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Your Guide to Average Credit Card Processing Fees

January 6, 2020 / Posted in Credit Cards

If you want to stay relevant on the market today, no matter what types of services or products you offer, you would have to introduce cashless payment options to your business. However, you should be familiar with the average credit card processing fees to be able to optimize your monthly expenses and set your business on a path to success.

How Does Credit Card Processing Work?

A cashless payment transaction process is carried out by a few parties. First, your customer will swipe or key in the payment with the cashless option of choice on the POS system in your store/establishment, the information will go through a secure channel to the card brand for approval or rejection. After the payment is approved, the instruction to transfer funds will go to the customer’s bank. All the parties involved in this process charge some kind of fee. The “channel” that communicates and processes the payment information is a credit card processor.

A pile of cards on a desk ready for credit card processing services

What Are the Types of Processing Fees?

To put it simply, when receiving cashless payments, card-present or non-present, you are paying certain fees to your processor, to the credit card brand, and to the issuing bank. There are charges that can be tweaked and negotiated, and there are some that are fixed. They are separated into three major categories:

Interchange Fees

These are the fees that are charged by the credit card issuing bank. The bank charges a certain amount for the transaction, and it is agreed upon by all the banks that are providing this service. In other words, interchange charges are the same for all. However, they are not static and the issuers change them over time. The structure of the interchange fee goes somewhere along these lines:

Percentage of the transaction + fixed sum per transaction = interchange fee

For example, for a $5 ticket, for swiped transaction your interchange fee would amount to:

1.60% x 5 + $0.10 = $0.18 on average


These fees are charged by brands such as Visa, Mastercard, Discovery and American Express, for assessing the validity of the transaction and the communication between the issuing bank and merchant account. It can vary between these associations and it is also susceptible to change. Those fees are calculated as a percentage of the paid amount, and at the moment they hold this value:

Visa: 0.14%

Mastercard: for a ticket that is under $1,000 the fee is  0.1375%, and for the ticket above $1.000, it is 0.01%

Discover: 0.13%

American Express: 0.15%


These fees are charged by your payment processor or merchant service provider, and since this is a big and competitive market, they can differ greatly from processor to processor. The companies in this business are not bound by any kind of agreement like the brands and issuing banks are, and they could even have different offers for some types of businesses, special arrangements for large companies and different pricing systems.

How Much Are the Average Credit Card Processing Fees?

You have to be aware that some processors are more suitable for small businesses, some for the larger companies and some are better for online payments. The structure of the charges is also different. Some processors charge only a percentage per transaction, while others may charge a percentage plus the fixed sum per every transaction. On average, their fees range from 2% for swiped transactions to up to 3.5 % for keyed-in or online payments. Usually, when the percentage is lower, there is a fixed $0.10 fee on top of it for every ticket.

Person typing in information

Can You Optimize Your Expenses?

When making your business strategy, what you should be focused on, as far as the processing expenses go, are the negotiable processor charges. If you already run a business and have your processor, it is not a bad idea to grab a few statements and check your expenses.

If you are not bound by a contract, you can choose another provider if they have a better offer. Also, pay attention to the type of processor that would be the best for your business and the fee structure.

The Difference Between Payment Processing Providers

There are two main types of these providers: merchant service providers and payment service providers. With Merchant Service providers, you have your own merchant account for the processed funds to land on, while the payment service providers have one account for many merchants. Also, payment service providers usually do not bind you with any contract, so you can change them at any time without breaking the bank for sometimes very expensive early-contract termination charges.

What Are the Expenses That You Can’t Change on Your Statement?

As you may have already deduced, the charges that are non-negotiable and therefore, can’t be influenced are interchange and assessment fees. They are charged by card brands and issuing banks. However, there are slight differences between them too, and no matter how small they are, they could influence your business, too. Besides, you cannot influence which cards your customers will use, and which bank.

Which Model Is the Best One for Your Business, Big or Small?

What you should focus on here is the amount of money you charge on credit cards or the volume of your transactions, and even more important, the average ticket price. Why is that? For example, if you process many transactions worth smaller amounts daily, you will lose money with the percentage plus the fixed amount structure. Your best bet would be the percentage-only structure.

It is usually, but not always the opposite for the bigger-ticket value businesses. There is also a possibility to pay a fixed fee every month, which some providers offer, and have a lower percentage charge for every transaction.

What Are Your Options?

Besides the charges, you should also pay attention to the whole system. Some providers offer free software and hardware for your transactions, but some of them can’t integrate with all the systems, while others don’t have a good and secure gateway. However, there are a few of them with an established reputation that offer great deals.

Our Top Picks for the Best Average Credit Card Processing Rate

The ones that pop out the most in the sea of companies that process cards, a favorable rate, good POS systems, and secure gateways are:

  • Paypal
  • Merchant Chimp
  • Square
  • Stripe
  • SpotOn


It never hurts to know how much you can save.

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