Monthly fees on a card machine bill: what each one is for

Part of Reading statements. Start with the main guide: How to read a merchant statement, line by line

Card fees come in two kinds. Variable fees move with your sales: a percentage of each payment, and sometimes a small charge on every transaction. Fixed fees do not move at all. They are the standing charges that appear every month, in a slow week and a busy one.

For a business with healthy turnover, fixed fees are a small part of the bill. For a small business, they can be the biggest part. This guide explains each fixed monthly fee, what it is meant to pay for, how much weight it carries, and which ones you can reasonably challenge.

Which fixed monthly fees do most statements share?

Different providers use different labels, but nearly every card account includes some version of these four.

There can be others, such as a connectivity (SIM) fee for a mobile terminal, an insurance or warranty charge on hardware, or a software fee for an add-on. Each one adds to the fixed total.

Terminal rental

This is usually the largest fixed fee. It pays for the card machine itself and often comes with a minimum term. The monthly amount depends on the type of terminal and how long the agreement runs. A contract may bundle rental, support and replacement, or it may be a finance agreement that continues even if you stop using the machine.

Because rental is often billed by a different company from the one that processes your cards, it is the fee most likely to be missing from a processing statement. We cover this in our guide to hidden fees on a merchant statement, and the buy-or-rent decision in card machine rental versus buying.

Gateway or portal fee

If you take payments online or over the phone, or use a virtual terminal, there may be a gateway fee. It pays for the connection between your website or screen and the card networks. Some providers include it in the main rate. Others charge it separately every month.

PCI compliance charge

Card schemes require businesses that accept cards to follow security standards. Many providers charge a monthly fee for running the programme that helps you complete the annual questionnaire. A separate, higher non-compliance fee can apply if the questionnaire is not completed on time. See PCI compliance fees explained for how this works.

Statement or account fee

A small monthly charge for maintaining the account and sending statements. It is often the easiest of the four to have removed, especially if you move to online statements.

How do fixed fees weigh on different turnovers?

Fixed fees do not care how much you take. That means their effect on your effective rate depends entirely on turnover. Take an example fixed bill of £40.00 a month.

Here is what that £40.00 adds to the effective rate at different monthly turnovers.

At £3,000 of turnover the fixed fees alone add 1.33 percentage points. Before the provider takes a single percentage fee, the business has already paid more than most headline rates. At £48,000 the same fees add 0.08 of a percentage point, which hardly shows.

This is the main reason a very low headline rate can still be a poor deal for a small business. A "no percentage fee" offer with a £40.00 monthly cost is cheaper for a business taking £48,000 than for one taking £3,000.

A worked comparison: percentage versus fixed

A small business takes £4,000 a month on cards. Two providers quote.

Provider A has the lower percentage and a higher bill. Fixed fees and the per-transaction charge together add £55.00. Provider B's higher rate wins because it has nothing fixed. If turnover were £40,000, the picture would reverse. At that level, A's percentage fee is £400 and per-transaction fees are £200 on 2,000 transactions, giving £635.00 including fixed fees, while B's would be £640.00. They would be about level, and A would be cheaper at higher volumes.

The lesson is that the right provider depends on turnover. We look at where the lines cross in flat rate versus interchange plus break-even.

Which one-off and annual charges should you add?

Fixed monthly fees are not the only standing costs. Add these to your total when comparing.

• Set-up or activation fee. Charged once when the account opens. Spread it over the contract length.
• Delivery or installation fee. For hardware that is posted or fitted.
• Annual account fee. A single yearly charge. Divide by 12.
• Terminal return or collection fee. Charged when a rented terminal is sent back at the end.
• Early termination fee. Only paid if you leave early, but it belongs in any decision about switching.

A £240.00 set-up fee on a 24-month contract adds £10.00 a month. An annual fee of £60.00 adds £5.00 a month. Both go into the effective rate.

Which fixed fees can you challenge?

Some fees are tied to contracts. Others are at the provider's discretion.

1. Ask for the statement fee to be removed. Moving to online statements removes the main reason for it.
2. Question the PCI charge. Check whether you are paying the compliance fee and a non-compliance fee at the same time. Complete the questionnaire if one is outstanding.
3. Check for duplicate gateway charges. If you moved your website to a new gateway, an old one may still be billing.
4. Review terminal rental at renewal. The end of a term is when you have the most bargaining power. Ask what a buy-out costs or whether a cheaper terminal would do.
5. Compare against a no-monthly-fee alternative. For very small turnovers, a provider with no fixed fees can be cheaper overall. Pay-as-you-go readers are built for this case.

How do you check your own bill?

1. Find every fixed charge on the statement and on any other invoice for card services.
2. Add them to get your monthly fixed total.
3. Divide the fixed total by your monthly turnover. That is what fixed fees add to your effective rate.
4. Compare it with the percentage and per-transaction parts of the bill.

If fixed fees are more than a third of the total cost, a provider that charges more per transaction but nothing monthly may suit you better. If they are a small share, focus on the percentage and the markup.

The checkmyrates calculator separates fixed fees from variable ones, so you can see the effect of each side by side.

Frequently asked questions

What are monthly card machine fees?

They are the fixed charges you pay every month to keep a card account and terminal running, regardless of how much you take. They usually include terminal rental, a gateway or portal fee, a PCI compliance charge and a statement or account fee.

How much does a card machine cost per month?

It varies widely with the terminal, the provider and the contract. Rather than relying on a typical figure, add up your own fixed charges and divide by your monthly turnover to see what they really cost you.

Can I get monthly fees removed?

Some, yes. Statement and account fees are the easiest to remove, and PCI non-compliance fees can often be cleared by completing the questionnaire. Terminal rental is usually fixed for the term of the contract.

Why do small businesses pay a higher effective rate?

Fixed fees do not shrink when turnover is low, so they take a bigger share of every pound taken. Small average sales also make per-transaction fees weigh more.

Is a no-monthly-fee provider always cheaper?

Not always. For small turnovers it often is. For larger turnovers a provider with a lower percentage and a monthly fee can be cheaper. Compare the total cost at your own turnover.

Should fixed fees be included when comparing quotes?

Yes, always. A quote that leaves them out cannot be compared with one that includes them. Use the all-in effective rate for every quote.

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.