What Are Card Payment Processing Fees and How to Avoid Them
Card payment processing fees are charges levied by card networks and payment processors each time a customer pays by debit or credit card, typically ranging from 1.5% to 3.5% of the transaction value. For UK sole traders and small businesses, these costs add up quickly, but there's a lower-cost alternative: bank-to-bank payments via open banking.
How Card Payment Processing Fees Work
When a client pays you by card, the payment processor takes a cut. On a £500 invoice, a typical card processor charges around £12.50 (2.5% plus a fixed fee). This money goes to the card network, the acquiring bank, and the payment provider. Every transaction incurs this cost, and it compounds across dozens of invoices each month. For plumbers, electricians, decorators, and other tradespeople who rely on fast payment, card fees can reduce profit margins significantly. Most card processors are transparent about their rates, but they're non-negotiable and built into their service model.
Why Bank-to-Bank Payments Cost Less
Bank-to-bank payments use UK open banking to transfer money directly between bank accounts. There's no card network involved, no acquiring bank middleman, and no card processor taking a percentage. Instead, you pay a flat, transparent fee of around £0.80 per transaction. On that same £500 invoice, you'd pay just £4 instead of £12.50. This is why Invoicr, the invoicing app for UK sole traders, uses bank-to-bank as its primary payment method. Clients don't need a special account; they simply authorise the payment from their existing bank app. The entire transaction is regulated by the Payment Services Regulation, making it as secure as card payments.
Which Businesses Benefit Most
High-volume invoicers see the biggest savings. If you issue 40 invoices a month at an average of £300 each, card processors would cost you roughly £300 monthly in fees. Bank-to-bank payments would cost around £32. Sole traders, plumbers, electricians, gardeners, decorators, mobile mechanics, and consultants are the biggest winners because they operate on tight margins and send invoices constantly. Even if only half your clients use the bank-to-bank option, you're still saving significantly. Invoicr is built specifically for these UK self-employed professionals, with free tier access to 5 invoices per month and the option to upgrade as your business grows.
When Card Payments Still Make Sense
Card payments have their place. International clients, for example, may not have access to UK open banking, so card payments are necessary. Some businesses also offer card payment as a fallback for clients who prefer it or can't use online banking. Invoicr supports both methods. Bank-to-bank is the default because it's cheaper and faster for UK invoicing, but you can still accept card payments if needed. The choice gives you flexibility without locking you into expensive processing fees for every transaction.
How to Set Up Low-Cost Invoice Payments
The simplest way to reduce payment fees is to use an invoicing app that prioritises bank-to-bank payments. Invoicr is a free iOS and Android app designed for UK sole traders and small businesses. When you create an invoice, clients receive a link or WhatsApp message with a one-tap payment button. They choose their bank, authorise the payment in their banking app, and the money lands in your account within hours. No card processor fees. No hidden charges. The app includes automated reminders to chase unpaid invoices, quote generation, and team access on the Business plan. For freelancers and tradespeople, it removes the friction of traditional invoicing while cutting payment costs by up to 68% compared to card processors.
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Frequently asked questions
What percentage do card processors charge?
Most card processors charge between 1.5% and 3.5% of the transaction value, plus a fixed fee per transaction (typically 20p to 30p). This means a £500 payment costs £10 to £17.50.
Are bank-to-bank payments as secure as card payments?
Yes. Bank-to-bank payments are regulated by the Payment Services Regulation 2017 and are just as secure as card payments. Money transfers directly between verified bank accounts with customer authorisation.
Can my clients refuse to use bank-to-bank payments?
Yes. That's why Invoicr supports both methods. Clients can choose their preferred payment option. In practice, most UK sole traders find that offering bank-to-bank as the default option encourages adoption because it's faster and easier.
How much can I save by switching to bank-to-bank payments?
On a £500 invoice, you'd save £8.50 per transaction. If you issue 40 invoices monthly at £300 each, you could save around £270 per month or £3,240 annually.
Is Invoicr free to use?
Invoicr offers a free tier covering 5 invoices per month and 3 customers. Pro (£9.99/month or £79.99/year) adds unlimited invoices, reminders, and WhatsApp delivery. Business (£19.99/month or £179.99/year) includes 5 team seats and VAT/CIS compliance.
What happens if my client doesn't have online banking?
They can use the card payment fallback option, or you can arrange alternative payment methods. Most UK businesses and individuals have online banking access, so this is rarely an issue.