What Are the Average Credit Card Processing Fees That Merchants Pay?
It goes without saying that every modern company needs to accept credit card payments. Paysafe found in April 2022 that 59% of consumers use debit cards, 51% use credit cards, and 33% use digital wallets. Simply put, consumers no longer want to pay for things using paper cash.
41% of Americans actually report they do NOT use cash to pay for any of their purchases in a normal week.
Not only that, but in recent years, mobile payments are increasing in popularity. As of 2022, 43% of consumers report using a mobile wallet to make a payment—including older consumers.
Numbers like that tell us that the ability to accept credit card payments isn’t just nice to have—it’s a necessity.
That said, accepting credit cards does come with certain fees, and it’s important to be aware of the fees that you’re paying, so you can assess your profitability and performance.
It’s also helpful to know what other companies are paying. When you have an idea of where you stand in terms of credit card fees (sometimes abbreviated as a cc fee), you can work to minimize your costs and improve your bottom line.
What Are the Average Credit Card Processing Fees for Merchants?
So, how much do merchants pay on average? The short answer is it depends. As you’ll learn below, there are several factors that go into processing fees for merchants (this expense is sometimes known as a swipe fee – even if the card itself is not swiped). We break down these factors in the following paragraphs and we suggest reading through them so you can understand how much you and other businesses are paying—and what you can do to lower your credit card merchant fees, average vendor fee, and rates.
But if you’re just looking for a general overview, the average costs for credit card processing ranges from 1.5% to 2.9% for swiped cards, and 3.5% for keyed-in transactions.
Here is a recent breakdown of average costs for four major networks:
- American Express – 2.3 – 3.5%
- Discover – 1.55% – 2.5%
- Mastercard – 1.5% – 2.6%
- Visa – 1.4% – 2.5%
3 Parties That Determine Average Merchant Processing Fees
There’s a common misconception that credit card processing fees are determined solely by the credit card companies themselves.
That’s not the case.
In order to determine the estimated credit card processing fee that you’ll need to pay every month, you must begin by understanding the three parties that decide how much a business has to pay:
- The banks – The financial institution that issues the card (e.g. Capital One, Chase, Bank of America, etc.)
- The credit card network – These include Visa, American Express, Mastercard, Discover, and other credit card companies.
- The payment processor – The company responsible for securing and carrying out the credit card transaction.
Generally, most businesses have to pay a fee (called an “interchange rate”) on the total of the transaction and a flat fee to the credit card company. One reason it’s so hard to predict the credit card fees for business owners is that interchange fees aren’t static.
For example, Mastercard and Visa adjust their rates twice a year. Interchange fees aren’t small, either. They usually account for between 70% and 90% of the total amount merchants have to pay the financial institution. More than one may apply, as well. Visa’s Interchange Reimbursement Fees include more than 150 different classifications. See the latest interest rates.
Furthermore, businesses typically owe a commission and flat fee to the payment processing company, too. Again, there’s no easy way to average this out, because your processor’s fees will vary depending on factors like your payment processing volume, the type of business that you have, and the payment model that the processor is using.
A Breakdown of These Credit Card Processing Fees
Interchange Fees
As we touched on above, interchange fees represent the largest percentage of the total credit card processing fee you’ll need to pay every time a customer pays with their credit card.
This portion of the payment processing fees can vary greatly based on a number of factors:
- The Credit Card Network – American Express, Discover, Mastercard, Visa, and other major credit card networks all charge different amounts for their interchange rates. Each of these may represent more than one credit card network and, thus, fee. For example, the different interchange fees for World Mastercard and World Elite Mastercard are expected.
- Type of credit card – Processing credit and debit cards will represent two different types of rates. Even among different types of credit cards, the rates will differ. Business credit cards are usually the most expensive, then those tied to reward programs, followed by regular credit cards. So a basic credit card would incur lower interchange rates compared to a travel rewards business card.
- Processing type – Whether the card is swiped, or its number is directly entered into the system matters, as well. In-person vs e-commerce payments can also impact processing costs. Swiping the card tends to be the cheapest option. Networks also charge different amounts for paying online or through mobile devices and card-not-present transactions.
- Merchant Category Code (MCC) – MCCs are four-digit numbers that credit card companies use to classify consumers’ transactions using particular cards. The rate also depends on your category of business. A restaurant will be charged differently than an airport which will be charged differently than an amusement park. Though it might be tempting to pick a classification with cheaper fees for your business, know that card issuers take great care to examine data from payments. Choosing the wrong category will get caught quickly.
Like Visa, you can download Mastercard’s interchange rates to get a sense of what it might cost your business. As you’ll see, there are categories for everything from “Program Type” to U.S. region and more.
Other companies are a little less helpful. For example, you can only review Discover’s interchange fees after you first partner with an MSP. Without the verification code the MSP provides, you can’t access the breakdown.
Assessment Fees or Credit Card Transaction Fees
Next up are assessment fees. These are the costs from a merchant’s credit card payments paid to the card networks like Visa, Discover, and Mastercard. Just like with the interchange, assessment fees are determined by the card brand/network and not your credit card payment processor. These fees cover the operating costs of credit card networks.
The assessment fee is lower than the interchange fee, and it depends on various factors, including the type of card used by the cardholder, the transaction volume, and incidental fees like the costs that come with processing foreign transactions.
Every credit card network charges its own assessment fees. According to Wells Fargo, as of 2022, their fees are as follows:
| Network | Assessment Fee | Description |
| Visa | 0.14% | Applies to credit card transactions |
| Visa | 0.13% | Applies to debit and prepaid card transactions |
| Mastercard | 0.1375% | Applies to all Mastercard sale transactions |
| Discover | 0.14% | Applies to all Discover sale transactions |
| American Express | 0.165% | Applies to all Amex sale transactions |
We are often asked, “How much does Visa charge merchants?” and as you can see, these direct credit card transaction fees from the card network range from 0.13% to 0.14%. These types of credit card fees are non-negotiable since they come directly from the networks.
Additional Fees Charged by Card Issuers and Networks
In addition to the above, you may be subject to the fees listed below. Note that these are the fees that come directly from the card brands (Visa, Mastercard, Discover, and Amex) that must be paid to accept credit cards. Since these fees can be understood as the wholesale cost, they do not vary between different credit card processing companies.
The bottom line, you will pay these fees with all credit card processors:
- Fixed Acquirer Network Fees (FANF): Charged by the card brands based on whether the card is present or not present at the point of sale, the number of locations, and volume.
- Kilobyte Access Fee (KB): Charged on each authorization transaction submitted to the card network for settlement.
- Network Access and Brand Usage Fee (NABU): Charged by MasterCard on all settled or refunded credit or debit card transactions.
- Acquirer Processing Fee (APF): Charged by Visa on all U.S.-based businesses Visa credit card authorizations.
Payment Processor Fees
Now let’s talk about the fees that you’re paying to your credit card processor or merchant account provider. While interchange and assessment fees are dictated by the card networks and issuers, your payment processor fees are determined by the provider you choose.
There are 4 different types of pricing models that payment processors use to determine your rates. You’ll note that each of these types is based on some type of per-transaction fee known as the interchange fee. This fee is a percentage of the dollar amount of the sale charged by the payment networks. The interchange fee ranges depending on the network and the type of transaction.
The four pricing models include:
- Tiered pricing – This pricing model charges you based on three main tiers—qualified, mid-qualified, and non-qualified. Transactions that fall under the qualified category have lower rates, while your payment processor will charge higher rates for non-qualified transactions. Debit cards and non-reward credit card transactions typically fall under the qualified rate, while transactions involving corporate cards and higher rewards cards would be under the non-qualified category.
- Blended pricing (aka flat-rate pricing) – With blended pricing, the credit card processors charges a flat rate for all credit card transactions. So, whether a customer pays using a credit card, a debit card, or a rewards card, the rate will be the same. This is typically expressed as a flat percentage plus a transaction fee—e.g., 3% + $0.10.
- Interchange-plus pricing – With interchange-plus pricing, your processor breaks down your rate into two components:
- The interchange, which, as mentioned above, is the fee set by credit card issuer.
- The “plus”, which is essentially the markup of your processor.
So, when a credit card processor uses an interchange-plus pricing model, it means that they’re charging a markup on top of the credit card issuer fees. These rates are typically expressed as the interchange fee plus the markup—e.g., 2.1% + $0.10 per transaction.
- Membership-based pricing – Processors that use membership-based pricing do not take a cut out of your sales. Instead, you only pay the interchange rates set by the card networks (Visa, Mastercard, Amex, etc.). Membership-based processors (like Stax) make money through monthly or annual membership fees.
Other Factors That Can Influence Your Credit Card Processing Rates
Another reason why the average cost of a credit card processing service is such a moving target is that there are a host of other factors that can determine your fees. Some of them include:
Whether or not the card is swiped or keyed into your POS system – Card-present transactions that are processed through a card reader incur lower fees than keyed-in transactions. As mentioned earlier, merchants typically pay an average of 1.5% to 2.9% for the former, and 3.5% for the latter. This is because keyed-in transactions have more risk associated with them.
In the same vein, card-not-present transactions are more expensive to process because they come with higher interchange fees.
The type of card used – Your customer’s card choice is also a big factor, especially if you’re using a payment processor that implements tiered pricing. Generally speaking, fancier credit cards—such as those that come with rewards or are used exclusively by businesses—have higher fees.
The type of business you have – Business-to-business (B2B) and business-to-government (B2G) companies may see the lowest credit card processing fees.
Avoidable Fees From Your Payment Processor/Merchant Services Provider
The following list outlines the fees that are not necessary in order for your small business to process credit cards. These fees are levied against you by your credit card processing company or merchant services provider. The fees that these processors charge go toward their operations, profits, etc.
These fees are the ones that you can and should negotiate. It’s best to look for a credit card processing company that charges you the fewest amount of these annual or monthly fees.
- Terminal lease fee – This is the fee you pay when you choose to lease your credit card machine. (Pro tip: NEVER lease your credit card terminal.)
- IRS reporting fee – Some payment processors charge merchants a credit card processing fee when they have to report certain information to the IRS.
- PCI compliance fee – Certain credit card processors tack on additional fees for keeping you PCI compliant.
- Statement fee – This is the admin fee associated with generating your statements.
- Account fee – This is the admin fee associated with maintaining your account
- Minimum monthly processing fee – Some credit card processors require a minimum amount of credit card transactions per month; they charge a processing fee regardless of whether or not you meet their threshold.
- Monthly fee – Depending on the provider, this could be a subscription fee for their services.
- Contract cancellation fee – This is a penalty cost when you cancel your contract with the provider.
- Payment gateway fee – When payment processors handle online credit card payments, they may decide to charge an additional gateway fee for doing so.
- Marked up discount fee – This represents the markup of your processor—the fee they add on top of the mandatory interchange rates.
- Chargeback fee – This is the fee you incur when chargebacks take place. You pay chargeback fees in addition to the actual cost of the good or service you sold.
- Service fee – This may represent administrative costs associated with running your account.
You should also be mindful of any hidden fees. You can uncover these costs by analyzing your merchant account statement. If you have issues with card readers down time, you my want to look at switching devices or processors.
The Easiest Way to Determine Average Credit Card Processing Fees
With all of that being said, there’s no one average fee for all credit cards. As you have now seen, even fees for individual credit cards may differ based on the type of business you run, where you run it, the kinds of cards being used, the amount of transactions you need serviced, and can even change throughout the year.
In the end, the simplest way–the only way, really–to figure out what you’ll owe in credit card processing fees is to shop around for payment processing costs.
Start by choosing a reputable credit card processor with affordable rates. They should be able to help you make the right decision for your company’s unique needs. As we mentioned above, in the case of Discover, it’s literally the only way you can review their interchange rates.
Then, it’s just a matter of keeping an eye on the credit card processing fees you’re being charged every month. If they start getting out of control, it might be time to reevaluate which ones you accept.
Need Help Figuring Out Your Credit Card Processing Fees?
If you’re having trouble identifying the information we’ve outlined above, feel free to send us your merchant statement and our payment consultants will analyze it for you.
Get in touch with the Payment Depot team—we’re happy to assist you.
Quick FAQs about Credit Card Processing Fees
Q: What are the average credit card processing fees that merchants pay?
The average credit card processing fees vary, depending on the card network and the transaction type. For swiped cards, fees usually range from 1.5% to 2.9%, and for keyed-in transactions, it’s about 3.5%. The fees for the four major networks are as follows:
- American Express: 2.3% – 3.5%
- Discover: 1.55% – 2.5%
- Mastercard: 1.5% – 2.6%
- Visa 1.4% – 2.5%
Q: Who determines the credit card processing fees for merchants?
There are three parties deciding the credit card processing fees:
- The issuing banks (e.g., Capital One, Chase, Bank of America)
- The credit card networks (Visa, American Express, Mastercard, Discover)
- The payment processor (the company responsible for carrying out the credit card transaction)
Q: What factors affect the interchange fees merchants have to pay?
Interchange fees vary based on several factors:
- Network (American Express, Discover, Mastercard, Visa)
- Type of credit card (debit card, regular credit card, rewards credit card, business credit card)
- Processing type (swiped, keyed-in, online, or mobile payments)
- Merchant Category Code (MCC), which classifies the nature of the business
Q: What are some of the additional fees merchants might need to pay to accept credit card payments?
On top of interchange and assessment fees, merchants may need to pay:
- Fixed Acquirer Network Fees (FANF)
- Kilobyte (KB) Access Fee
- Network Access and Brand Usage Fee (NABU)
- Acquirer Processing Fee (APF)
Q: How can merchants ensure they are paying reasonable credit card processing fees?
Merchants can follow these steps to ensure they pay reasonable credit card processing fees:
- Choose a reputable credit card processor with affordable rates.
- Be aware of all mandatory fees and negotiate any additional or hidden fees.
- Regularly analyze merchant account statements to identify unnecessary charges.
- Reevaluate the accepted credit cards and processing options if fees become unreasonable.