sales volume, mobility needs, and budget.

Providers at a glance

The UK card machine market includes traditional acquirers such as Barclaycard, Lloyds Cardnet, and Worldpay, as well as newer fintech providers like SumUp, iZettle, and Square. These providers differ in their fee structures, contract terms, and hardware options.

Traditional acquirers often offer lower transaction rates for high-volume businesses, but they may require a monthly fee and a longer contract. They typically provide countertop terminals and dedicated customer support. Their pricing is often bespoke, based on the business’s turnover and average transaction value.

Fintech providers, on the other hand, usually offer simple, flat-rate pricing with no monthly fees or long-term contracts. They focus on mobile readers and are popular with small businesses and sole traders. Their transaction rates are often higher than those of traditional acquirers, but the lack of fixed costs can be attractive for low-volume sellers.

Some providers specialise in specific sectors, such as hospitality or e-commerce. Others offer integrated payment solutions that combine card machines with accounting software or inventory management.

When choosing a provider, businesses should compare the total cost of acceptance, including transaction fees, monthly fees, hardware costs, and any hidden charges. The PSR’s summary boxes and online quotation tools can help with this comparison.

Which machine suits which business

The right card machine depends on the nature of the business. A retail shop with a fixed till point will likely benefit from a countertop terminal, which offers fast, reliable processing and can handle high volumes. A restaurant or a business that sells at markets may prefer a portable terminal, allowing staff to take payments anywhere.

Sole traders and freelancers who meet clients in person, such as plumbers or hairdressers, often choose mobile card readers. These are low-cost, easy to carry, and work with a smartphone app. They are ideal for occasional or low-value transactions.

For businesses that operate online as well as in person, a provider that offers both a physical terminal and an online payment gateway may be the most convenient. This allows for a single provider and consolidated reporting.

Businesses with very low transaction volumes might consider softPOS, which requires no additional hardware. However, they should check that their smartphone is compatible and that the transaction limits meet their needs.

Ultimately, the choice should be based on the business’s sales volume, average transaction value, mobility requirements, and budget. It is also important to consider the contract terms, especially the 18-month cap on initial terms, and to avoid being locked into a long-term agreement that may not suit future needs.

Glossary

Acquirer: A financial institution that processes card payments on behalf of a merchant. It settles funds into the merchant’s account.

Chargeback: A dispute initiated by a cardholder that results in the transaction being reversed. Merchants may be charged a fee for each chargeback.

Interchange: The fee paid by the acquirer to the cardholder’s bank for processing a transaction. It is set by the card schemes but regulated in the EU and UK for consumer cards.

Merchant Service Charge (MSC): The total fee charged by the acquirer for processing a transaction, often expressed as a percentage plus a fixed fee.

PCI DSS: Payment Card Industry Data Security Standard, a set of security requirements for businesses that handle card data.

POS: Point of Sale, the location or device where a card payment is made.

PSP: Payment Service Provider, a company that offers payment processing services to merchants.

Scheme fees: Fees charged by card schemes (Visa, Mastercard) for the use of their networks.

SoftPOS: Software point of sale, which allows a smartphone to accept contactless payments without a separate reader.

Frequently asked questions

How much do card machines cost per transaction in the UK?

In the UK, the cost per transaction for a card machine typically ranges from 1.5% to 2% of the transaction value for small and medium businesses. This headline rate includes interchange fees (capped at 0.2% for consumer debit and 0.3% for consumer credit under the Interchange Fee Regulation), scheme fees, and the acquirer's margin. Some providers offer flat rates, such as 1.69% or 1.75%, while others may charge a lower percentage plus a fixed pence amount. There may also be monthly fees or rental costs for the terminal. It is essential to compare the total cost of acceptance, not just the percentage rate.

Is a card machine contract limited to 18 months?

Yes, for contracts entered into after July 2023, the Payment Systems Regulator (PSR) has capped the initial term of point-of-sale (POS) terminal leasing and rental contracts at 18 months. This means that a provider cannot lock a business into a longer initial commitment. After the initial term, the contract may continue on a rolling basis, but the business must be able to terminate without penalty. Providers are also required to send trigger messages before the end of the initial term, reminding the business of their options. This remedy was introduced to make it easier for businesses to switch providers and avoid being tied into lengthy contracts.

Do sole traders need a business bank account for a card reader?

No, sole traders do not legally need a separate business bank account to use a card reader. Many payment service providers allow sole traders to settle funds into a personal bank account. However, it is advisable to have a separate business account for accounting and tax purposes, as it simplifies record-keeping. Some providers may require a business account, but this is not a universal rule. Sole traders should check the terms of the payment provider they choose. Even without a business account, they can still accept card payments, but they must ensure they keep accurate records of their income and expenses for their self-assessment tax return.

What is the difference between an acquirer and a card reader brand?

An acquirer is a financial institution that processes card payments on behalf of a merchant. It holds the merchant account, settles funds, and manages the risk. Examples include Barclaycard, Lloyds Cardnet, and Worldpay. A card reader brand, such as SumUp, iZettle, or Square, is often a payment service provider (PSP) that may act as an acquirer or partner with one. The brand provides the hardware and software, but the actual acquiring may be done by a third party. For the merchant, the key difference is in the contract and fees. Some brands offer simpler pricing and no long-term contracts, while traditional acquirers may offer bespoke rates for higher volumes.

Can a business refuse card payments in the UK?

Yes, a business can refuse card payments in the UK. There is no legal obligation for a business to accept card payments. However, if a business displays a card payment sign, it must honour that acceptance. Refusing card payments may be a commercial decision, but it could lead to lost sales, as many customers expect to pay by card. Some businesses may choose to accept only cash to avoid transaction fees, but they must consider the convenience for their customers. There are no specific regulations that force businesses to accept cards, except in certain sectors where payment by card may be required by contract or law, such as for tax payments.