Credit Card Processing Fees: Everything You Need To Know

As a small business owner, you’ve probably noticed credit card processing fees eating into your profits with every swipe. However, you also know that many customers prefer and expect to pay by card.
So, how do you deliver on customer expectations without cutting into profits? The first step is to understand how credit card fees work.
In this article, we’ll review the different credit card fees you might encounter. Plus, we’ll look at typical fee rates and when fees are assessed.
We’ll wrap up with strategies you can use to lower how much your business pays.
Let’s get started.
What Are Credit Card Processing Fees?
When you process credit cards in your business, you’re paying for convenience. These processing fees typically range from 1.5% to 3.5% of each transaction. Here’s an example. On a $500 sale, you could pay anywhere from $7.50 to $17.50 to process that credit card payment.
Behind every transaction, a team of companies works to process your payment. Your payment processor manages the transaction, while banks and card networks like Mastercard each play their part.
While accepting credit cards can boost your sales potential, understanding the transaction fees helps you manage them better.
Your rates depend on a few factors, like which major credit cards your customers use and how you handle transactions. Processing credit cards online? You usually pay more than with in-person sales because of higher fraud risks.
Your industry matters, too. High-risk businesses like travel agencies face steeper fees than low-risk ones like grocery stores.
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Types of Credit Card Processing Fees

Ever look at your merchant statement and wonder where all those fees come from? What’s a processing fee in the context of credit cards, exactly?
Let’s explore the 3 main types of credit card processing fees you might see:
Interchange Fees
Interchange fees, also called “swipe fees,” take the biggest bite out of your profits. Interchange fees go straight to the banks that issue credit cards, like Chase or Bank of America.
These transaction fees vary based on the card type, how much the sale was for, and your industry type. Online purchases usually come with higher interchange fees because they carry more risk for fraud.
Assessment Fees
You also pay assessment fees to major credit card networks like Visa and Mastercard. Think of them as maintenance transaction fees for using their payment networks.
These are usually based on your monthly sales rather than individual transactions, unlike other credit card processing fees
Payment Processing Fees
The final piece comes from your payment processor. Companies like Square and Stripe handle the actual mechanics of processing credit cards.
They might charge:
- Monthly service payment processing fees
- Per-transaction payment processing fees
- Equipment rental payment processing fees
- Statement payment processing fees
- Account maintenance payment processing fees
- Withdrawal payment processing fees
Not every payment processor charges all these fees. Plus, you can often negotiate.
For example, you might get a better deal with your payment processors if you often go through high volumes of credit card payments.
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3 Types of Pricing Models for Processing Fees

Not all payment processors structure their fees the same way. Understanding the different pricing models can help you choose the right one for your business.
Let’s look at 3 common ways credit card processors charge merchants:
1. Flat-Rate Pricing
With flat-rate pricing, you pay one simple rate that covers all your credit card processing costs. This makes it easier to know what you pay and plan accordingly.
For example, popular payment processor Square charges:
- In-person transaction fee: 2.6% plus 10 cents
- Online transaction fees: 2.9% plus 30 cents
If a customer makes a $100 purchase in your store, you’ll pay $2.70 in transaction fees on credit cards ($2.60 plus 10 cents). Simple math, simple planning.
2. Interchange-Plus
For transparent pricing, interchange-plus might be your best bet. With this model, merchants pay the basic interchange fee plus a set markup.
While it often saves you money, your credit card processing fees may vary month to month.
Helcim is a payment processing company that uses this model. It charges:
- In-person transaction fees: 1.83% + 8 cents for Mastercard, Visa, and Discover, 2.61% + 8 cents for American Express
- Online transaction fees: 2.27% + 25 cents for Mastercard, Visa, and Discover, 3.01% + 25 cents for American Express
Imagine you ring up a $100 sale through your online store with a Visa card. Your processing fees would be $2.52 ($2.27 plus a quarter for the transaction).
3. Subscription Pricing
Some payment processors offer a different approach. Instead of taking a percentage of each sale, they charge a monthly subscription fee. You might also pay a small, fixed fee per transaction.
Stax uses this model. It charges:
- Monthly subscriptions starting at $99
- 8 to 15 cents per transaction
Each transaction fee is just a few cents after you square your monthly payment processing bill.
This can work great for merchants with high sales volumes. Your credit card processing fees stay low even as your sales grow.
Typical Credit Card Network Fees
Different major credit card networks charge different rates. Let’s break down what credit card fees you can expect to pay for each one, according to Forbes:
Visa
When merchants accept Visa credit cards, they typically see interchange fees between 1.15% plus 5 cents and 2.40% plus 10 cents. The assessment fee is 0.14%. Merchants find Visa’s credit card processing fees predictable and easy to plan for.
Mastercard
Mastercard’s interchange fees are similar to Visa’s: 1.15% plus 5 cents to 2.50% plus 10 cents. Mastercard’s assessment fee is about 0.1375% for transactions under $1,000. For bigger sales over $1,000, that drops to 0.01%.
Discover
Discover’s fees are similar to those of Visa and Mastercard. Expect interchange fees between 1.35% plus 5 cents and 2.40% plus 10 cents. Its assessment fee is 0.13%.
American Express
American Express is known for higher credit card processing fees. Its interchange rates typically run from 1.43% plus 10 cents to 3.30% plus 10 cents. You’ll also see a 0.15% assessment fee.
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6 Tips To Lower Your Credit Card Processing Fees

Every penny you save on credit card processing fees is a penny back in your business.
Here’s how savvy merchants keep more of their hard-earned money:
1. Shopping Around and Negotiating
Don’t settle for the first payment processor you find. Get quotes from several and compare their credit card rates for merchants.
Many merchants find they can negotiate better deals by showing competing offers. Processing high volumes of credit card payments? Use that as leverage.
2. Keep It Safe and Simple
If you can, focus on in-person transactions instead of online. They’re safer for payment processors, so they cost less.
Here are some smart moves:
- Use chip readers and contactless payments
- Set up address verification for all transactions
- Keep good records of every sale
Additionally, some merchants offer cash discounts. To motivate customers to make purchases in cash rather than credit, the merchant applies a small discount to cash purchases.
3. Fighting Chargebacks
Chargebacks cost you money each time they happen, which can add up. Plus, too many chargebacks can lead to higher credit card processing fees.
Protect your business by:
- Using secure payment processing equipment
- Writing clear return policies
- Responding quickly to customer concerns
- Keeping detailed transaction records
4. Cutting Out Extra Fees
Take a close look at your merchant statement. Are you paying for monthly statements? Terminal leases? Minimum credit card processing fees?
Ask your payment processor to give you a discount or waive these fees. Some merchants save a bundle each year by reviewing statements and speaking up.
5. Negotiating Like a Pro
Here’s how to negotiate better credit card processing fees for small businesses:
- Keep detailed records of your credit card payment volumes
- Know your average transaction size
- Track your chargeback history
- Research competitor rates before you start talking
- Ask about rate matching if you find a better deal
Payment processors want to hold onto reliable merchants. If you consistently process credit cards and maintain good business practices, you’re valuable to them. Use that to your advantage in negotiations.
6. Handling Payment Disputes
When customers dispute charges, you risk both chargeback fees and higher credit card processing fees. Take clear photos of damaged returns and save all customer communications. The more records you have, the more leverage you have.
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