What are credit card processing fees and how to lower your fees

What are credit card processing fees?

Credit card processing fees are the costs businesses pay to accept credit card payments. Each of the parties involved in the payment process takes a cut of the transaction, including the card-issuing bank, payment network, and payment processor.

The biggest cut, the interchange fees, are also known as credit card swipe fees. Although people often use swipe fees when referring to all credit card processing fees, this isn’t technically correct. Processing fees encompass the full transaction fee, whereas swipe fees are just the interchange portion.

How much do credit card processing fees cost?

Merchants generally pay 1.5% to 3.5% per credit card transaction. According to the Merchants Payments Coalition (MPC), the average Visa and Mastercard processing cost is approximately 2.35%, though actual costs vary by merchant type, transaction method, and card mix.

Actual costs vary depending on the following factors:

• Payment network: Visa, Mastercard, Discover, and American Express each have their own rates.
• Card type: Premium cards tend to have higher processing fees than more basic options.
• Transaction method: Fees differ based on whether the card is present or not present (like in online and phone transactions).
• Type of business: The merchant’s industry affects the level of risk in a transaction and its credit card processing fees.

Typical ranges by transaction type

Processing fees for in-person transactions typically range from about 1.8% to 2.6%, plus a flat fee of $0.08. Rates for online and keyed transactions, where the card number is manually entered, typically range from 2.25% to 3%, plus a flat fee of $0.25.

Debit card processing fees are much lower than average credit card processing fees, ranging from about 0.5% to 1.5%. The primary reason is that the Federal Reserve Board has capped debit card fees for larger banks since the passage of the Durbin Amendment.

What are the main types of credit card processing fees?

The main types of credit card processing fees are interchange fees, assessment fees, and payment processor fees.

Interchange fees

Interchange fees go to the card-issuing bank and are the largest portion of credit card processing costs. Even though the card issuer receives the interchange fee, the payment network determines the fee amount. If a customer pays with a Chase Visa card, Visa sets the interchange rate, but the fee goes to Chase.

*Data collected Feb. 20, 2026 and subject to change. For the most current rates, refer to the card network’s published interchange tables.

Card-not-present transactions cost more because they present a greater risk of fraud. Other factors that affect rates are the card type, with fees being higher for premium cards, and the merchant category.

Assessment fees

Credit card assessment fees go to the card network (Visa, Mastercard, Discover, or American Express) for the use of its payment infrastructure. This is normally the smallest processing fee, and it’s nonnegotiable, as it’s set by the card network.

*Data collected Feb. 20, 2026 and subject to change.

Payment processor fees

Payment processors facilitate card payments for merchants. They provide payment platforms and equipment, transaction routing, security, and customer support.

Fee structures and amounts vary significantly depending on the payment processor, and they may include per-transaction charges, monthly fees, and equipment costs. Unlike interchange and assessment fees, credit card processor fees are negotiable.

What determines your credit card processing fees?

The biggest factors that affect your credit card processing fees are card type used, transaction method, type of business, and transaction volume. Here’s a closer look at each factor.

Card type

Payment networks group cards into tiers. Premium cards in higher tiers have more features than basic cards in lower tiers, so they also have costlier interchange fees to help fund those benefits.

For example, Visa has Visa Traditional, Visa Signature, and Visa Infinite lines. Processing fees cost more if a customer pays with a Visa Infinite card than if they pay with a Visa Traditional card. Mastercard is similar, as it has its regular Mastercard line, World Mastercard, and World Elite Mastercard.

Business credit cards and corporate cards are normally grouped with premium cards, so they also have larger payment processing fees.

Transaction method

In-person transactions/CP transactions cost less than CNP transactions. CNP transactions include online and phone orders, as well as any other situation where the merchant doesn’t process the payment using the physical card.

The difference in cost is due to the fraud risk. Credit card fraud is more common with CNP transactions because scammers only need a card number and don't need to steal or clone a physical card. Processing fees cost more for CNP transactions to account for the elevated fraud and chargeback rates.

Business type and industry

Your payment processor assigns a Merchant Category Code (MCC) to your company based on the type of business you have. The MCC affects your interchange rates. Industries that are seen as a higher risk pay more in processing fees. For example, an online gambling site is much more prone to fraud than a supermarket, and would pay higher fees as a result.

Transaction volume

Many payment processors offer discounts for high-volume merchants. For example, Square offers custom pricing plans for businesses that process over $250,000 in payments per year, and Helcim offers discounts starting at $50,000 in monthly sales volume.

Your average transaction size can also impact how much you pay in fees. If your business mainly handles big ticket orders, it could qualify for lower rates.

Credit card processing pricing models

Most payment processors use one of four pricing models: flat-rate, interchange-plus, tiered, and subscription pricing. By understanding how each model works, you can choose the one that’s right for your business.

Flat-rate pricing

• Best for: Small businesses with low volume or inconsistent sales

Many flat-rate plans don’t include monthly fees, though some providers offer subscription tiers. The flat rate normally consists of a fixed percentage of the transaction plus a small cash fee. For example, Square charges a flat 2.6%+$0.15 for in-person transactions on its Square Free plan. The flat-rate model is straightforward, easy to understand, and predictable. It also typically doesn’t include any monthly fees. But you may pay more than necessary, particularly on basic card transactions that have low interchange fees.

Interchange-plus pricing

• Best for: Businesses with consistent volume seeking the lowest rates

Interchange-plus pricing is the actual interchange rate plus a fixed processor markup. Helcim is one payment processor that uses interchange-plus, with in-person transactions starting at interchange+0.40%+$0.08.

The interchange-plus model is the most transparent, since it’s based on the actual interchange costs. It’s often the cheapest option for established businesses with stable sales volume. On the downside, your business will have more complex billing statements, and costs can vary quite a bit depending on the card type.

Tiered pricing

• Best for: Not recommended

Tiered pricing groups transactions into qualified, mid-qualified, and non-qualified tiers. Payment processors categorize transactions based on the card type, transaction method, and the level of risk. In-person transactions with basic credit cards generally land in the qualified tier and have the lowest rates. CNP transactions with premium rewards cards are likely to be non-qualified and cost significantly more.

Although tiered pricing may seem simple at first, it’s the least transparent model, with the payment processor having full control over tier assignments, and it’s often the most expensive.

Subscription (membership) pricing

• Best for: Established businesses with consistent, high transaction volume

Subscription pricing charges a monthly fee and the actual interchange costs with minimal markup. Stax, which uses this model, has membership fees starting at $99 per month for processing up to $150,000 per year. It has a 0% markup on interchange fees and a fee of $0.08 per transaction for in-person transactions.

The subscription model can be the best deal for high-volume businesses, enabling you to lock in an extremely low rate in exchange for a monthly fee. It only works for businesses with stable sales volume, though, since you still need to pay the monthly fee during slow months.

How to calculate credit card processing fees

You can use the following formula to calculate credit card processing fees:

• Total fees = (Transaction Amount x Percentage Rate) + Fixed Fee

Imagine your payment processor uses the interchange-plus model and charges you interchange+0.40%+$0.08. You process a $100 transaction with interchange fees of 2.10%. Here’s how to calculate the fees:

1. Add the interchange fees (2.10%) to your processor’s markup (0.40%) to get the total percentage fee: 2.50%.
2. Multiply the percentage fee (2.50%) by the transaction amount ($100) for a total of $2.50.
3. Add $0.08 for a final total of $2.58.

The $2.58 in fees are taken out of the transaction, and your business receives $97.42.

Comparison of major payment processors

Here’s a comparison of what several top payment processors charge and their key features.

PayPal Checkout

• In-person rate: 2.29%+$0.09
• Online rate: 2.99%+$.049
• Monthly fees: N/A
• Key features:
• • Competitive flat-rate pricing
  • Allows merchants to offer installment payment plans
  • Connects to other payment service providers in a single platform

Square

• In-person rate:
• • Square Free: 2.6%+$0.15
  • Square Plus: 2.5%+$0.15
  • Square Premium: 2.4%+$0.15
• Online rate:
• • Square Free: 3.3%+$0.30
  • Square Plus: 2.9%+$0.30
  • Square Premium: 2.9%+$0.30
• Monthly fees:
• • Square Free: $0
  • Square Plus: $49
  • Square Premium: $149
• Key features:
• • Free plans and subscription plans available with flat-rate pricing
  • Businesses with over $250,000 in annual volume may be eligible for custom pricing and fees
  • Built-in features for selling online

Stripe

• In-person rate: 2.7%+$0.05
• Online rate: 2.9%+$0.30
• Monthly fees: N/A
• Key features:
• • Flat-rate pricing with custom options available for companies with large payments volume
  • Develop a custom POS system or choose from hundreds of third-party POS and commerce integrations
  • Accept credit and debit cards, digital wallets, and buy now, pay later

Shopify Payments

• In-person rate:
• • Basic: 2.6%+$0.10
  • Grow: 2.5%+$0.10
  • Advanced: 2.4%+$0.10
  • Plus: Custom pricing for high-volume businesses
• Online rate:
• • Basic: 2.9%+$0.30
  • Grow: 2.7%+$0.30
  • Advanced: 2.5%+$0.30
  • Plus: Custom pricing for high-volume businesses
• Monthly fees:
• • Basic: $29 per month (billed yearly) or $39 per month (billed monthly)
  • Grow: $79 per month (billed yearly) $105 per month (billed monthly)
  • Advanced: $299 per month (billed yearly) or $399 per month (billed monthly)
  • Plus: Starting at $2,300 per month on a three-year term
• Key features:
• • Subscription model with flat-rate pricing
  • Built into the Shopify platform

Helcim

• In-person rate: Based on monthly credit card volume
• • $0-$50,000: Interchange+0.40%+$0.08
  • $50,000-$100,000: Interchange+0.35%+$0.07
  • $100,000-$500,000: Interchange+0.25%+$0.07
  • $500,000-$1,000,000: Interchange+0.20%+$0.06
  • $1,000,000+: Interchange+0.15%+$0.06
• Online rate: Based on monthly credit card volume
• • $0-$50,000: Interchange+0.50%+$0.25
  • $50,000-$100,000: Interchange+0.45%+$0.20
  • $100,000-$500,000: Interchange+0.35%+$0.20
  • $500,000-$1,000,000: Interchange+0.25%+$0.15
  • $1,000,000+: Interchange+0.15%+$0.15
• Monthly fees: N/A
• Key features:
• • Transparent interchange-plus pricing model
  • Discounts available based on sales volume

Stax

• In-person rate: $0.08
• Online rate: $0.15
• Monthly fees: Based on annual sales volume
• • Up to $150,000: $99 per month
  • $150,000-$250,000: $139 per month
  • $250,000+: $199 per month
• Key features:
• • Subscription pricing model
  • 0% markup on direct-cost interchange

Pricing and fees listed are publicly available as of Feb. 20, 2026 and are subject to change. Contact providers directly for current terms.

How to lower your credit card processing fees

Since credit card processing fees are one of the biggest business expenses, it’s in your best interest to get them as low as possible. Here’s how to do that.

Compare multiple processors and negotiate

Get quotes from at least three to five payment processors to see what kind of rates they can offer your business. Payment processor rates are often negotiable, especially if you have an established business with solid and consistent sales volume. Don’t hesitate to ask if a processor can discount its rate or beat another offer that you have from one of its competitors.

It’s worth doing this on an annual basis to see if you can reduce your operating expenses. Go comparison shopping and consider checking in with your current processor to renegotiate your rates.

Choose the right pricing model

Ensure that your payment processor’s pricing structure is a good match for your business’s volume and transaction patterns. The pricing model frequently makes a significant difference in overall processing costs.

For established businesses, interchange-plus pricing is usually the most cost-effective option. Because fees are based on the actual interchange rates, there’s no risk of paying much more than the transaction actually costs, like there is with flat-rate and tiered pricing.

Encourage card-present transactions

Processing fees are lower for in-person transactions where the customer inserts, taps, or swipes their card. Keyed transactions where the card number is manually entered cost you more.

You might not be able to avoid keyed transactions entirely, but you can ensure that in-person transactions are the default at your business. Encourage employees to use card readers whenever possible and avoid manually typing in card numbers. If your business accepts pickup orders online or by phone, consider opting for in-person payments at the time of pickup instead of having customers pay in advance.

Optimize your transaction process

When your business processes a transaction, it’s initially grouped into the interchange category with lowest fee for that type of transaction. But if your business doesn’t settle the transaction within a specific timeframe, generally 24 or 48 hours, the transaction could be downgraded to a more expensive category.

To prevent downgrades, settle transaction batches daily and include all the required transaction data, such as the customer’s address for online orders.

Also, do your best to avoid unnecessary refunds and chargebacks. While every business deals with these to some extent, a secure transaction process can help keep them to a minimum.

Consider surcharging

Many states allow businesses to add a credit card surcharge to transactions, under a few important conditions:

• You must notify customers in advance of the surcharge and include the surcharge fee on all receipts.
• Surcharges can’t exceed your actual credit card processing fee on the transaction.
• State laws on credit card surcharges vary, with Connecticut, Maine, and Massachusetts all banning the practice. Check the laws in your state before adding a surcharge.

Although you can recoup your credit card fees by surcharging, it may impact customer satisfaction. You’ll need to weigh whether the money you save is worth potential frustration and even customers taking their business elsewhere. Keep in mind that laws and card network rules change frequently. Always consult current state law and card network requirements before implementing surcharging.

Review your statement regularly

Do a monthly audit of your statement to stay on top of your business finances. Look for unexpected fees or rate increases, which can happen if you have downgraded transactions, or if you receive a volume-based discount but don’t meet the sales minimum.

By reviewing your statement, you can quickly identify issues and adjust your strategy accordingly. For example, if you incur costly fees because your business processes lots of small transactions, you could institute a minimum for credit card purchases. (Subject to card network rules, which typically limit minimums and prohibit minimums on debit card transactions.)

Can you pass credit card processing fees to customers?

You can pass credit card processing fees to customers through a surcharge, provided you comply with legal regulations and payment network rules. A surcharge is a percentage-based fee added to credit card transactions to cover the merchant’s processing costs. You can’t surcharge debit card payments–only credit cards.

Many states have laws governing credit card surcharges, and three (Connecticut, Maine, and Massachusetts) ban them entirely. Card networks require that you notify customers about credit card surcharges and that the surcharge doesn’t exceed your actual processing costs.

Credit card surcharges aren’t the same as convenience fees, which are flat fees for payment methods outside a merchant’s usual payment channels. For example, if a landlord normally accepts checks or money orders, it could add a convenience fee for online payments. This fee would be for all online payments, regardless of the payment method.

Surcharging is fairly common. In a 2026 J.D. Power survey, 35% of small businesses said they include credit card surcharges. However, 32% said that customers occasionally or frequently cancel a purchase when a surcharge is added. Before surcharging, carefully evaluate if the cost savings is worth the possible pushback.

How do credit card processing fees impact consumers

Credit card processing fees cost businesses $148.5 billion in 2024, according to the Merchants Payments Coalition (MPC). Most merchants incorporate processing fees into their pricing, effectively passing the costs onto consumers. The MPC also found that credit and debit card processing fees drive up prices by nearly $1,200 per year for the average American family.

A point of contention is that while everybody bears the burden of higher prices, not all consumers benefit equally from credit cards. Interchange fees are one of the reasons issuers can offer credit card rewards programs and other valuable features, as the fees help fund these benefits. Some consumers leverage these benefits to save hundreds or thousands of dollars every year.

However, there are also many who pay with cash, debit cards, or basic credit cards that don’t have all the bells and whistles. When merchants raise prices because of processing fees, it also affects these consumers.

How often do card networks update interchange fees?

The Visa and Mastercard networks typically update interchange fees twice per year in April and October. Most changes are small adjustments, but they can still impact your company’s bottom line.

Payment processors should notify merchants of significant changes. Still, it’s wise to stay informed about rate changes yourself, too. You can keep up with credit card processing fees through your payment processor. Visa and Mastercard also publish their interchange rates online.

Frequently asked questions