Credit Card Processing Fees: A 2024 Guide for Businesses
⏰ Estimated read time: 8 minutes
Credit card processing fees typically cost a business 1.5% to 3.5% of each transaction’s total. For example, you’d pay $1.50 to $3.50 in credit card fees for a sale of $100.
Here’s how credit card processing fees work and how your business can lower its rates.
Starting At
2.7% + 5¢
in-person; 2.9% + 30¢ online.
What are credit card processing fees?
Credit card processing fees are charges that merchants pay to enable and complete card transactions. How much your business owes will depend on multiple underlying factors and the various financial institutions — usually credit card companies, issuing banks and payment processors — involved in this process.
Here’s a breakdown of the charges that make up credit card processing fees:
Interchange feesInterchange fees make up the largest portion of the credit card processing fee that goes to the issuing bank, which manages the credit card used to make the payment. Examples of credit card issuer banks include Chase, Citi and Bank of America.
Assessment feesThese fees are directed toward the card networks, such as Visa, Mastercard, Discover and American Express, and help pay for their operating costs. The networks are also responsible for setting them.
Payment processor feesThese costs go to the processor, which is the company that manages the logistics of getting card payments processed for your business. Processors include Square, Stax and Helcim. Depending on your payment processing company, there may be room to negotiate these fees.
Looking for affordable credit card processing?
How much do major credit card companies charge?
The following table shows average merchant fees for major credit card networks based on estimates from the payment processor Payment Depot.
Card network |
Average merchant fees |
---|---|
American Express |
2.3%-3.5% |
Discover |
1.55%-2.5% |
Mastercard |
1.5%-2.6% |
Visa |
1.4%-2.5% |
Learn more about how credit card transactions are processed
How much do payment processing companies charge?
The two main types of payment processing pricing structures are flat rate and interchange plus. For each transaction, flat-rate processors charge a set amount that includes all processing fees. Interchange-plus processors separate those fees so it’s easier for you to see how much each costs.
Pricing structure |
Payment processing fees |
|
---|---|---|
Square |
Flat rate. |
|
Stripe |
Flat rate. |
|
Helcim |
Interchange plus. |
|
Finix |
Interchange plus and subscription based. |
|
Shopify |
Flat rate. |
Types of credit card processing fee structures
Credit card processing fees generally fall into the following categories:
Blended pricing is straightforward and predictable; however, it can also be more expensive overall than the other pricing structures.
This is based on three tiers: qualified (debit cards and cards without rewards programs), mid-qualified (cards with certain rewards programs) and non-qualified (corporate cards and cards with generous rewards programs). Rates are lowest for qualified cards and highest for non-qualified cards.
Like flat-rate pricing, tiered pricing is represented as a percentage plus a flat fee. With this pricing structure, your processing fees will vary based on the kind of card you accept. It’s usually a little less expensive than flat-rate pricing, but it can be higher than interchange-plus pricing.
Interchange-plus pricing is often the least expensive option. However, it also has the greatest variability. Interchange rates change based on the card network, type of card used (e.g., rewards cards usually cost more to process than non-rewards cards) and type of transaction (e.g., online transactions are typically more expensive to process than in-person ones).
Some providers also offer subscription-based pricing, which could be the least expensive processing option for some high-volume businesses. Under the subscription-based, also called membership-based, pricing model, processors do not take a percentage of your sales. Instead, they earn the bulk of their revenue by charging monthly or annual subscription fees, sometimes with fixed per-transaction fees. Stax, for example, charges fees starting at $99 per month and 8 cents per in-person transaction plus the interchange fee.
💬 From our Nerds: Weighing interchange-plus vs. flat-rate options
“I’m in the process of choosing a payment processor for my husband’s brewery. Initially, I was going to choose a flat-rate processor for convenience’s sake, but what if he could save more money with an interchange-plus one?
How to calculate your credit card fees
How to offset your credit card processing fees
Here’s how you can save money on credit card processing fees.
Pass credit card fees to consumers
In both cases, businesses need to follow specific rules and regulations. For example, credit card surcharge programs aren’t legal in Connecticut, Massachusetts and Puerto Rico. Additionally, remember to consider your customer base and how you’ll roll out the program.
Keep your chargeback rate low
Collect quotes from multiple processors. If you find more favorable pricing elsewhere, take the quote to your current processor. The company might match the offer or provide lower rates. If that doesn’t happen, the quotes can help you decide whether the savings are substantial enough to justify switching processors.
Ready to choose a payment processing company?
Frequently Asked Questions
The typical fee for credit card processing ranges from 1.5% to 3.5% of the total transaction.
Merchants typically pay credit card processing fees, though these fees are an operating cost and thus can affect how merchants price their goods and services.
Processing fees for credit cards are distributed to the card’s issuing bank (interchange fee), the credit card network (assessment fee) and the processor that facilitates the payments process for your business (payment processor fee).
Credit card processing fees encompass three types of fees (interchange, assessment and payment processing) that get distributed to three separate financial institutions (issuing bank for the card, credit card network and payment processor) involved in facilitating the card payment process. All of these fees together, therefore, can add up to a decent percentage of the total sales transaction.
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