Credit card processing fees, explained
Credit card processing typically costs a business 1.5% to 3.5% of each sale. Where you land in that range depends on the cards your customers use, how you take payments, and how your processor prices its markup.
Who gets paid when a customer taps a card
Every card sale is split three ways. Only one part is set by the company you sign with.
| Fee | Who sets it | Can you negotiate it? |
|---|---|---|
| Interchange | The customer's card-issuing bank, using rate tables published by Visa, Mastercard and the other networks | No. Every processor pays the same rates. |
| Network (assessment) fees | Visa, Mastercard, Discover and American Express | No. |
| Processor markup | Your processor or merchant services provider | Yes. This is where pricing differs. |
Interchange is the largest share. It varies by card type (debit, rewards, business), by how the card is accepted (tapped or dipped in person costs less than typed in or online), and by the type of business.
The four ways processors price their markup
- Flat-rate: one percentage plus a per-transaction fee for every card. Simple and predictable, but you pay the same markup on a cheap debit card as on a premium rewards card.
- Tiered: cards are sorted into "qualified," "mid-qualified" and "non-qualified" buckets at different rates. The processor decides which bucket each sale falls into, which makes it hard to check.
- Interchange-plus: the actual interchange and network fees, passed through at cost, plus one fixed markup. It's the most transparent model and often the lowest cost for growing businesses. Learn how it works.
- Subscription: a monthly fee plus a small per-transaction charge, with interchange passed through. It can suit high-volume businesses.
Other fees to look for on your statement
- Monthly statement, account or "maintenance" fees
- PCI compliance or non-compliance fees
- Monthly minimums, charged when your fees fall below a set amount
- Batch, gateway and per-authorization fees
- Chargeback fees
- Equipment leases, which often run for years and can't be cancelled
- Early termination fees in multi-year contracts
Eight ways to lower your card processing fees
- Ask for interchange-plus pricing. You'll see exactly what the networks charge and exactly what your processor adds.
- Read your effective rate. Divide total fees by total card sales for the month. It's the one number that lets you compare processors fairly.
- Take cards in person when you can. Tapped and chip transactions usually qualify for lower interchange than keyed or online ones.
- Send full data on online sales. Using address verification and complete order details helps transactions qualify for better rates and reduces fraud.
- Pass Level 2 and Level 3 data on business-to-business sales. Business and purchasing cards can qualify for lower interchange when tax and line-item details are included.
- Settle your batches daily. Transactions settled late can be downgraded to higher rates.
- Remove fees you didn't agree to. Question every line on your statement you can't explain.
- Avoid long-term contracts and equipment leases. They make it expensive to leave when a better price is available.
Some businesses also add a surcharge or offer a cash discount. Card network rules and state laws limit how you can do this, so check the requirements before you start.