Card Processing Fees Cost UK Small Businesses Billions. Zeller Is Betting It Can Fix That.

Australian payments fintech Zeller has officially entered the UK market, targeting a card processing industry where merchants pay an average transaction fee of 1.65%, a rate the company estimates costs the sector £5.2 billion annually. The Melbourne-founded startup, which reached unicorn status in under four years, opened a London office in Holborn with 18 staff and reported over 100 business sign-ups before its public launch date.

The move marks Zeller's first international expansion since its 2020 founding, and it arrives at a pointed moment. In Australia, the Reserve Bank of Australia (RBA) is set to ban card surcharging in October 2026, a regulatory shift that is intensifying competition among payment providers for cost-conscious merchants. Zeller says it will save Australian business owners more than A$21.8 million in EFTPOS hardware and transaction fees in the current financial year.

Why Is the UK Payments Market Still This Expensive?

The UK banned card surcharging for consumers in 2018 under the Payment Services Regulations, which brought the country into line with EU rules. That policy, however, shifted the cost burden entirely onto merchants rather than eliminating it, a dynamic that has kept average transaction fees elevated relative to markets with more competitive acquiring infrastructure. Unlike Australia, where the RBA has actively regulated interchange fees since 2003, the UK's market has relied primarily on competitive pressure from new entrants to drive down costs. That pressure has been uneven.

Zeller's pitch to UK merchants centres on up to a 35% reduction in card processing fees compared to incumbent providers, according to the company's own estimates. Its product bundles payments hardware, transaction processing, and business banking tools into a single platform, a model it has used to displace legacy bank terminal rentals in Australia, where more than 100,000 businesses, including Domino's Pizza and Chatime, now use its infrastructure.

How Does Zeller's UK Entry Compare With Other Australian Fintech Expansions?

Zeller's trajectory in Australia has been faster than several high-profile comparisons: the company says it reached unicorn status more quickly than Airwallex, Afterpay, and Atlassian, all of which are now global operations. However, international expansion is where many domestic fintechs face their first genuine stress test. Airwallex, which targets a different segment (cross-border payments for businesses), has built a significant UK presence, while Afterpay's UK growth was later consolidated under Block's global operations following its 2022 acquisition.

The UK fintech market is materially larger than Australia's. Zeller's CEO Ben Pfisterer has described it as "four times" the addressable opportunity, a figure consistent with UK GDP and SME population data. The UK had approximately 5.6 million small businesses as of 2024, compared to roughly 2.5 million in Australia.

"UK merchants have been underserved for too long. Payments are still dominated by legacy providers offering unreliable, outdated, and costly hardware, paired with lengthy sign-up processes."

Ben Pfisterer, co-founder and CEO, Zeller

What products is Zeller offering UK merchants at launch?

Zeller has not disclosed full UK pricing at launch, but its Australian model offers flat-rate transaction fees, no lock-in contracts on hardware, and an integrated business account. The combination is designed to replace the fragmented stack many SMEs operate: a terminal rental from one provider, a merchant account from a bank, and a separate business current account. In the UK, that fragmentation is common among smaller businesses using legacy bank acquiring alongside standalone card readers from providers such as Worldpay, SumUp, or Square.

What Does the RBA Surcharging Ban Mean for Zeller's Australia Business?

The RBA's forthcoming October 2026 ban on card surcharging removes the ability of Australian merchants to pass processing costs directly to consumers, a mechanism that has helped some businesses offset fee pressure from acquirers. When that option disappears, the net cost of payment acceptance becomes more visible on the merchant's income statement, creating a direct commercial incentive to reduce the base transaction rate. Zeller's timing of its UK launch alongside this domestic development is unlikely to be coincidental; demonstrating international growth may strengthen its position as it navigates a more contested domestic market.

Why this matters to FinanceX readers

The Zeller UK entry is a live test case for whether Australia's fintech wave can cross into mature Western markets on price competition alone.

For investors, the key question is unit economics at scale: Zeller's Australia model benefits from a concentrated merchant base and a regulatory tailwind. The UK offers a larger market but higher customer acquisition costs, more entrenched incumbents, and no equivalent of the RBA's structural intervention. The company's ability to replicate A$21.8M in annual merchant savings within a British context, without surcharging reform as a catalyst, will be closely watched. Payments infrastructure remains one of the highest-margin segments in financial services, and any credible challenger that captures even 1% of the estimated £5.2 billion annual fee base changes the competitive calculus meaningfully.

By Koen Vanderhoydonk - FinanceX Magazine