Restaurant Card Processing Fees Explained
What are card processing fees?
Every time a customer pays by card, a cut of that payment comes off before the money reaches your account. That cut is the card processing fee. It's split between the bank that issued the customer's card, the card network (Visa or Mastercard) and your payment processor.
Most restaurants see one rate on their statement. That one number is three separate charges added together.
The three layers of card processing fees
1. Interchange fees
Interchange goes to the bank that issued the customer's card, at a rate set by Visa or Mastercard. On most transactions it's the biggest part of the fee.
The UK and EU cap interchange on consumer cards:
- Debit cards: 0.2% of the transaction value
- Credit cards: 0.3%
Cards issued outside the UK or EU aren't covered by those caps. They can cost a lot more.
2. Scheme fees
Visa and Mastercard charge these for running the network itself. They're a small fraction of a percent per transaction.
3. Acquirer margin
Your payment processor (the acquirer) adds its own margin on top of interchange and scheme fees. Providers differ most here, and it's the part you can actually negotiate.
What does a restaurant typically pay?
For a UK restaurant, total processing costs usually land between 0.5% and 1.8% of card revenue, blended across all card types. Where you sit in that range comes down to:
- Card mix. Mostly debit keeps costs down. Credit and international cards push them up.
- How much you put through each month - more volume, more room to negotiate
- Whether you're on a blended rate or interchange-plus
At £50,000 a month in card payments, that's anywhere from £250 to £900 in fees.
Blended rate vs. interchange-plus pricing
| Pricing model | How it works | Best for |
|---|---|---|
| Blended rate | One percentage on every card | Simple, predictable costs |
| Interchange-plus | Interchange plus a fixed markup | Seeing exactly what you pay, often cheaper |
| Flat rate | Fixed percentage or per-transaction fee | Very low volumes |
Most small and mid-sized restaurants start on a blended rate. Interchange-plus can work out cheaper once card volumes grow, but someone has to go through the statements line by line to check it.
Hidden charges to watch for
The headline rate isn't the whole bill. Check your contract for:
- Terminal rental - a monthly charge for your card machines
- Authorisation fees, usually £0.01-0.05 per transaction
- PCI DSS compliance fees, charged once a year for security certification
- Monthly minimums if you don't hit the provider's volume threshold
- Chargeback fees when a customer disputes a payment
- Early termination fees if you leave before the contract ends
How to reduce card processing costs
Start with your card mix. If most of your customers pay with UK debit cards, your real interchange cost is tiny, since it's capped at 0.2%. A blended rate priced for a business with lots of credit card payments could be overcharging you.
Compare providers on the full cost, not the headline rate. A low rate can come with expensive terminal rental, compliance fees or per-transaction charges.
Connect your card terminal to your restaurant POS. Staff stop typing amounts into the card machine by hand, so you get fewer errors and fewer chargebacks. Both cost you money.
If you put a lot through on card each month, use that. Providers will cut their margin to keep you.
Check your rate once a year. Rates drift. A deal agreed two years ago may not match your volume now, or the current interchange caps.
How Flipdish approaches restaurant payments
Flipdish has payments built into its POS and online ordering. Counter payments, online orders and kiosk transactions all settle through one system, so there's one set of numbers to reconcile and you can see what you're actually paying.
There are no separate terminal contracts to juggle. Payments work the same way whether the customer orders at the counter, in your restaurant app or at a self-service kiosk.
For more on how payment costs eat into your margins, see How Much Do Card Payments Cost Restaurants in the UK?.
Quick reference: card fee terminology
| Term | Meaning |
|---|---|
| MSC | Merchant Service Charge - your total processing fee as a % |
| Interchange | Fee paid to the cardholder's bank |
| Acquirer | Your payment processor / card machine provider |
| PCI DSS | Payment Card Industry security standard |
| Chargeback | A customer dispute that reverses a transaction |
| Authorisation | The check that confirms a card can make a payment |