Transaction Fees and What You Need to Know – Full Guide

It can sometimes feel like transaction fees pop up out of nowhere. There isn’t much you can do to avoid them. Knowing more about transaction fees can help you to understand when and why you might see them.

Transaction fees

Interchange fees

Interchange fees are what the bank takes in order to pay for the processing that occurs when a card payment is made. Luckily they are quite small and cover both sides of the transaction. This means there’s no need to worry about it being doubled if the client has a different bank from you.

How much is it?

The amount varies from transaction to transaction, however, it is possible to calculate the fee beforehand.

When paying an invoice or buying a product that is from Europe, the interchange fee is always the same. For credit cards, it is always a 0.3% charge and for debit cards, it is always a 0.2% charge. So it’s as simple as when paying for a £10 invoice of any kind, whether it be product or service, the amount taken off will be 3p for a credit card or 2p for a debit card. This is according to the official VISA website at the date this post was made

When trading outside of Europe, the fees become a little bit more complicated, however, for simplicity, we will be talking about the commercial prices which don’t actually change. You need only worry about larger interchange fees when trading abroad as a corporation or a much larger company.

Merchant Service Charge

The merchant service charge or MSC for short is a small fee deducted from merchants which allows them to trade using that bank’s services. This fee varies from around 0.25-0.35% average for debit cards and 0.7-0.9% average for credit cards. This fee is negotiable with your bank and is subject to change depending on the negotiated prices.

Payment service providers can also charge a fee. This includes paypal, stripe, square or similar examples. This fee varies and can be charged per payment or by a subscription charged at a set rate.

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