You set a price & someone pays it, but somehow a smaller number lands in your bank account.
If you’ve started selling anything online, whether that is a batch of cakes, an hour of tutoring, a bit of freelance writing or a tidy pile of things from the loft, you’ll have had this moment. The gap between the price on the listing and the money in your account is made up of fees, and almost nobody explains them before you start.
They’re not enormous. They are, however, completely predictable, which means you can price around them once you can see them.
Here is what comes out, roughly in the order it comes out.
The Four Things That Take A Cut
Every online payment gets shaved in up to four places:
- The card fee, taken by whoever handles the payment
- The platform fee, taken by whoever hosts the sale
- The payout fee, taken when the money moves into your bank
- The currency charge, if your buyer paid in something other than pounds
The first one is the fee everybody budgets for. The other three are the ones that catch people out.
The Card Fee Has Two Parts
A card fee is almost always written as a percentage plus a fixed amount per transaction, and providers price it very differently.
Stripe’s UK rate is 1.5% + 20p for a standard UK card. PayPal charges 2.9% + 30p for most commercial transactions. Whop publishes 2.7% + $0.30, in US dollars rather than pounds. Card readers from SumUp, Zettle and Square each publish their own rate card too.
The percentage is the part you notice. The fixed amount is the part that quietly ruins small sales.
Take Stripe’s 1.5% + 20p on a £40 order:
- Percentage: 60p
- Fixed fee: 20p
- Total: 80p, or 2% of the sale
Now the same rates on a £4 order:
- Percentage: 6p
- Fixed fee: 20p
- Total: 26p, or 6.5% of the sale
Same provider, same rate card, more than three times the effective cost. The 20p doesn’t shrink just because your price did.
That £40 order costs £1.46 through PayPal rather than 80p through Stripe, which is worth knowing before you default to whichever one you already have an account with.
What To Do If You Sell Cheap Things
If your average order is small, the fixed fee is the thing to design around. A few options:
- Bundle. Six cards at £12 costs you one fixed fee. Six separate £2 sales costs you six.
- Set a minimum order. Even a low one, like £10, changes your effective rate noticeably.
- Offer a subscription or a block booking. One payment for six tutoring sessions beats six payments for one.
- Add a small postage or booking charge that covers the fixed fee rather than absorbing it silently.
None of this is about squeezing your customers. It’s about not handing over 6.5% of a £4 sale without noticing.
The Platform Takes Its Own Cut
If you sell through a site that hosts the listing for you, there is usually a second fee on top of the card fee. Etsy, Shopify, Squarespace and eBay all work this way. Sometimes it is a flat percentage of the sale, sometimes a listing fee, sometimes both, plus a monthly subscription.
This is where two providers quoting similar card rates end up costing very different amounts. Always ask what the platform charges in addition to processing, and whether there is a monthly fee that applies even in a month when you sell nothing.
That last one matters more than people expect. A £20 monthly fee is fine when you’re turning over £600. It isn’t fine in January when you’ve sold two things.
Getting The Money Out Is A Separate Charge
Your money doesn’t go straight into your current account. It sits in a balance with your provider, and moving it out costs something.
The pattern is usually:
- Standard transfer taking a few working days, either free or a small flat fee
- Instant or same-day transfer, charged as a percentage or a larger flat fee
- International transfer, which is nearly always the most expensive option
If you withdraw once a month, this is barely worth thinking about. If you withdraw every time a payment lands because you need the money now, it adds up fast, and it’s the single easiest cost to reduce. Batch your withdrawals where you can.
Selling Abroad Adds Two More Charges
The moment someone outside the UK buys from you, two extra things usually happen.
The card fee goes up, because a foreign-issued card costs your provider more to accept, and if the payment arrives in dollars or euros and you want pounds, there is a conversion charge on top.
The published numbers make the scale of it clear. Stripe charges 2.5% + 20p for European Economic Area cards and 3.15% + 20p for cards from further afield, plus 2% when currency conversion is needed. PayPal adds 1.29% for EEA senders, 1.99% for other international senders, and 3% above the base exchange rate for conversion.
So a £40 order from a customer in Australia, converted into pounds, can cost you well over £2 where the same order from Manchester costs 80p. Neither charge is unreasonable, and both are invisible until you look at the statement. If a meaningful chunk of your sales come from abroad, the same logic that applies to spending abroad applies to receiving from abroad, and a multi-currency card or a balance held in the currency you were paid in can stop you converting twice.
Refunds And Chargebacks Can Put You Below Zero
This is the one that genuinely surprises people.
When you refund a customer, you give back the sale price. Depending on your provider, you may or may not get the original card fee back. Many don’t return it, so a refunded £40 order can leave you 80p worse off than if the sale had never happened.
A chargeback is worse. That’s when a buyer disputes the payment with their bank rather than asking you for a refund. You lose the money, and most providers also charge a dispute fee, often £10 to £20, whether or not you eventually win.
Two disputes in a quiet month can wipe out the profit on a lot of small orders. If you sell anything where confusion is likely, clear descriptions, clear delivery timings and a visible refund policy are worth more than any fee negotiation.
The Cut HMRC Takes
Fees aren’t the only thing standing between the price you charged and the money you keep. Tax is part of the cost of getting paid too, and it catches people who never thought of themselves as running a business.
The useful number is the trading allowance. HMRC gives you a tax exemption of up to £1,000 a year on trading income, which covers self-employment, casual services and hiring out your own equipment. If your gross income from all of that is £1,000 or less in a tax year, you generally don’t need to tell HMRC anything at all.
Go over £1,000 and it changes. You have to register for Self Assessment by 5 October in the following tax year, and HMRC warns you could get a penalty if you tell them after that. You’re then taxed on your profit rather than the price on your listings.
Two things worth knowing:
- It’s gross income, not profit. If you sold £1,400 of cakes and spent £600 on ingredients, you’re over the threshold on the £1,400, even though you only cleared £800.
- It’s per person, not per project. The £1,000 covers everything you do, so tutoring plus a bit of selling plus the odd freelance invoice all count together.
None of this is a reason to stop. It’s a reason to keep a note of what comes in from the very first sale, because reconstructing a year of payments the week before a deadline is genuinely miserable.
Bank Transfer Is Usually The Cheapest Route
For larger one-off amounts, ask whether you can be paid by bank transfer instead of card.
In the UK this is free at both ends for most people, and it removes the card fee entirely. On a £400 invoice at Stripe’s UK rate, that is the difference between paying £6.20 and paying nothing.
For anything you bill on a repeating schedule, Direct Debit is worth a look too. GoCardless and similar services charge a percentage capped at a low flat amount, which makes them considerably cheaper than cards on larger recurring payments.
Bank transfer is less convenient. Nobody types their sort code in on a whim, so it works badly for impulse purchases and well for invoiced work, block bookings and anything over a couple of hundred pounds. Offer both and let the amount decide.
How To Find Out What You Are Really Paying
Rate cards vary enormously in how much they tell you upfront. Some providers publish one headline percentage and leave the rest to the small print. Others publish every line.
A few list the lot. Whop prices card processing, currency conversion, tax handling and each individual payout method as separate published lines, so you can add up your own likely total before you sign up rather than after.
Whatever provider you use, the number that matters is not the headline rate. It is what you actually paid last month divided by what you actually collected. Work that out once and you’ll know more about your own costs than most people selling online.
Questions Worth Asking Before You Sign Up
Whether you’re choosing a provider for the first time or reviewing one you’ve used for years:
- What is the card fee, including the fixed amount per transaction?
- Is there a monthly fee, and does it apply in months when I sell nothing?
- What does the platform charge on top of processing?
- What does it cost to move money into my bank, and how long does the free option take?
- What happens to the fee when I refund someone?
- What is the dispute fee, and is it charged even if I win?
- What changes when the buyer is outside the UK?
Seven questions. Most providers will answer all of them from their public pricing page, and the ones that won’t have told you something useful.
Working It Backwards
The point of all this is not to find the cheapest provider. Cheapest is rarely the thing that matters when you’re turning over a few hundred pounds a month, and a slightly dearer service that actually works is worth paying for.
The point is to know your real rate, so you can set prices that survive it.
Pull your last three months of statements. Add up everything you collected, add up everything that was taken off it, and divide one by the other. If that number is under 3%, you’re in normal territory. If it is over 6%, look at your average order value first, because the fixed fee is almost certainly the culprit and bundling will fix more of it than switching providers ever will.
Then put the kettle on. You’ve done the hard part.