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.
How much you’re actually charged depends on factors like the card type and whether the transaction was made in person or online. Ultimately, you want a service that minimizes fees for your business’s sales trends and volume. (Ready to shop? Compare our picks for the best credit card processing companies.)
Here’s how credit card processing fees work and how your business can lower its rates.
advertisement
Featured card placement may be affected by compensation agreements with our partners, but these partnerships in no way affect our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
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 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.
These 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.
These 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.
How much do credit card processing fees cost?
Credit card processing fees vary based on the transaction type (online versus in-person), the customer’s credit card company and the markup your payment processor charges.
Flat-rate payment processing companies combine interchange fees, assessment fees and markups into a set amount (e.g., 2.6% plus 10 cents). Interchange-plus processors, on the other hand, charge a consistent markup (e.g., 0.4% plus 8 cents), but pass varying interchange fees to the merchant.
Here’s a rundown of what you can expect to pay with different processors.
2.29% plus 9 cents for in-person credit and debit card payments.
2.59%-2.99% plus 49 cents for online credit and debit card payments.
3.49% plus 49 cents for PayPal Payments transactions (PayPal, Pay Later, Pay with Rewards, Venmo).
2.6% plus 15 cents for in-person transactions with Free plan.
3.3% plus 30 cents for online transactions with Free plan.
2.5% plus 15 cents for in-person transactions with Plus plan.
2.4% plus 15 cents for in-person transaction with Premium plan.
2.9% plus 30 cents for online transactions with Plus and Premium plans.
3.5% plus 15 cents for manually keyed transactions.
2.7% plus 5 cents for in-person transactions.
2.9% plus 30 cents for online transactions.
3.4% plus 30 cents for manually keyed transactions.
4.4% plus 30 cents for international card transactions.
Interchange plus 0.4% and 8 cents per in-person transaction (if $50,000 or less in monthly card transactions).
Interchange plus 0.5% and 25 cents per online or manually keyed transaction (if $50,000 or less in monthly card transactions).
0.5% plus 25 cents for ACH payments (capped at $6).
Interchange plus and subscription based.
8 cents plus interchange for card-present transactions.
15 cents plus interchange for card-not-present transactions.
2.5%, 2.7% or 2.9% plus 30 cents for online payments for Advanced, Shopify or Basic plan, respectively.
2.4%, 2.5% or 2.6% plus 10 cents for in-person payments for Advanced, Shopify or Basic plan, respectively.
Looking for affordable credit card processing?
Explore NerdWallet’s list of cheapest credit card processing companies and compare prices across each to make sure you’re getting the best deal.
Types of credit card processing fee structures
Credit card processing fees generally fall into the following categories:
Flat-rate, or blended, pricing
Under this pricing structure, you pay a percentage of the transaction total plus a flat fee. For instance, the rate might be 2.6% plus 10 cents for in-person transactions. Square fees, Stripe fees and PayPal fees all fit into this model.
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 for high-volume businesses. However, it also has the greatest variability. Interchange rates change based on the card network (e.g., American Express is typically the most expensive), 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).
This pricing structure consists of the interchange rate charged by the credit card network plus a defined markup, or transaction fee, which goes to the processing company. Like flat-rate and tiered pricing, you will pay a percentage plus a fee per transaction. This is the pricing structure used by companies like Finix, Dharma and Payment Depot.
Subscription-based pricing
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?
“I used the calculator on this page (see below) to compare fees across both types of processors. It turns out that flat-rate pricing might be just as economical — if not less expensive — for businesses with lower average transaction amounts (e.g., under $50) and doing less than $8,000 in card transactions per month. Doing that same kind of math can help you make an informed decision for your own business.”
How to calculate your credit card fees
Use this credit card processing fee calculator to see how monthly payment processing costs will vary based on transaction rates and how you accept credit card payments (e.g., online versus In person).
If you have a payment processor in mind, enter the provider’s rates in the calculator — or an estimate of average rates for interchange-plus pricing — to estimate how much the service will cost each month.
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
Small businesses can pass credit card fees to customers by implementing a cash discount program or credit card surcharge. With a cash discount program, customers receive a small discount for choosing to pay with cash instead of card. Credit card surcharges are similar in that the business tacks an extra fee on purchases made with a card.
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.
It’s best to work with a processor that doesn’t charge statement fees, minimum monthly processing fees, PCI compliance fees or terminal lease fees. But if that’s not an option, and you see these fees on your statement, pick up the phone and ask if any of those charges can be waived or avoided in the future.
Keep your chargeback rate low
Your chargeback rate is the percentage of transactions disputed by customers — for instance, because of unauthorized card use, billing errors or unresolved disputes about the quality of the items purchased. Chargeback fees can be costly, often $20 to $100 per dispute on top of refunding the complete transaction, and high rates of chargebacks can cause providers to increase your transaction fees.
Minimize chargebacks by using contactless and chip card readers to reduce your liability in case of credit card fraud, and by offering return policies, good customer service and quick responses to any customer complaints.
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
What is the typical fee for credit card processing?
The typical fee for credit card processing ranges from 1.5% to 3.5% of the total transaction.
Who pays credit card processing fees?
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.
Who gets the processing fees for credit cards?
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).
Why are card processing fees so high?
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.
What is the typical fee for credit card processing?
The typical fee for credit card processing ranges from 1.5% to 3.5% of the total transaction.
Who pays credit card processing fees?
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.
Who gets the processing fees for credit cards?
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).
Why are card processing fees so high?
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.
