Summary
Most merchants overpay by 25-30% on card processing fees without knowing it. The reasons are structural: legacy pricing, untested negotiations, and assumptions about what the market rate actually is in 2026. This piece walks through a 30-minute audit that finds the gap.
5 Key Facts
7 out of 10 merchant audits we run reveal overpayment of 25-30%. The pattern is consistent across UK and EU markets.Most merchants signed their processing agreement 2-4 years ago and have not revisited it.The market has moved; the contract has not.The audit takes 30 minutes and three monthly PSP statements. Finance team effort, no technical work.The headline rate is the wrong number to benchmark.Effective rate (total fees divided by total volume) is what to compare.On a £1m/month merchant, the typical overpayment is £15-25k per year. Renegotiation usually closes most of the gap without a PSP switch.
Most merchants accept their processing fee structure on faith. The PSP's sales deck said the rate was competitive. The CFO signed it. The rate has not changed in three years. The market has.
This audit takes 30 minutes, three monthly PSP statements, and a calculator. By the end of it you will know whether you are overpaying, how much, and where the overpayment sits in your statement.
What you need
Three things:
- Three months of PSP statements (PDF or spreadsheet, any format).
- Total card volume for the same three months.
- A calculator (or a spreadsheet with a few formulas).
If you do not have three months of statements, the same audit works on one month. Three months is better because it smooths out volume spikes.
Step 1: Calculate your effective rate
Take total processing fees across the three months. Divide by total card volume. That is your effective rate.
Example: £3m of card volume, £87,000 in total processing fees. Effective rate = 2.90%.
The effective rate is the only number that matters for benchmarking. Headline rates (Stripe's 2.9% + 30p, Adyen's interchange-plus quote) are not comparable to your effective rate because they exclude interchange pass-through, international surcharges, and add-on services.
Step 2: Compare against market benchmark
For UK merchants processing more than £500k/month on cards, the typical 2026 effective rate is:
- Flat-rate PSPs (Stripe, Checkout.com basic): 2.7-3.2% effective.
- Interchange-plus (Adyen, Worldpay enterprise, Barclays ePDQ): 2.4-2.8% effective.
- Tiered pricing (legacy acquirers): 2.6-3.5% effective, depending on card mix.
If your effective rate is above 3.0% on interchange-plus or above 3.3% on flat-rate, you are probably overpaying. The gap between your effective rate and the market benchmark is what you are losing per year.
Step 3: Find the leakage
The audit gets specific here. Four places where overpayment typically hides:
International surcharge. If you sell to EU or international customers, the surcharge should be capped at 1.0-1.5% above domestic. If you are paying 2.5-3.0%, that is negotiable.
FX margin. If you settle in anything other than your home currency, the FX margin should be below 1.0%. If you are paying 2.0-3.0%, the PSP is the wrong provider for FX.
Add-on services. Billing, Tax, Invoicing, Terminal, Radar — every Stripe product is an additional charge. Many merchants are paying for products they no longer use or that are bundled into the headline rate.
Unauthorised add-ons. PCI compliance fees, statement fees, batch fees, gateway fees. Most of these are listed in the contract but rarely reviewed.
Step 4: Calculate the annual overpayment
Take your effective rate, subtract the market benchmark for your pricing model, multiply by your annual card volume. That is the annual overpayment.
Example: 3.30% effective rate, market benchmark 2.70% (interchange-plus), £12m annual card volume. Gap = 0.60% × £12m = £72,000 per year.
Step 5: What to do with the result
If your audit shows you are overpaying by 15-30% (the most common result), the path is renegotiation. Your PSP wants to keep you more than they want to keep the markup.
If your audit shows you are overpaying by 50+%, the path is either a serious renegotiation with a credible switch threat, or an actual switch. At that gap, the engineering cost of switching is recovered within 6-12 months.
If your audit shows you are paying roughly market rate, the right answer is to re-run this audit every 6 months. Pricing changes. Your card mix changes. The gap opens again.Whatever the scenario Tonkr are here to help negotiate the best possible outcome for you. As payment experts the negotiation is often clearer, with likely known outcomes.
Want help running the audit? Send us three months of PSP statements and we will run the numbers with you, tell you what model you are on, and what your realistic saving is. No charge for the initial read.
