Short answer
A per-transaction fee is a fixed charge, such as 5p or 10p, added to every card payment. An authorisation fee is a similar charge for each request to the card issuer, which may include declined attempts. Both matter most for businesses with many small sales, because a fixed fee is a larger share of a small payment.
Part of Fees and pricing models. Start with the main guide: Interchange plus vs blended vs flat rate: which pricing model costs less?
Key takeaways
- A per-transaction fee is a fixed charge on every payment, in addition to any percentage fee.
- An authorisation fee may be charged on every attempt, including declined ones, depending on your contract.
- The smaller your average sale, the more these fees add to your effective rate.
- Check whether your fee is per sale or per attempt, because the difference can be thousands of charges a year.
- Turn any fixed fee into a percentage by dividing it by your average sale, so it can be compared with quotes.
A percentage fee grows with the value of a sale. A per-transaction fee does not. It is the same whether the customer buys a £3 coffee or a £300 appliance. That simple difference is why the small fixed charges on a card bill matter much more to some businesses than to others.
This guide explains what per-transaction and authorisation fees are, where they come from, how declined payments are treated, and how to work out what they cost your business in pounds and as a percentage.
What are per-transaction and authorisation fees?
In everyday use the two overlap, and different providers use the words in different ways. What matters is who charges the fee, when it applies and how many times it is charged. Always ask for the exact trigger.
Where do per-transaction fees come from?
A single per-transaction amount on your statement can include several layers.
- Scheme processing fee. The card network charges your provider a small fixed amount for each transaction. This is a pass-through cost. See scheme fees explained.
- Provider markup. The provider may add its own fixed amount per transaction on top of its percentage markup. See acquirer markup explained.
- Interchange. In some markets, such as the US debit cap, interchange itself has a fixed per-transaction element. See interchange fees explained.
On a flat-rate or blended statement, you may see only one per-transaction figure. On an interchange plus statement you can often see each layer separately.
How much do they cost in total?
The monthly cost of a per-transaction fee is simple: the fee multiplied by the number of transactions. What makes it add up is the number of transactions.
The fee is the same. The bill scales with the number of payments.
For a business taking 4,000 payments a month, a 5p fee costs £200.00, or £2,400 a year. The same fee on 200 payments costs £10.00.
Why do they matter more for small sales?
A per-transaction fee is a fixed amount, so as a percentage of the sale it falls as the sale gets bigger. To compare a per-transaction fee with a percentage fee, convert it.
| Average sale | Calculation | Added to effective rate |
|---|---|---|
| £4 | 0.05 ÷ 4 | 1.25% |
| £8 | 0.05 ÷ 8 | 0.63% |
| £20 | 0.05 ÷ 20 | 0.25% |
| £60 | 0.05 ÷ 60 | 0.08% |
| £200 | 0.05 ÷ 200 | 0.03% |
A café with a £4 average sale pays an extra 1.25 percentage points for the same 5p fee that adds just 0.03 to a furniture shop with a £200 average sale. This is the reason a price list that looks cheap for one business can be expensive for another. Our guide to the effective rate goes into the same point.
How are declined payments charged?
Every card payment starts with a request to the issuer asking whether the payment can go ahead. The answer is yes or no. A declined request is still a request, and some contracts charge for it.
Per sale or per attempt?
There are two common ways a fee is charged:
- Per successful transaction. You pay only when the payment completes.
- Per authorisation attempt. You pay for every request, including those that are declined or abandoned.
The difference is small for a business with few declines. For one with many, such as an online business with a lot of failed checkouts or a hospitality venue with many retried payments, it adds up.
Example. A business takes 1,000 successful payments in a month, plus 150 declined attempts. The authorisation fee is 4p.
- Charged per successful sale: 1,000 × £0.04 = £40.00
- Charged per attempt: 1,150 × £0.04 = £46.00
The difference of £6.00 a month is £72.00 a year, which is modest but entirely avoidable by asking the question or choosing a contract that charges only on success.
- Successful payments
- Declined attempts
- Successful payments £40 · Declined attempts £0
- Successful payments £40 · Declined attempts £6
1,000 successful payments and 150 declined attempts in a month.
Other situations where extra authorisations occur
- Pre-authorisations. Hotels, car hire and bars may authorise an amount, then settle a different one later. This can mean two authorisations for one sale.
- Retries. Staff re-entering a card after a failure create extra attempts.
- Subscriptions. Recurring payments each need authorisation, and failed ones may be retried.
- Address and security checks. Some providers charge an extra fee for each check performed.
If any of these apply to your business, ask how they are charged.
Where are these fees on a statement?
Look for lines labelled:
- Per transaction, per item or transaction fee
- Authorisation fee or auth fee
- Processing fee
- Network access or switch fee (sometimes a scheme pass-through)
- Address verification or card verification fee
Each line should show a count and a rate or an amount. If the count is higher than your number of sales, you may be paying for declined attempts. Compare the transaction count on the statement with your till or sales records.
How do per-transaction fees fit each pricing model?
How you meet these fees depends on the pricing model.
- Interchange plus: Often has several per-transaction lines: scheme, provider, sometimes interchange. Add them up.
- Blended and tiered: May have one per-transaction fee on top of the percentage rates.
- Flat rate: Frequently includes a fixed amount per transaction, for example "1.5% + 5p". The fixed part is easy to miss in a headline rate.
Read quotes carefully for a "+ Xp" after the percentage. A quote of "1.4% + 20p" is very different from "1.4%" for a business with small sales. At a £10 average sale, 20p is an extra 2.0 percentage points, giving an effective rate of 3.4%.
How do you work out what you pay?
- Find the number of transactions on your statement for the month.
- Find every per-transaction or authorisation line and its amount.
- Add them up. That is the monthly total of fixed per-transaction costs.
- Divide by turnover. This is what they add to your effective rate.
- Check the count. Does it match your sales plus any declined attempts?
If you cannot find the count, ask your provider for it. The number of transactions is one of the most useful figures on a statement, and not all of them show it clearly.
Can you reduce them?
Per-transaction fees are largely set by contract, but you have some influence.
- Negotiate at renewal. The markup part is the provider's choice. Ask for a lower per-transaction fee in exchange for a higher percentage if your sales are large, or the reverse if they are small.
- Choose the model that fits your sale size. A flat rate with no fixed fee can be cheaper for very small sales. A model with a small fixed fee can be cheaper for large ones.
- Reduce avoidable declines. Make sure staff enter cards correctly, keep online forms simple and check that your terminal software is up to date.
- Avoid unnecessary pre-authorisations. Use them only where you need them.
- Ask for no fee on declines. Some providers will agree.
For consultants
Per-transaction fees are one of the easiest places to find a saving for a merchant with small sales, and one of the easiest places to lose it. A quote that lowers the percentage but adds a per-transaction fee can leave a café worse off. Always convert fixed fees to a percentage at the merchant's own average sale before you present a comparison. The checkmyrates calculator works from the transaction count and the average transaction value on the statement, so the effect of each fixed fee is visible on both sides.
Frequently asked questions
What is a per-transaction fee?
It is a fixed charge, usually a few pence or cents, added to each card payment in addition to any percentage fee.
What is an authorisation fee?
A charge for each request sent to the card issuer to approve a payment. Depending on your contract it may apply to declined attempts as well as successful payments.
Do I pay a fee on declined card payments?
It depends on the contract. Some providers charge for every authorisation attempt, and some only for successful payments. Ask which applies to you.
How do I compare a percentage fee with a per-transaction fee?
Convert the per-transaction fee to a percentage by dividing it by your average sale. Add it to the percentage fee for a like-for-like comparison.
Why do small businesses feel per-transaction fees more?
Because the fee is fixed, it takes a larger share of a small payment. A 5p fee is 1.25% of a £4 sale and only 0.03% of a £200 sale.
Where can I find the number of transactions on my statement?
Look near the turnover figure or in the fee section, where per-transaction fees are listed with a count. If you cannot find it, ask your provider.
Sources and further reading
Figures in this guide are examples to show the method. Fees, rules and rates change, so check your own statement, contract and current rules before you decide. This is general information, not financial or legal advice.