The Complete Guide to Credit Card Processing Rates & Fees

credit card processing fees

Credit card processing fees are extensive, complicated, and somewhat overwhelming. Nevertheless, you have to pay them if you want to process credit cards through your business. Rather than paying these charges blindly, you might as well make an effort to understand them. That way, you can dispute any costs you think are unfair or get a better understanding of what your true overhead is. Hopefully, this guide will help you do just that.

If you’re pressed for time and trust our judgment here at Merchant Maverick, then I suggest you take a look at our top rated credit card processors. They all offer very fair and competitive rates and don’t charge any bogus fees. If you prefer to learn about this stuff yourself, then read on!

Parties Involved

Before you can begin to understand processing fees, you need to know about the parties involved with them. Consider these the financial “middlemen” between a customer and merchant. They include:

  • Credit Card Associations: These are obviously the companies that create the credit cards, like Visa, MasterCard, and American Express. These are the guys that set the rules.
  • Credit Card Issuing Banks: These are the financial institutions that issue the credit cards, like Chase, Citi, and Wells Fargo. Some card associations take on the role of a bank as well, developing and issuing their own cards. Examples include Discover and American Express.
  • Credit Card Processors: Also known as Acquiring Banks aka Acquirers, these institutions act as messengers between merchants and credit card associations. They pass batch information and authorization requests along so that merchants can complete transactions in their businesses. A merchant may encounter several acquirers for one transaction – one that creates monthly statements, one that handles technical support, and one that issues money to a bank account.
  • Merchant Account Providers: These are companies that manage credit card processing (e.g. sales, support, etc…), usually through the help of an acquirer. They could be financial institutions, independent sales organizations, or double-duty acquirers, depending on the situation.
  • Payment Gateways: These are special portals that route transactions to an acquirer, usually in the case of an online shopping cart.

Where Do They Fit Into a Transaction?

In any given transaction, the above-mentioned parties play a role. Here’s a graphic to help you visualize the flow of a typical credit card transaction. (Note: Credit Card Processors and Merchant Account Providers usually fill the same role within a transaction, so that’s why you only see “Credit Card Processor” listed below.)


Types of Fees

Now that we’ve covered all the parties involved, let’s discuss the different types of fees in any given credit card transaction.

Transactional Fees
These fees are assessed every time you run a transaction. They represent the biggest cost of operating a merchant account.

Flat Fees
In addition to transactional fees, you may be charged some flat fees as well. They vary by name, value, and applicability, but at least some of them will show up on your monthly statements.

Incidental Fees
Flat fees are always charged, but incidental fees only appear per incidence. When a chargeback occurs, for instance, you are charged a chargeback fee. Some months you will (hopefully!) not have any chargebacks, and, therefore, the fee will not be charged. However, there’s more than just one incidental fee so keep reading to find out what they are.

Wholesale vs. Markup

All of the above fees (transactional, flat, incidental) fall into one of two categories: (1) wholesale fees, and (2) markups. Just remember, markups are negotiable, while wholesale fees are not.

Wholesale Fees
I’m using the term “wholesale” to help you picture the meaning behind this type of fee, but it can go by other names as well, like, “base fee” or “pre-markup” etc… Your wholesale fees are exactly like they sound – the wholesale cost of your sales transactions. These fees are determined by the credit card issuing bank and the credit card associations (VisaMasterCard, etc.). They are consistent regardless of which provider you choose. In other words, don’t try to shop around for lower wholesale fees or rates from various credit card processors. It’s just not going to happen.

Your markup fees are how your credit card processor is planning to make a profit from your business. With the right processor, these fees will be modest. With the wrong processor – you’re in trouble. What’s worse is that some processors make it as difficult as possible to know how much markup you’re paying by using bewildering terms and pricing models that would baffle even the most experienced business owner. Markup fees are different from processor to processor and are what you should be comparing when preparing to open a new merchant account.

Breakdown of All Credit Card Processing Fees

Remember the different types of fees we discussed above? This is where we break each of them down.


  • Interchange Reimbursement Fees and Assessments: These are the fees the card-issuing banks and the credit card associations charge for each transaction, and they represent the largest expense merchants (should) pay per sale and per month. Interchange fees typically consist of a percentage of each transaction accompanied by a flat per transaction fee (2.10% + .10). Assessments are typically based on a percentage of the total transaction volume for the month. Examples of these non-negotiable interchange and assessment merchant account fees include: Merit 1/ecommerce/CNP fees, NABU/APF/data usage fees, Dues and assessments. Each card association publishes their interchange and assessment fees online (e.g. Visa, MasterCard, Discover, American Express). Remember, these are the wholesale rates. Now, let’s say you’re on an interchange-plus pricing structure. Your processor will quote you something like (.25% + .10). THAT is their markup. That is the amount that they will add to the wholesale rates. But, if you’re on a tiered pricing plan, you’ll get a quote with the Qualified, Mid-Qualified, and Non-Qualified rates that we talked about earlier. Those quotes have the margin baked right into the quote, thus making it more difficult to tell what the processors margin is.

Flat Fees

  • Terminal Fees: These are charged to merchants who have physical stores, where they directly swipe a customer’s card. If you run a business online, you will not have to worry about this. Some providers try to lock merchants into terminal leases, but as we’ve mentioned before, don’t lease a terminal. Most of our favorite providers will encourage you to buy your machine outright for a low one-time fee. This can save literally thousands of dollars in the long-run. For an example of this, check out Helcim.
  • Payment Gateway Fees: These are similar to terminal fees, but they are applied to ecommerce businesses instead. Some processors have in-house payment gateways that are free of charge (CDGcommerce). You can learn more about payment gateway’s here.
  • PCI Fees: These are fees paid to the Payment Card Industry, either for noncompliance or compliance. In the case of noncompliance, you have to pay because your business is not upholding PCI standards, which could cost you even more money in the long run. In the case of compliance, you have to pay the merchant account provider to make sure you remain in line with the regulations at all times. Unfortunately, some providers charge for this service without actually providing it, so you need to make sure you are being cared for at all times.
  • Annual Fees: These are fees charged every year to cover the basic use of a provider’s services. In my opinion, this is a bogus fee. Most of the better merchant account providers will not charge it.
  • Early Termination Fees: This is pretty self-explanatory. It is a fee that is charged if you cancel your contract early. Another fee you definitely want to avoid.
  • Monthly Fees: These are fees that are charged each month, usually for the purpose of covering call center costs. Ironically, most of the phone calls that come in are the result of mistakes made by the merchant account providers, making them the cause of their own fees. If you’re looking for the lowest monthly fee possible (a good idea if you have a low volume) take a look at Payline Data. They have a plan for just $5 per month.
  • Monthly Minimum Fees: These are fees charged to merchants who do not reach a certain transaction total for the month or year. The minimums will vary by provider, but most of them are around $50,000 a year. This is another fee that is not charged by some of the better providers like Dharma Merchant Services.
  • Statement Fees: These are fees charged to cover printing and mailing costs for credit card statements. Some merchants bypass these costs by using electronic bill statements, but others pay as much as $15 a month for miscellaneous processing costs.
  • IRS Report Fees: These are fees that merchant account providers charge in exchange for reporting transaction information to the IRS (1099-K). Most of these charges range from $2 to $5, depending on the provider.
  • Online Reporting: These are alternatives to statement fees, charged to merchants who choose to view their statements online. Most providers will not charge this kind of fee, and those that do often lump it together with others.
  • Network Fees: The card networks charge certain non-negotiable fees that are passed through to the merchant, such as the FANF.

Incidental Fees

  • Address Verification Service (AVS): If you have an e-commerce or telephone order business, beware of the AVS fee. It will be charged on every single transaction. For retail businesses that occasionally key-in card information, you don’t need to worry about it as much.
  • Voice Authorization Fee (VAF): Rarely you may be required to call a toll-free number in order to verify certain information before a transaction is authorized. This doesn’t occur often, so don’t worry about it too much.
  • Retrieval Request Fee: Every time a customer initiates a dispute on a charge from your business, it sets into motion the chargeback protocol. This retrieval request is the first step. The fee covers any expense related to the retrieval request.
  • Chargeback Fee: After the retrieval request, the actual chargeback may occur depending on the circumstances. If it does, expect another fee on top of losing the money from the sale.
  • Batch Fee: Every time you submit a batch of transactions, a batch fee (or batch header) is charged. It only happens once or twice a day, so don’t worry too much about an extra dime or two.
  • NSF Fee: If you don’t have enough funds in your bank account to cover your merchant account expenses, you will be assessed a NSF (non-sufficient funds) fee.

Pricing Models

When it comes to selling merchant accounts, there are four popular ways of pricing: interchange-plus, tiered pricing, subscription/membership, and blended.

Interchange Plus
The first is referred to as an interchange plus pricing model. This is the most transparent pricing model with the most understandable terms and fees. Interchange-plus itemizes wholesale fees and markups and clearly lists them on your monthly statement. It may make your statement a bit more difficult to read, but it’s worth it since you’ll know exactly what the difference between your wholesale fees and markups are.

If you aren’t lucky enough to be on interchange plus pricing, chances are you’re tied up in a tiered or ‘bundled’ pricing model. In fact, the vast majority of business owners are on a tiered plan, which may make it more difficult to review and understand some statement charges.

Tiered pricing plans categorize credit card transactions into three categories – qualified, mid-qualified and non-qualified Generally, qualified rates are the lowest, and the transaction rates increase for mid-qualified and are highest for non-qualified transactions. Qualified transactions must meet all of the processor’s criteria for processing, such as a swipe in-person with a batch settlement the same day. Failure to meet one or more standards may result in a ‘downgrade’ to mid-qualified or non-qualified tiers.

Although tiered pricing plans aren’t necessarily a bad thing, some dubious merchant account processors will take advantage of this more complicated price plan to charge merchants excessive fees. You may end up paying a lot more than you want to with little way of determining exactly what you are paying for. This is because processors often fail to disclose which tiers the merchant’s transactions are falling into, making it near impossible to determine the markup rates.

This is a fairly new pricing system, but it’s catching on. It is similar to interchange-plus in that the actual cost of the transaction is charged separately from the mark up. But the difference is that you do not pay any percentage markup, just a small transaction fee. For merchants with large transactions especially, this kind of pricing can save a lot of money without decreasing transparency. Check out Payment Depot for a great example of this kind of pricing.

This is like tiered pricing, but without the tiers. Instead all transaction cost the exact same percentage and transaction fee, regardless of the wholesale cost. All costs are blended together to create one consistent rate and fee. This tends to make the transaction cost very high, especially for debit transactions. But since processors using blended rates (like Stripe and PayPal) usually do not charge a monthly fee, this pricing model often makes sense for low-volume businesses.


Every credit card and merchant account provider has a different set of costs associated with its services. Some of them are unavoidable, but others can be negotiated. Remember to choose interchange-plus, and keep in mind that most of the flat fees can be negotiated. If you process a lot of transactions, don’t be afraid to bargain with your processor. With that in mind, there are several processors out there that are very transparent with their fees and are more than happy to place you on interchange-plus credit card processing fees. The majority of our highest rated processors do just that.

Questions about credit card processing? Reach out to us on Twitter with the hashtag #askmerchantmav

Amad Ebrahimi
Amad has worked in the eCommerce and online marketing world since 2002. He started as an eBay seller, then slowly graduated to building & marketing his own websites and consulting others to do the same. He founded Merchant Maverick out of frustration with all the misinformation and shady tactics that he encountered when trying to find a merchant account for his and his client's businesses. He's the man behind most of the merchant account reviews, and articles posted on Have any questions related to credit card processing? Talk to him.
Amad Ebrahimi
Leave a comment


    Chris Matters

    I appreciate the information here, as someone who is just getting into Credit Card usage I found it very informative.

    So I own mobile home parks and am expanding to RV parks. I take in monthly rents and utility fees. I am buying a new park which had about $300,000 in Credit Card charges last year. I am trying to find the best way to process this. While most would be in-person swipes, how can I process deposits/pre-pay customers without being double tapped on fees. Also looking to improve/reduce the previous reported fees, which ate up a considerable amount of the previous owners revenues.

    Chloe Bahal

    Hi Chris,

    Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend Fattmerchant. I would encourage you to use the green “visit site” button within the review if you would like to support our work. I hope this helps and if you have further questions please let me know.


    Thanks for the useful info!

    I have a coffee house that is about to start accepting credit payments. The processor my POS company put me in touch with is offering Interchange Plus .25% + .10, but I’m hurt by my necessarily smaller check average. A $15 check puts me around 3.38% overall effective rate, if my calculations are correct, which is a fair bit high. Throw in monthly fees for PCI compliance and statements and I’m wondering if credit is worth it at all. Whatever processor I choose, I’d want to integrate them with my POS software to use the swipe features of my terminals. I’ve been warned that “bridging software” by the POS company for another processor would be $1000 fee, but they also said some processors would be willing to pick up the fee. Any advice? Which processor do you recommend?

    Chloe Bahal

    Hi Jeff,

    Thank you for your inquiry. I am going to send you an email right now so please keep an eye out for it.


    We do $20-$30K in monthly transactions using PayPal Pro. Should we be looking at another processor? I don’t have any issues with PayPal, just not sure if I’m leaving money on the table. I don’t really want to go through the hassle of transferring unless I can save some real dollars.


    Chloe Bahal

    Hi David,

    Thank you for your inquiry, I am happy to help you with this. I would take your current rates to CDGcommerce and Payment Depot to see if you can get better rates. I would encourage you to use the green “visit site” buttons within our reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.



    I find your article very informatice. Thank you for the great work.

    Question: What would be the best solution for not-for-profit membership/trainings/lessons/seminar man-power shortage environment?

    Please provide some suggestions.

    Thank you very much, Patricia

    Chloe Bahal

    Hi Patricia,

    I would suggest taking a look at this detailed article on processing for non-profits. I would encourage you to use the green “visit site” link within our reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.



    I recently renegotiated revised pricing with Wells Fargo Merchant Services on my account. The new pricing says that the pricing type is “Fixed Rate with Non-qualified Fees”. The discount rate is 1.88% for credit card, and 1.38% for debit. They also provide a Interchange Pricing Summary. They don’t mention mid-qualified. So, I am not clear what kind of a pricing model this is, and would like your help in determining if this is a fair plan.

    Thank You

    Chloe Bahal

    Hi Joe,

    This sounds like tiered pricing, a model we strongly recommend against. Make sure you get the Interchange Plus pricing, it is much more transparent. I would also recommend taking a look at our review of Wells Fargo here. If you need help choosing an alternative, please let me know.


    Hi.. I’m about to open a carry out restaurant and not certain how much customers would be using credit card. Which credit card merchant do you recommend?

    Chloe Bahal

    Hi Nikita,

    Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend Square. I would encourage you to use the green “visit site” button within the review if you would like to support our work. I hope this helps and if you have further questions please let me know.



    I am in the process of selecting a vendor for my business. Basically, I expect my business to be making many transactions but each transaction will be $50 or less. So for example, I can expect over 1000 transactions from customers and each transaction to be on average $40.

    Due to the numerous transactions and the low value of each transaction, I wanted to know which model would fit my business best. Thank you for your help.

    Chloe Bahal

    Hi Adi,

    This is a great questions. Since you are doing a high number of transactions, going with a traditional merchant account would be the most reliable. It is riskier to do 1000 transactions at $50 because that is 1000 chances to have a chargeback. If you would like some help picking out the right processor, please contact me and I will be happy to assist you.


    Hello, I’m about to open a restaurant in LA. Toast quoted me 2.49% + .15c for the first month. After 30 days of processing I was told they’d find our effective rate (middle rate, essentially) and install that as our flat rate. I’m planning to negotiate this starting rate and (what seems to me) crazy-high per-transaction charge. I’d love advice on what to expect and what I should ask for!

    Chloe Bahal

    Hi Ekf,

    The rate is pretty standard, but it isn’t the best situation to have your rate change after 30 days since you are already committed to the service. What you should expect/ask for is based on your projected card payment volume. I would recommend taking a look at the introductory rates for Helcim. They offer an interchange-plus quote even for new businesses, and that rate would be a good one for Toast to match. I hope this helps and if you have further questions please let me know.


    I run a small medical supply company. My website by GoDaddy was set up to take payments through First Data. I do about $30,000 in cc processing and paid an average of 11% GoDaddy/First Data in monthly fees and charges in 2016.
    All of my clients are Universities that use corporate credit cards. They don’t pay through my website because they get preferred pricing, I key payments in through my First Data dashboard. I need a cheaper alternative. I’ve even eliminated my shopping cart from my site. Any suggests of who I should use? Thanks!

    Chloe Bahal

    Hi Gail,

    Thank you for your inquiry, I am happy to help you with this. I would recommend Payment Depot and Helcim. I would encourage you to use the green “visit site” button if you would like to support our work. I hope this helps and if you have further questions please let me know.

    Brooke M Campbell

    My family is staring up a small kitchen that serves lunch and dinner 5 days a week. We have one of those swippers that you use right there at the table with a phone or a tablet. It accepts all major credit cards and has a rate of 2.75% each swipe, that is directly linked with our business bank acocunt. There are no hidden fees or additional costs for statements. It seems to be an average rate for the volume of business we are doing at this time. Only downfall is we do not have a way to print a customer cc receipt. Moving forward, we are wondering if this will be the most cost effective. We are old school and hand write our tickets, but would like to get actual POS system as we grow. I would appreciate some feedback on what we should do. Thanks so much!

    Chloe Bahal

    Hi Brooke,

    Thank you for your inquiry, I am happy to help you with this. I am going to send you an email, so please keep an eye out for it.

    Ross Nunan

    I’m looking into building a e-commerce website which I intend
    to use payapl for but also wanted to have telephone sales.
    I heard that a credit card machine can require large cash deposits for new ventures.
    What should I budget for my start up company to have the ability to do credit card transactions?
    Thanks Ross Nunan

    Chloe Bahal

    Hi Ross,

    Thank you for your inquiry, I am happy to help you with this. I am going to send you an email so please keep an eye out for it.

    Anyssa Velasquez

    Hello, thank you so much for the information! We have an LLC in manufacturing. Our transaction amounts run in the thousands. We currently have Square but we are looking to purchase a card reader. Can you please point me in the right direction?

    Chloe Bahal

    Hi Anyssa,

    Thank you for your inquiry, I am happy to help you with this. We have a great filtering tool that you can try here. I hope this helps and if you have further questions please let me know.


    Hello my name is Ken and i have a similar question that many others are asking and you are sending emails for answers
    I have always struggled with this and now am taking a new restaurant property that does between $90k to $100k a month in CC transaction with a high volume of tickets

    Do you have some companies or fee program you suggest?

    Thank you


    Chloe Bahal

    Hi Ken,

    I went ahead and sent you an email, so please keep an eye out for it.

    Tho Phung

    We are looking for new credit card service provider to replace the current one with very high over rate. Our credit card volume is about 400K to 500K paid by few customers with non card presented, and very high ticket that is as high as 120K. Would anyone recommend ones with overrate about 2.5%?
    Thank you in advance for your help.

    Chloe Bahal

    Hi Tho,

    Thank you for your inquiry, I am happy to help you with this.Based on the information provided, your best options are going to be Durango Merchant Services, Payline Data, and Instabill. I would encourage you to use the green “visit site” button within the reviews if you would like to support our work. I hope this helps and if you have further questions please let me know.


    Hi – Our business has always struggled with what % we should be charging customers who use a credit card to cover the convenience fee. The issue is that if we add an additional % to our product cost for the CC fee, the overall fee increases because we are running the card for a higher $ amount. I know there’s got to be a formula I learned at some point in school to do the math but it seems to be escaping me.

    Chloe Bahal

    Hi Ashley,

    That’s a great question. Passing on the fees to a customer is going to depend on the state laws of where your business is located. A lot of states have laws prohibiting it, so you will have to make sure that isn’t the case for your state. For states that allow the practice, the business can generally charge a fee equal to the actual cost of processing the transaction. But, you will need to make this clear before the customer pays. Here are a couple of articles that will help: Article 1 and Article 2. I hope this helps and if you have further questions please let me know.

    Neil DeBoer

    Passing on fees to customers: Not sure that passing on the processing fees to customers is the best idea. And, as Chloe said some states do not allow that. Some companies get around that by offering cash discounts and pricing all of their products high enough to cover the cost of the credit cards. However, you should also look at the cost savings of credit card sales before you consider any of these options. When you take a credit card you don’t have to count cash and checks at the end of the day. You don’t have to transport cash or wait in line at the bank. And your bank reconciliations are typically a lot easier and faster with credit card transactions. Cash and check transactions are clumsy and time consuming compared to credit card transactions. Part of the expense you incur from your credit card transactions comes back to you in cost and time savings.

    Diane Lange

    I own a tattoo studio and have been processing credit cards for 25 years.. i switched to bank of America for my credit card processing about 7 years ago and upgraded my machine approx. 3 years ago. now i need a chip reader and they want to charge me for a new machine… i process on average 4000-11,000 a month based on time of the year… what are the best companies for rates and equipment that you recommend? thanks for you time.. Diane

    Chloe Bahal

    Hi Diane,

    Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend Helcim, CDGcommerce, and Dharma Merchant Services. I hope this helps and if you have further questions please let me know.



    Its a great informational page for new biz owners like me. I am getting into QSR franchise biz in US. I am required to use “Revel” PoS but I can chose merchant I want. I was recommended to use Wells Fargo as the Corporate banks with them. However reviews of Wells Fargo Merchant services are not satisfactory and hence landed on this page.

    Would you recommend me to some best merchant services with no contract/commitments yet low cost so to better the margins ? Price range for the products is from $3 to $15

    Thank You

    Chloe Bahal

    Hi Shree,

    I am going to send you an email right now, so please keep an eye out for it!


    Very good information! Thank you for lending your expertise!

    i was thinking about ways to save money for the company i work for and figured merchant transaction cost may be one. This is not my department but I wanted to learn a little bit about the subject before creating any kind of proposal. My company’s revenue is over $1 billion dollars with most of it coming from US based sales. Are you able to lead me in the correct direction for researching the most profitable option? And what information should I obtain from my company that will aide in analyzing the current state?

    What kind of approach can i take to determine

    Chloe Bahal

    Hi John,

    I am going to send you an email with some information, so please keep an eye out for it.


    Hello there,

    I’m looking to start a brewery/taproom. Average ticket will around about $15 but many tickets a day (quantity over quality scenario). With that being said, looking for a low per-transaction cost but will sacrifice for a higher %.

    If this venture goes well then we might be opening others like it around the state so we’d like to use the same gateway and cc processor throughout (might be able to leverage that for better rates).

    Our POS system limits us to four gateways now but I wasn’t sure if that was something that is typical.

    I had some troubles with a cc processor at a previous brewery I started where cards that were entered-in manually weren’t able to process or acknowledge the tips that were made (bartenders were NOT happy about that) so I’m trying to avoid a situation like that.


    Thank you kindly!

    Chloe Bahal

    Hi Andy,

    Thank you for reaching out. I am going to send you an email right now, so please keep an eye out for it.


    Including monthly fees our average rate that our business pays is 2.6% – is this “good” or “bad”?

    Thank you for your article,


    Chloe Bahal

    Hi Carrie,

    2.6% is within the average range for processing fees. You might be able to get it a little lower, but it probably won’t be by much. I would recommend trying our filtering tool and contacting the different processors for a quote. I hope this helps and if you have further questions please let me know.

    Tristan Daniel

    Which system would be best for several small charges ranging from $12-20?

    Chloe Bahal

    Hi Tristan,

    If you are looking for a mobile processor, I would recommend Square. If you are looking for a traditional merchant account, I would check out CDGcommerce. I hope this helps but if you have further questions please let me know.

    arran martin

    Hi , this seems like a real mind field for a new start-up, we are opening an aqua park business for 2017, This is a seasonal business which charges customers £15 phpp. We have a max potential to turn over £9600 per day which we hope will be mainly via an online booking system, but we also need to be able to accept card payments from walk in customers as well.
    Any advise would be great thanks

    Chloe Bahal

    Hi Arran,

    I just sent you an email so please keep an eye out for it!

    Chris B

    I have a small training company, so people call in or mail me the registration forms and I process their credit card using an internet based merchant account. Do you have any recommendations for online merchant account processing that has the lowest rates?

    Chloe Bahal

    Hi Chris,

    Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend CDGcommerce, Payment Depot, and Helcim. I hope this helps and if you have further questions please let me know.

    Britt Douglas

    We have been using Fifth third which I believe has been bought by Vantiv for our Veterinary Clinic for last 3+ yrs. We have a standard Vx570 Verifone that needs to be upgraded to a chip compatible. The machine has been on the fritz for last 2 weeks and now I am doing some analysis before renewng a three yr contract. They wanted $495 for a verifone vx520 OR a 39.95/month lease that included Verifone vx805? and Omnishield Breach assist for 48 months. We process approx 14 to 15,000 per month in Visa and M/c sales and $800 in American Express and $2-3000 in Discover each month. Our “discount rate” is 2.37% and going up again. So our average costs for Merchant fees is 908.71 per month and avg cost for billing is 300 per month. I have since looked into Dharma and my local bank Marion County savings which they said fees would be comparable to fifth thirds rates. But shouldnt they be much lower as I do use them for our bank? Thoughts?

    Chloe Bahal

    Hi Britt,

    I am going to send you an email right now, so please keep an eye out for it!



    I’m opening a Wireless cell phone shop. We process payments and sell phones and accessories. We are expecting to do about 1,500 payments of average $48.00 per payments plus 300 phones monthly at average $120 per transaction. Of course the payments gets collected electronically every 3 days. I found flagship processing company that’s charging us $.19 per debit or credit transaction plus 0.58%. And $7.99 a month . Do you recommend them ? Am I paying too much ? Thank you

    Chloe Bahal

    Hi Adel,

    This is pretty comparable to the industry standard, but I would try to negotiate getting interchange-plus pricing. Their pricing does vary considerably so you will want to make sure to get your rates in writing. Don’t be surprised if you get charged more than 0.58% — that rate only applies to certain transactions. I would recommend taking a look at our review of them here for more information. I hope this helps and if you have further questions please let me know.

    Luisa Land

    We are in the process to open a donuts / coffe shop. Ticket items from $ 1.35 to $13.00
    Can you suggest a Merchant that fits our needs
    Thank you

    Chloe Bahal

    Hi Luisa,

    Thank you for your inquiry, I am happy to help you with this. Based on the information provided, I would recommend Square.

    Cathy Brown

    We are a small vacation rental office so most the money we process for the rental we do not keep – we only retain a small percentage as commission and the rest we mail to the individual owners of the various homes. Therefore our fees are going to be based on the total amount we receive into the office and obviously not on the small amount we actually get to keep.
    We will never see a credit card since all payments will be taken on-line and processed via a link we send to the tenant. Is there a company that would be best suited to us whose fees are going to be lowest possible?

    Thanks for your help – interpreting the fees involved seem pretty overwhelming. Cathy

    Chloe Bahal

    Hi Cathy,

    Thank you for your inquiry, I am happy to help you with this. I would recommend taking a look at Durango Merchant Services and Payline Data. I hope this helps and if you have further questions, please contact us.


    Kathy you have to negotiate yourself. I have been in the industry for years and if you showed me a statement I would have to beat it.


    Amad –

    Perfect analysis for the uninitiated. Thank you.

    Do you happen to know anything about a company called Authorized International positioning itself as a wholesale processing company?

    Thanks –

    Chloe Bahal

    Hi Chris,

    Unfortunately I don’t have much information on Authorized International so I can’t speak confidently on them. If you are looking for a merchant account, you can try our filtering tool here. I hope this helps and if you have further questions please let us know.

    calvin le

    Thank you for the great article Amad,

    I processed anywhere from $170,000 to $175,000 monthly. I just got quoted .05% as my rate and .05 per transaction fee. My program that I got quoted was the ” cost plus pricing ” with an disclosure ” all standard payment network fees and charges will be added to the fees below” which is the .05% for the rate and the .05 per transaction. This is almost too good to be true. What are your thoughts about this and can the merchant company raise the assessment and interchange rate on us? I also just signed up with CAKE POS. I didn’t read the fine prints that they are exclusive with World Pay. I have no choice but to go with World Pay. Is this a standard practice to lock us in with an exclusive merchant processor? I signed the contract but those ” exclusive ” was very fine printed. Please advise.

    Thank you,

    Calvin Le

    Chloe Bahal

    Hi Calvin,

    I am going to contact you via email.

    William Engstrom

    Have a small massage business. I want to use a simple phone card swipe. I do maybe $500 to $1000 in credit card sales a month. What would be the best and or cheapest way to go? I use to use Groupon breadcrumb phone swipe fyi.
    Thank you
    Bill Engstrom

    Chloe Bahal

    Hi Bill,

    I would recommend taking a look at Square.

    George Tsatsos

    Great stuff breaking it down. In the real world-it turns out to be the average percent charged. When you get your statement, review all fees using the well written guide above.
    However, I’ve found that after all the negotiations, since there are so many “perk cards” with different fee adds that when I switch merchants-no matter what they say, make sure you own your machines & there are no exit fees.
    A very good percentage total-with all fees-is @ 2.5-3%- That’s if you’re more than 10K a month in sales.
    Expect .5% more with low sales. Use these percentages as guides & go negotiate!


    I’m just starting out and providing a service over Skype and phone for which I’ll need to get credit card info. Can you tell me please who you think has the best product for this, and do I have to have a website, which currently I do not. I’m in Canada. Thanks.

    Chloe Bahal

    Hi Dee,

    That’s a great question, no, you won’t need to have a website. I would recommend taking a look at Helcim.


    Love the article, but one question for my specific situation. I will not have transactions every month, maybe only one or two a year. But when I do have a transaction, it will be for $10,000+

    Is paypal a good plan for me, or should I pay a monthly fee even though I am not using the service?

    Brian Mead

    Great Read.
    Now I understand this mess and my guns are loaded for my 5 meetings!
    I know I will save my company money!



    I am merchant account holder. I just sign up a contact with one of credit card processor, and using for two days. They charger more than what they said. After calling they, they claim the only earn 1.76 from our account, rest of $33 is back to customer because those customer using cash back reward credit card. Thus, they will charge me the fee cost to process and whatever the fee that holdering back for customer for cash back reward. Is that true?



    This is a great article! We are a small business with only about $9K (50 transactions) per month. We were using the 3 tiered model for years and years, since we have been in business a long time. I just discovered Payline Data and Payment Depot and calculated the difference in fees. It is unbelievable, my fees with the tiered company have been about $400/mo. With the new plan it will be about $80 – $90/mo. It’s almost too good to be true.

    Thanks for your info. Spread the word! People like me who have been in business a long time may not know about these new plans.

    Patti Bruno

    Thank you for the information! We too are a small business and have been paying outrageous fees!


    Nice article. Question: My business customers are considered “high-risk”. In the application process, does this mean the acquiring bank makes the decision on issuing the merchant account?

    Any suggestions for high risk? These are consumer lenders.


    Hey Amad,
    Really helpful article… I’m new to the payments space so am just trying to understand the basics.
    I have to ask a really stupid question… I just can’t understand what the card associations (Visa, MasterCard) actually do… what real value do they provide?

    In the regular transaction chain:
    consumer –> merchant –> merchant acquirer –> payment processor –> card association –> issuing bank

    What do the card associations actually do? The ‘interchange’ is just the process of exchanging information between processor and issuing bank, right? So can’t you cut out the card associations?

    Aren’t they only licensing their names to put on the credit cards?

    Maybe this is a totally dumb question but they don’t sign up merchants, handle processing, or issue credit… so can’t they be disintermediated?

    Would appreciate your expertise and insight!

    Chloe Bahal

    Hi Austin,

    Those are all really great questions. You might find this article helpful. If you still have questions please let me know.


    Hello Tom.
    Super great article. Thank you.

    As a very green novice, I am quite overwhelmed and must admit that I clicked on 5-6 of your valuable links but haven’t sifted through them yet. I was hoping to see a range for total fees in the form of a percentage so I could quickly evaluate my situation. Obviously, knowing that would tell me if I need to invest the time into learning the ropes.

    I manage 2 vacation rentals using the popular booking sites. One site just increased their CC processing fees from 2.5% to 2.9%. They process about $80,000-$90,000 for me per year so the increase is $450/year on the high side. Seemingly not much but over time, it’ll add up.

    I’m trying to figure out if processing credit cards directly through my vacation rental company would make sense.

    So you have any quick advice?
    Thank you.


    I live outside of the United States and am looking for a merchant service provider that will securely store my clients’ credit card info on their servers. In the event that I need to charge a card at a later date, I would like to access those details.
    I don’t need their services to charge a card. I only want to have their services to store, access, and delete credit card details.

    Can you suggest any service providers.

    Rita Bell

    Do all credit card processes collect their fees by crediting the amount collected or do they send a monthly invoice and then the merchant pays them via a separate transaction? Or does it vary by credit card processing company?


    Is it legal to assess a customer a % charge to offset the credit card fees incurred by the merchant? I’ve seen some of my vendors starting to charge a % and when asked they said it is to offset the credit card fees. How are they able to do this?

    Tom DeSimone

    Hi Teresa,

    It is legal. You can surcharge customers who use credit up to the amount you are charged to process the transaction, but not more. So if it costs you 3% to run the transaction, you can surcharge up to 3% and still abide by the card network rules. State laws may differ though.


    Actually, it depends on the state. “Surcharges are (also) illegal in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas”

    All four credit card company issuers also have policies that disallow charging credit customers a surcharge. That means, if a shop is doing it, they’re at risk of losing their ability to accept credit cards altogether. Merchants have however found a loophole that many are exploiting, offering a “discount” to cash payers is fine.



    In most states, no. Each state has it’s own laws. In FL, it’s illegal to charge a fee to take a CC.

    It is, however, legal to offer cash discounts in almost every state. So you have to structure your pricing to suit.

    harshad dantale

    Hi !
    I deal in renting bicycles to customers. I need a cash deposit from them, and when the return the bicycle, i return them the cash deposit and charge them a rent. Is there a way where the credit card company comes in and holds his deposit for me, such that he has not paid me, but I am assured, in case he defaults.


    My merchant account provider, Flagship, just charged me $49.95 for filling out the IRS 1099K. There was no mention of this fee when I signed up for the account or in any of their massive paperwork. Do I have any recourse in getting this fee refunded.
    Thanks, Stu

    Springfield market LLC

    Looking for a new company that handles my credit card machines

    Dhruv Sehgal

    Hi Amad,

    Great review – I learnt a lot. I am particularly interested in knowing more about the Subscription based Pricing Model. Can you please provide more examples? Which companies are currently doing this and in what industry? Have they added on more services to it like Loyalty Programs with Mobile Payments?

    Would really appreciate your help.


    Dhruv Sehgal

    Tom DeSimone

    Hi Dhruv,

    Our two favorites for subscription pricing are Payment Depot and Fattmerchant. Both have mobile processing options, and you can add on third-party loyalty programs, or use a POS with a built-in loyalty program.


    We are small business looking to change our credit processing from Trans Tech Merchant. They charge a huge amount and have not read 1 positive review about them. We process with a swipe terminal. Can anyone help with recommending a great company with good rates. Looking at using the square or Flagship Merchant Services based on reviews. Need to find someone asap as our contract is almost up.
    Thanks for your help.

    Amad Ebrahimi


    We have a great tool for this. Check it out here.


    I have been struggling with finding the right or should I say best merchant that can allow me to make money 😉 I find that most of the big companies charge about the same, which sucks as they take most chunk of the money. Anyways Thanks for the details.


    Thank you for the information.
    I just had our structure priced out, and I was told that cost+interchange was a total of 31 basis points. My agreement was supposed to be 10 basis points, and even on the face of it they are charging me 11-13 (visa/MC/Discover). I was told that the difference is what you describe as the “Wholesale” rate, meaning the interchange rate. So am I being cheated?

    Tom DeSimone

    Hi Daniel,

    The wholesale interchange rates vary widely, but average at maybe 1.70% + $0.10 or so for credit cards for most businesses (it really depends on your business and the types of cards used, however). If your markup is supposed to be 10 basis points (0.10%), then there should not be a separate charge of 0.31%. The markup (the “plus” part of interchange plus) should be a consistent figure, and should match the rate you agreed on at all times.


    Thank you for the clear explanations of merchant accounts. Got caught up with a very shady merchant account with an expensive 4 year equipment lease. Unfortunately lots of me business owners fall victim to this scam in the busyness of business and do not research enough before making a costly mistake. I recently had a BofA rep tell me their Amex rates are the same as visa and mc – is that possible?

    Tom DeSimone

    Hi Neil,

    American Express rates are always going to be higher than standard Visa and MasterCard. So my concern is that you’re being overcharged for Visa/MC if the rate for those cards is the same as Amex. The only way to make meaningful comparisons in terms of rate quotes is to get an interchange-plus quote. That way the markup and wholesale are separate. Check out my quick guide to credit card processing negotiations for more information on this.

    Richard Siddall

    Great article, well done.

    How about application fees? There seems to be a growing list of business types classified as high risk. I understand that even travel companies are now on this list. The application fees for these seems to becoming quite extreme. I have seen application fees paid to open accounts with the mainline schemes at USD5,000 and I have just had one come across my desk at USD50,000 – with no guarantee that the application will be successful. What is happening with high risk applications?

    Tom DeSimone

    Hi Richard,

    For standard merchant account, I’d usually insist on no application fees whatsoever. For high-risk accounts, it get trickier since some fee is often warranted to offset the time and cost needed to complete the application/setup process. But just because a fee is warranted doesn’t mean that any fee is fair. The tricky part is that “high-risk” is a catchall term, but really the merchants exist on a risk spectrum. Some are moderately high-risk, while others are extremely high-risk. Some are simple and straightforward to work with (or at least run applications for), while others will require a sizable investment of resources to setup. Because of this, setup and application fees are prone to vary widely. Since there is some subjectivity here, it’s difficult to pin down what a fair fee would be across the board.

    But I’m having trouble imagining a scenario where a $50K fee (or even a $5K fee) would be appropriate. Some merchant services providers will take advantage of the desperation of high-risk merchants, and to me that’s what this sounds like.

    My advice to merchants faced with large application fees would be this. First make sure you talk to at least a handful of different providers. If one is charging $100 to run the application and another is charging $5K, there’s something wrong there. Don’t let desperation get the best of you. Take your time and keep the pressure off yourself and put it on the sales rep. Always ask questions. When faced with a fee that doesn’t seem to make sense to you, ask for a breakdown of where that money goes. And then ask that same question of a different provider. Always remember that this is your money, and you are ultimately in control. Also, consider ways to lower your risk profile. How you’d go about this will vary depending on your business.

    Hope this helps.

    brian keith conner

    travel companies have been considered high risk for 20+ years….



    Knowledge is power my friend, this article is a refreshing change from the obviously sponsored “Best Credit Card Processors” I’ve seen elsewhere. I’ll definitely be checks your recommendations out!

    One question: I’ve been told that credit card “Rewards” costs are often passed down to the merchant (airline miles, Disneyworld trips, cash back, etc.). Is this true? and if so is it avoidable?

    Tom DeSimone

    Hi Lawrence,

    We’re glad to help!

    The answer is yes, the cost of rewards are – in part – passed on to the merchant in the form of higher interchange rates. For example, a retail transaction with a standard Visa card will cost 1.51% + $0.10 in interchange. A “traditional” rewards card or a “signature” rewards card would cost 1.65% + $0.10. A “signature preferred” card (premium rewards card) would cost 2.10% + $0.10. So in this example, there is a difference of about 0.5% between the basic tier and high-tier cards. Obviously this doesn’t cover all of the rewards paid out, but it does offset the cost for the credit card companies.

    The best way to save is to encourage debit card usage. Most Visa debit transactions only cost 0.80% + $0.15 or 0.05% + $0.21.

    Check out this infographic for more information on credit card fees. Good luck!


    So heres the thing . I was told that the rewards for the costumers promised by the credit card company , in actuality it does not come from the credit card company. It comes from the business owners bank account whom they purchase their goods from. Is this correct info ? If so , how did credit card companies manage to do this with out asking business owners. is called stilling . what can be done to stop it.

    Tom DeSimone

    Hi Elen,

    I discuss this in the answer above. Part of the rewards do come from the increased interchange rates on rewards cards, but the increase from non-rewards to rewards cards is not high enough that the card companies could pay out all rewards with just this fee. A lot of the money to pay out rewards come from the interest the bank earns from the cardholder. But I agree that it’s unfair to surcharge the business owner to pay the rewards points. Unfortunately there is little we can do about it. You will have to talk to your senators and congressional representatives who might be able to introduce legislation to stop this practice. If it was up to me, there would be no rewards! I think the entire credit card rewards system is unethical.


    I’m considering changing processors due to fees. I process retail through POS software. Does each processor have different software, or can the software I have in my system be configured by any processor? I paid half the cost of software when installed & current processor paid the rest. Is this normal practice?

    Tom DeSimone

    Hi Pat,

    Most major POS systems are compatible with most major processors and payment gateways, but there are exceptions. Some POS software is proprietary and only works with certain processors.

    Some merchant services providers will offer reduced cost or free POS as a bonus, but many do not. It’s important to do the math, because that POS discount might be counterbalanced with excessive fees elsewhere.

    Good luck!


    What about the hidden credit card swipe fees charged by banks that increase credit card expenses for consumers? Are they standard, since credit card processors charge a swipe fee (Square charges 2.75% per swipe), while the banks charge a swipe fee too. There are even reported cases where a merchant might earn less in a sale than what the bank takes-in through these hidden swipe fees.

    Tom DeSimone

    Hi Harrison,

    The banks and credit card networks charge fees, which are passed on to the processor, who in turn puts a markup on the fee and then passes it on to the business owner. Most of the money goes to the banks and the card networks. To learn more about this, check out our handy infographic!

    Linda Bracc

    what website does each card association publishes their interchange and assessment fees

    Tom DeSimone

    Hi Linda,

    They each publish their rates on their own websites, usually as PDF documents. You can find the pages easily in Google by searching for Visa Interchange or MasterCard Interchange, etc. The charts are a little bit confusing, but very thorough.


    Can anyone comment on what’s in the “outrageous” range for passing fees? I operate a “store within a store” concept. I pay rent to the merchant for the ability to sell my goods in his larger space. There are roughly 125 “dealers” selling vintage items and antiques. Recently, the merchant announced he would be charging all dealers 5% in card fees, up 2.5 points, with no explanation or rationale. This sounds like a “skimming” tactic to me. But, I don’t have enough knowledge on this tactic to know what’s considered normal and what’s not. 5% seems very high to me, and why not pass along to the customer, vs. the dealer middleman?

    Tom DeSimone

    Hi Lynn,

    Five percent is very high. The actual cost for the merchant is probably closer to 2-3%, possibly less if a lot of debit comes through. If there are a lot of small sales coming through (like $10 or less), 4-5% is not completely out of the question because small sales cost a higher percentage. Also if there are a lot of AMEX transactions, that could justify a high rate. But really with 5% a certain amount is going to be profit for the merchant. Although there is also a chance that the merchant is getting overcharged by his or her credit card processor. Maybe you should refer them to our site!

    This hike could be related to the upcoming switch to chip cards. Since there will be added cost to replace the credit card machines with new ones, the merchant may be trying to offset that cost by charging you more. I don’t think that is the right thing to do, but it might be the case.

    Surcharging the customer is certainly an option, but according the the network rules the surcharge cannot exceed the cost to process the transaction. Chances are the merchant doesn’t want to lose sales or deal with angry customers, so instead decided to pass the cost to the sellers instead.

    If possible, you might want to consider opening up an account with a mobile processor like Flint. Flint charged 1.95% for debit and 2.95% for credit.


    Wouldn’t it be cheaper to use something like square at 2.75% then to pay all the bank fees? Anyone know?

    Tom DeSimone

    Hi Karen,

    It depends. For very low volume businesses, services like Flint, Square, PayPal, etc., can be much less expensive in terms of effective rate, especially if the average ticket size is very low too. But you give up some stability and versatility by going that route. For businesses processing over $10K monthly, even over $5K monthly in many cases, they will see substantial savings going with a traditional merchant account provider because the percentage markup will be lower and that percentage fee is what will make up the vast majority of their processing costs.

    It really comes down to your business needs and processing habits. Check out our merchant account finder to see which option will be best for your business.

    And here’s an article where we compare Square to other options.

    James Trieb

    Most companies and small business’s should always do a price comparison with another Merchant processor twice a year. That way you know what your current processor is doing for you. Some want you to sign a 3-5 year contract. Most Merchant processors will buy out your old contract up to $500.00 if, you switch with them. When an agent comes to you and want to do a comparison, say yes then and print up your last month’s billing statement give it to the agent. They will do the price comparison within 24 hrs.


    I appreciate the great amount of information.
    as I accepted a job at firm selling software, the owner passes on the 3.5% credit card processing fees to the sales reps. This doesn’t seem common practice to push the fee to the sales rep whom worked hard to make the sale.
    I’m looking for best fees and rates and eCommerce examples where the sales people may be able to accept credit cards themselves (Ipad or other apps) and avod losing 3.5% off ther gross margins before commissons are paid out.
    any tps, help examples, are appreciated.

    Tom DeSimone

    Hi Doug,

    I think it’s crazy to essentially surcharge the sales rep for the client’s credit card payment. I’ve never heard of that before. If anything, the customer should incur the surcharge (which is allowed under network rules, with some stipulations). My suggestion would be to charge customers a convenience fee in order to cover the credit card fee if your employer insists that you must pay. You can also try to push ACH payments through a service like Dwolla. Look into Dwolla Direct. You can create a payment button and customers don’t even need to have a Dwolla account. Only $0.25 per transaction. If you need to accept payments from a mobile device, consider Flint Mobile. At least the rates will be a little lower (only 1.95% for debit).

    Good luck!

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