In this day and age, almost every business accepts credit cards. It’s important to allow customers to pay by credit or debit card because It’s convenient and customers can make unplanned purchases with ease, but one look at the various fees that go into each transaction done with a credit card could make you doubt that decision.

But don’t worry; we’ve got you covered in our guide to credit card processing fees. We’ve broken down the ways in which credit card companies, processors and banks charge businesses for allowing consumers to use credit cards.

What are credit card processing fees?

In short, credit card processing fees are the fees that merchants or sellers pay for the ability to accept credit card payments from your customer.

While a credit or debit card transaction is being processed, the point-of-sale machine sends the data to multiple places to verify or decline the transaction. If it is approved, the money is sent from the credit card issuer’s financial institution to yours. Along the way, another fee is deducted by the company responsible for setting up and facilitating the process also known as the payment processor.

Even though this unseen sequence of events is happening automatically when the customer inserts or swipes their card, there are many other people involved in the transaction. The process is automated, but there are troubleshooters for when problems arise, coders, and people who oversee the accounts and handle customer service. The processing fees merchants pay go toward these expenses like but also for markup of the service, and, in the case of the credit card issuer, the rewards that they give their rewards credit card holders.

Three types of credit card fees that affect your rate

There are three types of fees that go into determining how much you pay per credit or debit card transaction.

Interchange fees are a percentage of the total sale paid to the customer’s credit card issuer. Each credit card network sets its own fees that are updated twice a year. These fees, in part, offset the risk the card issuer is taking on by approving the sale, the handling costs and potential fraud expenses.

Dues and assessments, sometimes called service fees, are the money that you pay to the credit card network for the ability to process the transactions and use of the card brand. These fees vary by network, with tiered pricing for the size of the transaction or whether the customer used a credit card or a debit card. Debit cards which use a PIN are considered safer and usually incur a lower fee than credit cards. Like the interchange fee, these are revised twice a year.

The payment processor’s fee is paid to the processing company for use of its service to facilitate and process the payment between you, the customer and the credit card issuer. It’s a markup fee and often charged per transaction using the interchange rate plus a flat fee. Since you have the ability to switch payment processors, you also have the ability to negotiate pricing terms and other one-time or annual fees charged for the provider’s services.

As you do research about what’s needed to get set up to accept credit card payments, remember to pay particular attention to the payment processor fees, as these fees will vary between providers. They might charge the interchange fee plus $0.15 per transaction but have better benefits than a competitor who only charges interchange plus $0.10. All three of these fees go into the overall rate that you pay per credit card transaction.

How can you reduce credit card transaction fees?

You can expect credit card fees to take 1.7% to 3.5% of the transaction total. However, there are a few ways in which you can lower the fees so that you can keep more of your hard-earned money as profit.

The easiest way to keep credit card processing fees low is to always swipe the card rather than key in the information. Swiping the card, or having the customer insert the chip into the card reader, proves that the customer is there in the store and can verify with their signature,thus lowering the risk of accepting a stolen card.

Another way to both enjoy lower fees and protect yourself from accepting a fraudulent card is to set up your system to require address verification. There are different ways to do this: you can ask for just the ZIP code or the full address. This data is then transferred to the credit card issuer and verified with the customer’s information. If it’s not a match, the card is declined.

You can also negotiate with your credit card processing service for lower fees. This is especially helpful if you have a large transaction volume. The company will still be making money on all of the transactions, so it’s in its best interest to keep you as a client by offering you a discount.


Now that you see all of the credit card processing fees that go into accepting cards, don’t let that turn you off accepting plastic. Consumers crave convenience and don’t carry cash and checkbooks like they used to. Not accepting credit cards could break an otherwise easy sale. Even though you’ll pay a percentage of it in fees, it’s still advantageous for you to accept credit cards.

Understanding the options you have when choosing a processor will help you control your expenses when it comes to ongoing fees that aren’t tied to individual transactions. As always, shop around for payment processors so that you get one that fits the needs of your business.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.