if i am paid by credit card, it appears quickbooks will charge me 1.2% (vat) & 20p on every transaction & 20%, if my customer pays me £400 does it cost me £85 in fees?

The 20% VAT applies only to the processing fee, not to the total customer payment amount.
 

For example, if your customer pays £400 by credit card and the processing fee is 1.2% + 20p:
 

• 1.2% of £400: £4.80

• Fixed fee: £0.20

• Processing fee (before VAT): £5.00

• VAT on the processing fee (20%): £1.00
   

Total fee: £6.00 (instead of £85.00).
 

The amount you receive would therefore be £394.00 (before any other applicable transaction fees).
 

If you have additional questions, please feel free to reply to this thread.