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Interchange fees in the UK, explained

Interchange is the fee paid by the merchant's acquirer to the cardholder's issuing bank on every card transaction. It is set by the card schemes rather than by either bank, it is the largest single component of what a merchant pays to accept a card, and no acquirer can discount it. In the UK, consumer card interchange is capped by law at 0.2% for debit and 0.3% for credit.

By the VIP360 editorial team: a team including former FCA, MAS and MGA regulators · Reviewed for accuracy by VIP360 compliance · Updated 6 August 2026

Interchange is the largest single line in what it costs to accept a card, and the one line your provider cannot discount. Understanding it is what separates a merchant who can tell a good quote from a bad one from a merchant comparing headline percentages.

What it is and who gets the money

When a customer pays by card, the merchant's acquirer pays a fee to the bank that issued the card. That is interchange. The issuer keeps it.

The card schemes, Visa and Mastercard, set the rates. Neither the acquirer nor the issuer negotiates them, and no provider can waive them, which is why every acquirer in the market pays exactly the same interchange on an identical transaction. It funds the issuing side of the system: the fraud liability issuers carry, the interest-free period on credit cards, and rewards programmes.

Two consequences follow, and they explain most of what merchants find confusing.

Interchange varies enormously by transaction. The card type, whether the cardholder was present, where the card was issued and what your business sells all change the rate. And because it is identical across providers, it is the part of your bill nobody is competing on. When quotes differ, the difference is in the margin and the fees around it, not here.

The UK caps, and what they leave out

The Interchange Fee Regulation capped consumer card interchange across the EU in 2015, and the UK retained those caps in domestic law after leaving.

  • UK domestic consumer debit: 0.2% of the transaction value.
  • UK domestic consumer credit: 0.3% of the transaction value.

The exclusions matter more than the caps for many businesses:

  • Commercial cards are not capped. Cards issued to businesses sit outside the regulation entirely, and interchange on them can run several times the consumer rate. A B2B seller taking mostly corporate cards has a materially different cost base from a retailer taking consumer debit, on identical volumes.
  • Cross-border transactions are outside the domestic caps, which is where the significant change since Brexit sits.
  • Three-party schemes such as American Express operate differently, because the same organisation issues the card and acquires the merchant, so there is no interchange between two banks to cap.
  • The caps limit interchange only. Scheme fees and your provider's margin sit on top and are not capped.

The cross-border gap, and where regulation has got to

This is the live issue, and it is worth knowing because it affects any UK business selling online into Europe.

When the UK left the EU, the EU caps stopped applying to UK-EEA transactions. Mastercard and Visa then raised interchange on card-not-present consumer transactions between the UK and the EEA:

  • Debit: from 0.2% to 1.15%
  • Credit: from 0.3% to 1.5%

That is roughly a fivefold increase on transactions that had been capped for years, applied to exactly the transactions a UK e-commerce business selling to European customers relies on.

The Payment Systems Regulator ran a market review and concluded that Mastercard and Visa were not subject to effective competitive constraints, and that the increases cost UK businesses an estimated £150 to £200 million a year.

Where it stands is the part most articles get wrong, so to be precise about it:

  • In December 2024 the PSR published its final report and proposed an interim cap returning cross-border card-not-present interchange to 0.2% and 0.3%.
  • In October 2025 the PSR decided not to proceed with the interim cap while litigation about its powers to impose one continues, and instead opened a consultation on the methodology for setting a longer-term cap.

So as at the regulator's most recent published update, no cross-border cap is in force. If you sell into the EEA, you are paying the higher rates today, and the position is worth rechecking rather than assuming it has been fixed.

What you actually pay, and how to read a quote

Interchange is one of at least three components:

  • Interchange, set by the schemes, paid to the issuer, identical for every provider.
  • Scheme fees, charged by Visa and Mastercard for running the network. Also not set by your provider, and considerably more complex than interchange.
  • Acquirer margin, which is your provider's own charge. This is the only part that is genuinely negotiable.

How those are presented changes what you can see:

  • Interchange plus (IC++) passes interchange and scheme fees through at cost and states the margin separately. You can see which part is the provider's.
  • Blended pricing charges one rate across everything. Simpler to read, and it means the provider absorbs the variation, which they price for. A blended rate has to assume some proportion of expensive cards, so if your mix is better than their assumption you are subsidising it.
  • Fixed or tiered pricing sorts transactions into bands labelled something like qualified and non-qualified. The definitions are the provider's, which makes it the hardest model to compare between quotes.

The useful exercise is not comparing headline rates. Take three months of your own transactions, divide total fees paid by total value processed, and compare that effective rate between providers. It is the only number that survives different pricing models.

What a merchant can actually influence

Interchange is fixed, but its inputs are not entirely outside your control.

  • Your merchant category code. Interchange varies by category, and a business classified as something it is not is being priced as something it is not. Check yours against the MCC lookup and challenge it if it is wrong.
  • Your card mix. You cannot choose what customers present, but you can know what they present. B2B sellers seeing mostly commercial cards should stop expecting consumer-capped economics.
  • Authentication data. Transactions carrying stronger authentication and fuller data can qualify for better interchange categories. This is a conversation to have with your provider rather than a setting you flip.
  • Card-present versus card-not-present. Remote transactions carry higher interchange because they carry higher risk, which is a real cost rather than a penalty.
  • The margin. The genuinely negotiable part, and the one worth spending your negotiating capital on.

The honest summary is that interchange is a cost you manage rather than beat. What you can beat is paying a blended rate built for somebody else's card mix, and being classified as a business you are not.

Sources

Rates and regulatory status checked on 6 August 2026 against the PSR's published material, whose most recent update on the cross-border review was October 2025. Scheme interchange tables change; confirm current rates with your acquirer before modelling.

Put it to work

Frequently asked questions

The fee your acquirer pays to the bank that issued your customer's card, on every transaction. The card schemes set the rates, the issuer keeps the money, and it is passed through to you inside whatever your provider charges. It exists to fund the issuing side of the card system, including the fraud liability and the interest-free period on credit cards.

For UK domestic consumer cards, 0.2% of the transaction for debit and 0.3% for credit. These came in under the Interchange Fee Regulation in 2015 and were retained in UK law after Brexit. They apply only to consumer cards on domestic transactions, which is the exclusion that catches merchants out.

No. The caps cover consumer debit and credit cards. Cards issued to businesses sit outside them, and interchange on a commercial card can be several times the capped consumer rate. If you sell business to business, your card mix is doing more to your effective rate than your provider's margin is.

Because the EU caps stopped applying to transactions between the UK and the EEA. Mastercard and Visa then raised interchange on UK-EEA card-not-present consumer transactions from 0.2% and 0.3% to 1.15% and 1.5% respectively. The Payment Systems Regulator found this costs UK businesses an estimated £150 to £200 million a year and that the schemes faced no effective competitive constraint.

Not as at the PSR's most recent published update. It proposed an interim cap at the old 0.2% and 0.3% levels in December 2024, then decided in October 2025 not to proceed with that interim cap while litigation over its powers continues, and is instead consulting on the methodology for a longer-term cap. Check the PSR's market review page for the current position before relying on this.

A pricing model where your provider passes interchange through at cost, adds the scheme fees at cost, and charges a stated margin on top. Often written IC++. It is more transparent than a single blended rate because you can see which part is the provider's and which part nobody controls, and it usually favours merchants whose card mix is better than average.

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