You’ve probably heard the term payment fees, but what exactly are they? And why do they matter so much when you’re working hard to make every pound count? Let’s break it down.
Whenever a customer pays using a debit card, credit card, or certain online payment platforms, a fee is often taken from the money received. This is called a payment fee or transaction fee.
Think of it like this: every time someone pays you £10, you don’t actually get to keep the full £10. A small chunk, maybe 1.5%, 2%, or even more, is taken by the payment processor (that could be a bank, card company, or app).
That might sound tiny. But over time, it adds up.
Let’s say you sell handmade candles and take £10 for each sale. If your payment provider charges 2% per transaction, you lose 20p every time. Sell 100 candles? That’s £20 gone. Sell 1,000? That’s £200 lost to fees, money that could have gone back into your business.
And remember: some platforms charge even higher rates, plus monthly fees or extra charges for things like refunds or foreign cards.
In theory, payment fees cover the cost of:
Big companies can usually absorb these costs. But for smaller businesses, they bite hard because:
When people picture running a small business, they often focus on the fun parts: making great products, building loyal customers, and being your own boss. But behind the scenes, fees quietly chip away at hard-earned income.
For independent sellers, fees can:
1. Make it harder to invest in growth (e.g. buying stock, advertising, hiring help)
2. Force prices up to cover costs, which can make competing harder
3. Eat into already slim profits, especially when sales are unpredictable
In other words, payment fees can be the difference between thriving and just getting by.
The good news is: options are emerging that aim to cut out unnecessary fees, especially for small and independent businesses.
For example, Pay by Bank and Open Banking solutions (like VibePay!) let customers pay you directly from their bank account to yours. No cards. No middlemen taking a slice. Often: no fees at all.
That means:
Payment fees might sound like small change. But for smaller and independent businesses, they can quietly add up to hundreds or thousands of pounds a year, money that could be making a real difference.
If you’re running your own business, it’s worth looking into how you take payments, what it’s costing you, and whether there’s a better, fairer way. Because when you work hard for every sale, you deserve to keep every penny possible.
