Credit Card Processing Fees 2023

credit card processing fees

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Payment processing fees seem like an irritation at best and a dint in your profits at worst. Yet, ranging between 1% and 4%, credit card processing fees are vital to the financial system.

As the experts in all things small business, we’re here to bust through the sales pitches and confusing marketing messages to explain what the real costs of payment processing are.

For a quick way to access payment processing rates, you can use our callback request form. We’ll ask our payment processing partners to speak to you specifically about your business’ needs, and they’ll provide you with clear and accurate pricing information.

Before you agree to sign up with a top small business credit card processor, you need an overview of the fees involved. In this guide we’ll go through:

And no, you don’t have to read it all. Feel free to click on the section that’s most appealing to you and start there.

What Are Credit Card Processing Fees?

You pay processing fees for the service of secure digital money transfer from your customer to your merchant account. Either the payment processing company or the merchant services provider deducts these fees from the total transaction amount.

That means you, the merchant, lose the fees from the total sales amount. The remaining transaction amount goes into your merchant account.

The only fee the customer pays is for using a foreign card. So you should do your best to let your customer know they’ll be charged a little extra for using an overseas account.

We’ve written a dedicated guide if you’re unsure about how to accept credit card payments in the first place. Bookmark that for later reading, if you like.

What Else Do I Pay?

Usually you’ll pay monthly fees to your payment processor. Extra fees may apply such as billing and enhanced fraud protection.

And there’s the cost of hardware (card readers), also known as “point of sale” or “POS systems.”

You should check the terms of service very carefully to ensure you understand all the possible charges you’re agreeing to with any provider.

Types of Payment Processing Fees

Although referred to collectively as “payment processing fees,” these are actually the sum total of several unique fees. Think of the amount you pay as the rainbow, and the various fees as individual colors.

It can help to make sense of what you’re being charged if you know what each of the fees are for.

So let’s look at the main types now:

  • Interchange fee: the largest proportion of your payment processing fees. This facilitates the transaction between the merchant’s bank (known as the “acquirer”) and the customer’s bank (the “issuing bank”). It’s an incentive payment set by the card networks (eg Visa, Mastercard, American Express) to encourage banks to give credit cards to their customers.
  • Assessment fee: a smaller percentage of each transaction that goes to the credit card companies. It funds the maintenance and growth of secure payment networks.
  • Gateway fee: charged to use a payment gateway. A payment gateway is most often used for online transactions, but can also work for mobile payments in person or using a virtual terminal. These may be charged on a monthly and per-transaction basis. For instance, charges $25 per month plus $0.10 per transaction.
  • Markup: the payment processor’s fee for facilitating the payment and transferring fees to the relevant parties. Honestly, these won’t always be visible to you because they’re profit margins added on to other charges.
Definition: Transaction Fee

All of the above four charges combined can be thought of as the “transaction fee”, which is the charge you pay for each individual credit card payment.

  • PCI compliance fee: covers the cost of meeting necessary data security standards, and may cost between $1,000 to $50,000 per year. It’s essential to protect you (and your customer) from payment fraud. If, as a merchant, you don’t meet these standards, you could be fined between $5,000 to $100,000.
  • Chargeback fee: happens when a customer disputes a charge (claiming their card was used fraudulently, for instance). It’s a fixed amount (for instance $20 or $30). You may be able to get this reversed if you can prove your case to the payment processor.

Note, these are only the major types of payment fees. There are likely to be more, so look out for all of the possible extras in your contract before signing up. Skip down to our section on extra fees to watch our for.

What About Declined Payments?

Luckily, there aren’t fees for payments that are declined. So you won’t have to worry about that.

Typical Costs for Credit Card Processing

What you’ll pay for credit card processing depends on the set-up you need. For instance, you could need just a card reader to take payments at in-person events. Or you may want a cash register system for your physical store.

If you want to sell online, you should look at ecommerce platforms for small businesses which often connect with in-person sales systems.

Instead of overwhelming you with all of the possible options, we’ll break it down into sections.

Worked Example of Retail Transaction Fee

To start with, let’s look at Stripe, one of the largest payment processors. With no set-up or monthly fee, it’s 2.9% + 30¢ per transaction.

For a sale of $100, you’ll pay $3.20 in transaction fees. Assuming there are no other charges from your merchant account services provider, that means $96.80 from that customer’s payment will go to your merchant account.

But you may well have to pay additional charges, depending on your chosen provider. Let’s look at some of the main fees for other major payment processors.

Credit Card Processing Fees of Major Providers

Swipe right to see more
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Monthly Fees
Varies depending on your plan

Square for Retail or Restaurants Plus: $60/month, per location

Square Online Plus: $29/month

Free: $0

Virtual terminal: $0

Afterpay: $0

Monthly Fees
Varies depending on your plan

Advanced Credit and Debit Card Payments: $0

Payments Advanced: $5

Payments Pro: $30

Payments Pro Payflow: $30

Virtual Terminal: $30

Monthly Fees
Varies depending on your plan


Hardware costs

Card reader: $59

Dock with charging cable: $39

Terminal: $299

Register: $799

Taxes and fees apply

Hardware costs

Card reader: $79

Charging dock: $49

Terminal: $199

Terminal with scanner: $239

Taxes added at checkout

Hardware costs

Card reader: $109

Terminal: $349

In-person transaction fees

Card reader (Free plan): 2.6% + 10¢

Card reader (Plus plan): 2.5% + 10¢

Virtual terminal manual entry or payment link: 3.5% + 15¢

In-person transaction fees

Card present: 2.29% + $0.09

Manual card entry: 3.49% + $0.09

QR code: 2.29% + $0.09

In-person transaction fees

Credit: 1.9-2.8% + 20¢

Amex: 2.6% + 28¢

Debit: 0.7-2.1% + 20-30¢

Manually keyed in rates same as online

Online transaction fees

Free or Plus: 2.9% + 30¢

Premium: 2.6% + 30¢

(includes website builder)

Online transaction fees

Online card payments: 2.59%-3.09% + $0.49

PayPal Checkout/Guest Checkout: 3.49% + $0.49

Online transaction fees

Credit card: 2.5-3.3% + 40¢

Amex: 3.2% + 45¢

Debit: 0.8-3.3% + 38-50¢

Your Mileage May Vary

These fees are subject to change at any time. Pricing correct as of July 2023.

Who Has the Lowest Credit Card Processing Fees?

It’s not easy to give a cut-and-dry answer to this. Mainly because rates vary according to the type of payment card used. So you could assess which type of credit card (or other payment type) your customers are using most, and then look for the most competitive rate for that one, specifically.

However, we recommend market leader Stripe with its per-transaction fee of 2.9% + 30¢, as a solid option. With its host of extra charges, PayPal usually works out rather expensive compared with Stripe. And Shopify Payments is actually facilitated by Stripe, so you’d be getting the same service if you signed up.

Yet transaction fees are not the only cost involved in credit card processing. You should also factor in the monthly fees, the costs of additional security, plus any hardware you need.

And, if you want to get an even more accurate estimate, you could even factor in the cost of electricity for charging card readers and running terminals in each of your facilities. If a system charges faster, the battery lasts longer, and the payments go through quicker, then these will all bring down the cost to process each payment.

Most importantly, you should consider the impact of offering payment options on your revenue and customer satisfaction. If a customer can’t pay you with their preferred payment method, you not only lose that sale, but all of that person’s repeat business, and peer recommendations.

How Many Payment Methods Should a Small Business Offer?

Recent research found small businesses accepting four or more payment types earn seven times more sales revenue than those with fewer.

Who Pays Credit Card Processing Fees?

The merchant (also known as the retailer, seller or entrepreneur) pays the card processing fees because payment processing is a business service.

If you imagine a few hundred years ago, a shop owner would have sent an assistant to the bank (several kilometers away) with a bag full of gold coins earned that day. Well that journey may take a few hours on horseback, with a risk of being robbed along the way. Such a person would surely expect payment for their trouble.

Modern payment processing fees are the digital equivalent of the money-carrier on horseback. Except instead of fighting off highway robbers, payment processors have to adhere to data security standards, and distribute relevant fees to banks and credit card companies.

Want to compare credit card processing costs?

Fees For Various Ways Customers Pay

There are different credit card processing fees to pay depending on the transaction type. The reason for this is the varying levels of risk involved.

Each payment process requires particular security checks, data encryption, and even hardware, depending on how easy it would be to commit payment fraud.

Here are some examples of payment methods which will likely have different costs:

  • In person – lower risk of fraud, with lower fees
  • QR code payments – require a barcode scanner and possibly extra software investment
  • Card not present (eg taking payments online or by phone) – fraud more likely, higher fees

Sometimes you can opt for additional payment services, based on your business needs. For instance, you might find your profits have suffered from fraudulent payment scams in the past, and want to invest in better security now.

Credit Card Processing Fee Examples: Stripe

The following fees apply per transaction.

  • In person payments via Stripe Terminal: 2.7% + 5¢
  • Point-to-point encryption (optional): 5¢
  • Accept payments through iPhone or Android: 10¢
  • Online payments: 2.9% + 30¢
  • 3D Secure authentication to verify online customer card payment: 3¢

Fees are subject to change. Correct as of July 2023.

How To Save Money on Credit Card Processing Fees

Here are our top tips on reducing credit card processing fees:

  1. You may not have to use the branded hardware of your payment processor. For instance, if you’re taking payments with Shopify, you can connect non-Shopify card readers and payment gateways.
  2. You can avoid buying hardware at all if you manually enter customers’ card information. However, this can have higher processing rates, so it may only be worth it if done infrequently.
  3. Mobile apps are often free of charge, and can be used for payment processing instead of purchasing full POS set-ups you don’t actually need.
  4. Many providers have a free plan (including Square and Helcim), however you should run some numbers to make sure the slightly increased card processing rate is worth it.
  5. Ensure you adhere to PCI standards in order to avoid fines.
  6. Negotiate your rates. Where possible, you should ask a potential new provider if they can offer you a better deal based on your predicted revenue. After all, you’ve got options, and payment companies want to win your business.
  7. Set minimum purchase amounts. Be careful with this one, as you don’t want to lose out on repeat business. But you need to make sure you’re not paying so much in transaction fees that you make a loss on a sale.
  8. Clearly state your payment terms and conditions at the checkout – whether in your physical store or your website. If you’re clear about your returns policies, you may be able to reduce your chargeback requests.
  9. Train your staff. Chargebacks can occur when customers are charged twice for a purchase by mistake. You can avoid this kind of error with careful instruction to retail colleagues.

The most critical advice we can give you is to take your time to weigh up your different options, and don’t rush into a contract based on a limited-time offer. You need more than a surface-level understanding of a merchant account services provider or payment processor agreement.

We can help you out here with our free callback service from credit card processing providers. All you need to do is let us know some basic contact details and an outline of what you’re looking for.

As we’ve already said, monthly fees are just as important to consider as the individual transaction fees. In addition to the extra charges which commonly occur.

Extra Fees to Watch Out For

We’ve listed the main fees to be aware of already, but in the world of electronic payments, the number of possible charges make up a very long list. Each payment processor has their own particular schedule of fees, including different pricing for various plans.

Here are some more possible charges you may have to pay:

Monthly fees

These are perhaps the most important charges of all, as you’ll have to pay them for the duration of the contract regardless of your sales volume. Think of it as the subscription cost for accessing a payment processor’s services. Make sure you understand these in detail, because they may be broken down further.

There are different possible monthly fees:

  • Terminal rental: the cost to hire a POS system (including the card reader and cash register, for instance).
  • Software fee: to make use of certain accompanying software.
  • Statement or billing fee: believe it or not, you have to pay for being billed. For instance PayPal Online Card Payment Services charges $10 for “recurring billing” (as an optional service).
  • Fraud protection: some providers may charge this as an additional service upgrade.
  • Minimum fee: charged if your sales volume is not high enough within the billing period.

Set-up fee

This is a one-off charge for starting a new contract with a provider. It’s nothing to do with banks, regulations, security or credit card companies. It’s simply a business charge set by the merchant services provider to cover the cost of admin for onboarding you. For that reason it’s usually negotiable, and not all providers charge it.

Integration fee

Likely a one-off charge, this is the cost of connecting your existing systems and software with the payment processor’s technology. Typically you’re paying for tech support, here.

Risk fee

This is added if the payment services provider, for whatever reason, deems your business to be at risk of receiving more customer complaints, chargebacks, claims or there are other indicators of business risks. For instance, PayPal will give 30 days prior notice and then charge you up to 5% extra per transaction.

Early termination fee

Just like with a cell phone contract, if you try to pull out early, you’ll have to pay a chunk of change. It’s vital to make sure you check this carefully before you sign a contract.

Dispute fee

To cover the cost of staff and technology resource that goes into resolving a customer complaint (for instance, about a chargeback). For instance, PayPal charges $15 per escalated claim. Or if more than 1.5% of your transactions are disputed, you’re charged $30 per claim. Exceptions apply.

Batch fee

Instead of sending every individual transaction to your payment processor, it’s common to send them all together at the end of the business day. So you’ll be charged for the service of processing the entire batch. The fee is usually a flat rate, although it can vary by volume.

Alternative payment providers

If you choose to add more payment options onto your existing contract, that will likely incur extra charges. Only some payment processors are set up to facilitate this – otherwise you’ll have to set up individual agreements with those providers yourself. For instance, you can accept Afterpay with Square point of sale and it will cost a fixed rate of 6% + $0.30.

How Are Credit Card Processing Fees Calculated?

There are several models for working out credit card processing fees. Each payment processor tends to offer just one type. We’ll go through the major models here:

Interchange Plus Pricing

Best for:

  • Medium-sized businesses with large transaction volumes
  • Businesses with customers that pay with a wide range of card types
  • Businesses with lots of data on their transaction types

Earlier we mentioned the interchange fee, which is the charge paid between banks. That’s a set rate, determined by the card network in question. It varies depending on the payment card used. A payment processor typically adds their own markup to this, to produce an “interchange plus” price list.

The pricing therefore looks like this:

table with six columns of percentages plus fixed dollar amounts
Helcim's in-person Visa payment processing rates, as published on its website.

To work out your likely charges in a month, you should look at your past payments processing data to find out the distribution of payment card types. That means you find out which payment methods your customers are using, and how often. Then you can calculate the total amounts you would have paid, based on the rates provided for each card with various interchange plus providers.

Flat Rate Pricing

Best for:

  • Smaller businesses who see lower-value transaction amounts
  • Businesses that sell in lower volumes
  • Businesses who need clear and predictable monthly costs

This is the simplest processing charge type – it means the merchant pays the same rate for any transaction amount, regardless of the card used (for instance, debit or credit).

You get the benefit of transparent pricing that’s easy to understand and calculate. However, it’s not necessarily the most affordable solution.

It looks like this:

several payment provider logos beside text explaining the price is the same for all cards and digital wallets: 2.9% + 30¢
Stripe Payments card processing rates, as published on its website.

For instance, if your customers mostly use debit cards rather than premium credit cards, you might end up paying higher processing fees than you would have with interchange plus pricing.

Tiered or Bundled Pricing

Best for:

  • Most small-to-medium sized businesses
  • Retailers looking for a balance between variable rates and simplicity

We mentioned above that certain payment methods are more or less risky. Well, some payment processors choose to bundle payment rates into categories based on risk (because it aligns with the cost of processing).

Unlike interchange plus pricing, which sets rates based on card type plus a fixed markup, bundled pricing groups together similar payment methods into price brackets.

The price brackets are typically as follows:

  1. Qualified rate: least risk of payment fraud (lowest cost), eg. chip-enabled cards presented in person
  2. Mid-qualified rate: some risk of fraud, eg. manually typed in payments or business rewards cards
  3. Non-qualified rate: most processing costs involved, eg. international or premium rewards cards

The above are just representative examples, and each payment processor will have its own specific pricing criteria. This gives ample opportunity for processors to hide markup fees, as you won’t be able to see the network charges versus the processor’s profit.

Here’s an overview of Intuit Quickbooks Payments’ pricing, as an example:

three different payment percentage rates based on ACH transfers, invoiced, card reader or keyed in payments
Intuit Quickbooks Payments offers straightforward rates based on four payment methods.

Tiered pricing models can be suitable for businesses without the capacity to deeply analyze individual transaction costs. The simplicity of this model can therefore suit less experienced business owners.

However, the business types most suited to tiered pricing are those whose customers tend to use low-risk payment methods such as in-person credit cards with chip technology. So if you tend to ask customers to verify their payment either with signature or PIN, then this could be the most cost-effective method.

Summary: Credit Card Processing Charges for Businesses

Admittedly, it’s complicated. But these are the takeaways:

  • Don’t just look at the headline rate or take providers’ claims at face value
  • If a provider has no monthly fees, they probably have higher processing fees
  • So check out all the individual costs from each provider
  • Main costs to check are: monthly costs, hardware costs, set-up costs, and transaction costs per payment type
  • Check what the contract commitment is, because you may have to pay for ending it early

If you’re ready to start negotiating a good deal for your business, request a callback from our payment processing partners. Take your time to make a decision, and be sure to compare rates with providers as best you can.


What's the difference between a payment processor and a merchant service provider?
These terms are often used in place of one another, but they mean slightly different things. A payment processor is the intermediary who charges you fees for the service of making sure the transaction goes through from the customer to your merchant account. An example is Shopify Payments.

Merchant service providers (MSPs) facilitate transactions too, but they may also set up your merchant account. They can offer additional services such as providing point of sale hardware and software, as well as installation and integration of these with your existing business systems. Examples include Elavon and Square.

How do I avoid credit card processing fees?
The only way to avoid credit card processing fees is to not accept credit card payments. However, you can try to reduce the fees you pay with the following tips:
  • Ensure customers are aware of your retail terms and conditions to reduce chargebacks
  • Train your staff so they don’t make mistakes that result in chargebacks or error correction fees
  • Compare pricing offered by various providers, to ensure you’re getting the most cost-effective deal for your business
What is the typical fee for credit card processing?
Fees vary depending on the payment method used and the pricing structure of the payment processor. However, typical rates fall in the range of 1% to 4% plus 5¢ to 50¢ per transaction. However, credit card processing incurs additional costs including monthly fees, hardware purchase, set-up fees and additional fraud protection (depending on what your business needs).
Can I charge my customer a credit card processing fee?
Whether you can legally charge customers a surcharge for paying with a credit card depends on which state you’re in. A settlement was reached after retailers felt they’d been overcharged on interchange fees for accepting Visa and Mastercard.

Regardless of your state, you can offer customers a discount for paying with alternative payment methods such as cash or a check. You may also set a minimum purchase limit, to avoid overpaying on processing charges for low value transactions.

You can’t add a surcharge for debit card payments, however.

Why is there a 3% processing fee for credit card payments?
Payment processors charge merchants around 3% per credit card payment to cover a range of transaction costs. For instance, credit card companies collect an assessment fee for maintaining the electronic networks that allow payments to be transferred. There’s also an interchange fee to be paid to the customer’s bank. Other costs include fraud prevention and data security, as well as the payment processor’s own profit margin.
Written by:
Sabrina Dougall
Sabrina is a business journalist whose career began in news reporting. She has a master's in Investigative Journalism from City University London, and her work has appeared in The Times, The Daily Express, Money Saving Expert, Camden New Journal, Global Trade Review, and Computer Business Review. She specializes in writing about SEO (search engine optimization). Having run her own small business, Sabrina knows first-hand how critical digital marketing is to building a client base and local reputation.
Reviewed by:
Julia Watts author headshot photo
Specialising in business software, Julia writes jargon-busting guides about VoIP, fleet management, dash cams, fuel cards, and more. Having spent almost a decade writing for entrepreneurs and reviewing business solutions, she loves helping exciting ventures – big or small – to flourish.