⏰ 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.
How much you’re actually charged depends on factors like the card type and whether the transaction was made in person or online. Ultimately, the best credit card processing company for you will offer fees that are manageable based on your business’s sales trends and volume.
Here's how credit card processing fees work and how your business can lower its rates.
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Helcim
Helcim POS
NerdWallet Rating
4.5
Starting At
0.40% + 8¢
plus interchange, in-person; 0.50% + 25¢ plus interchange, online.
Learn more
on Helcim's website
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:
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.
Card network charges can change due to variables like transaction or business type. For example, interchange fees are typically higher for online versus in-person transactions and high-risk industries versus low-risk ones.
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
Take a behind-the-scenes look at what happens each time you swipe a credit card, as both a merchant and consumer.
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.
Here’s a rundown of how much popular payment processing companies charge businesses for in-person and online transactions, along with which type of pricing structure they use.
Pricing structure | Payment processing fees | |
|---|---|---|
Square | Flat rate. |
|
Stripe | Flat rate. |
|
Helcim | Interchange plus. |
|
Finix | Interchange plus and subscription based. |
|
Shopify | Flat rate. |
|
Credit card processing fees generally fall into the following categories:
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. 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).
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.
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 this calculator 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.”
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.
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.
Sidestep avoidable fees
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
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?
Explore NerdWallet’s collection of top credit card processing companies and compare your estimated monthly costs for each.
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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