Business Bank Account Fees Explained

Business bank account fees can vary widely between providers. Some accounts charge a monthly fee, some charge per transaction, some charge for cash deposits, and others offer free or discounted banking for a limited introductory period. The best-value business bank account is not always the one with the lowest monthly fee. It is the one that matches how your business actually receives, spends and manages money.

UK current account providers are required to publish comparable information about the services they offer to consumers and small businesses, including overdraft charges for each product. This is designed to help small businesses compare current accounts more easily.

Common business bank account fees

Most business bank account charges fall into a few main categories: account fees, transaction fees, payment fees, cash fees, overdraft fees and international fees. Not every account charges all of these, and digital providers may use different pricing models from high-street banks.

Before opening a business account, always check the tariff, price list or summary box. Fees can change, and the cheapest account for one business may be expensive for another.

Monthly account fees

A monthly account fee is a fixed charge for having the business current account. Some accounts have no monthly fee, while others charge a set amount each month in return for additional features or bundled transactions.

A paid account may be worth considering if it includes useful features such as:

Invoicing tools
Accounting software integrations
Multiple user access
Expense cards
Cashback or rewards
Payment approval workflows
Relationship management
Lower transaction fees

A free or low-cost business bank account may be enough for a freelancer, contractor, sole trader or small limited company with simple banking needs.

Transaction fees

Transaction fees are charges for money moving in or out of your account. These may apply to electronic payments, bank transfers, standing orders, Direct Debits, debit card payments, cheque payments or cash withdrawals.

Some providers include a number of free transactions each month. Others charge per transaction from the start. A business with hundreds of monthly payments may be better off with a monthly-fee account that includes transactions, while a business with only a few payments may prefer a pay-as-you-go structure.

Cash deposit and cash withdrawal fees

Cash fees matter if your business receives notes and coins. Restaurants, cafés, hairdressers, market traders, small retailers and tradespeople may need to deposit cash regularly.

Cash deposit charges may be a percentage of the amount deposited or a fixed fee per deposit. Some accounts also charge for cash withdrawals, coin handling or paying in cash at a Post Office or branch.

If your business is cash-heavy, compare cash deposit limits, branch access, Post Office access and cut-off times. A digital account can be convenient, but it may not be the cheapest option if you regularly handle cash.

Cheque fees

Cheque use has declined, but some businesses still receive cheques from customers, councils, insurers, clubs or older clients. Business accounts may charge for cheque deposits, cheque payments or issuing a cheque book.

If your business rarely uses cheques, this may not matter. If cheques are part of your normal trading, check whether the bank supports mobile cheque imaging, branch deposits or postal cheque deposits.

Faster Payments, CHAPS and Bacs fees

Most UK businesses use Faster Payments for day-to-day transfers. Some accounts include these for free, while others charge per payment.

CHAPS payments are same-day high-value payments and often cost more. They may be useful for property, legal, supplier or large one-off payments.

Bacs payments are often used for payroll, supplier runs and Direct Debit collections. If your business pays staff or processes high volumes of regular payments, check Bacs costs carefully.

Card payment and merchant fees

A business bank account is not the same as a merchant account, but the two often work together. If you accept card payments, you may pay separate fees to a card payment provider, payment gateway or merchant services provider.

Typical card payment costs can include:

Transaction percentage fees
Fixed authorisation fees
Terminal rental
Online payment gateway fees
Chargeback fees
Settlement fees
PCI compliance fees

When comparing business bank accounts, check whether the provider offers integrated card payment services, but compare merchant costs separately.

Overdraft fees and interest

A business overdraft can help with short-term cash-flow gaps, but it is borrowing. Costs may include interest, arrangement fees, renewal fees or unauthorised borrowing charges.

If you expect to use an overdraft, compare more than the account fee. Look at the overdraft interest rate, facility fee, review fee, security requirements and whether the overdraft is available to your type of business.

Current account providers publish overdraft charge information to help small businesses compare products.

International payment and foreign currency fees

International fees matter if you pay overseas suppliers, receive money from international customers or sell through global marketplaces.

Check for:

International transfer fees
Exchange rate margins
Receiving fees
SWIFT charges
SEPA payment costs
Foreign ATM fees
Multi-currency account support

A business that imports stock, uses overseas freelancers or sells internationally should compare foreign exchange costs carefully. A low monthly fee can be outweighed by expensive international payments.

App, bookkeeping and add-on fees

Some business bank accounts include extra tools. Others charge for add-ons. These might include invoicing, tax pots, receipt capture, bulk payments, team cards, spending controls or accounting integrations.

If an account saves you time on bookkeeping, it may be worth paying for. However, avoid paying for features you do not need.

How to estimate the true cost of a business bank account

To compare business bank account fees properly, estimate your likely monthly usage.

For example, calculate:

Number of incoming payments
Number of outgoing payments
Amount of cash deposited
Number of card transactions
Expected international transfers
Likely overdraft use
Number of users or cards required
Need for branch access
Need for bookkeeping integrations

Then apply each provider’s tariff to your expected usage. This gives a more realistic monthly cost than comparing headline fees alone.

Are free business bank accounts really free?

There are some business bank accounts that have no monthly fees, but that does not always mean no fees at all. You may still pay for cash deposits, international transfers, CHAPS payments, overdrafts, card readers, additional cards or premium features.

A free account can be excellent for a simple business with low transaction volumes. For a growing business, a paid account with bundled transactions or better tools may work out cheaper.

How to reduce business bank account fees

You may be able to reduce business banking costs by:

Using electronic payments instead of cash or cheques
Choosing an account that matches your transaction volume
Avoiding unnecessary CHAPS payments
Keeping overdraft use short term
Checking exchange rates before sending money abroad
Reviewing your account once your business grows
Switching if your fees no longer match your usage

The Current Account Switch Service (CASS) says eligible business current account switches can be free, simple and secure, with regular payments transferred automatically and a seven-working-day switch period.