What Are The Costs of Credit Card Processing?

Mar 03, 2023 By Triston Martin

To accept credit card payments from clients, businesses must pay credit card processing fees. The bank or credit card firm that processes the transaction may impose these costs. Several variables, including the processing business, the amount of the transaction, and the type of card used, might affect the fee size. Credit card processing costs consist mostly of a percentage of the total amount charged and a flat fee. The percentage fee is a commission the processor charges for handling the payment, typically 2-3% of the total transaction value. The authorization and settlement fees are included in the flat fee per transaction, typically a few cents.

Types Of Credit Card Processing Fees

Interchange, assessment, and processor fees are the three main categories of credit card processing costs. These costs are levied by various organizations for their services in processing your payment.

Interchange Fees

The credit card network (Visa, Mastercard, etc.) charges an "interchange fee," a percentage of the total amount of the transaction. These fees can vary widely based on several criteria, such as the type of card used and the risk connected with the transaction, but they always make up the bulk of credit card processing fees. When a business accepts a credit card as payment, the acquiring bank must pay the issuing bank an interchange fee. The acquiring bank includes these fees in the processing fee it charges the merchant. Premium cards, such as rewards and business cards, often incur higher interchange fees, ranging from 1.5% to 3% of the transaction value.

Assessment Fees

The assessment fee is a modest percentage of the total transaction amount the credit card network levied. The acquiring bank will pay these fees to the network to cover the system's cost. Common to all credit and debit cards are assessment fees ranging from 0.11 percent to 0.15 percent.

Processor Fees

The cost of processing a transaction is covered by the processor fee levied by the payment gateway. The processor's fees may be a flat rate, a percentage of the total, or some mix.

Percentage-Based Fees

There are also percentage-based fees that vary from 1.5% to 3% of the total transaction value, depending on the processor and the type of card used. Credit card transactions are typically more expensive than debit card purchases, but some processors may charge differently.

Flat Fees

The fees for authorizing and settling a transaction are bundled into one low flat rate. Depending on the processor and the features they offer, these costs could be anything from a few cents to a dollar or more. Depending on the processor, you may additionally have to pay a monthly or annual account maintenance fee.

Additional Fees

In addition to the standard processing fees, certain processors may have supplementary fees for services like chargebacks, overseas transactions, and so on. These costs can range considerably from one processor to another.

Chargeback Fees

When a customer has cause to dispute a charge and ask for a return from their card issuer, this is known as a chargeback. Processors impose chargeback fees to recoup the money they spend settling the dispute. Depending on the processor and the nature of the dispute, this cost might be anything from $15 to $100 per chargeback.

International Fees

Processing payments in a currency other than the merchant's local currency incur an international fee. Depending on the specifics of the transaction, these costs could account for anywhere from 1% to 3% of the total.

Special Services

Some processors may charge extra for exceptional services like recurring billing or fraud detection. These costs may change based on the type of processor used and the services required.

What Determines Credit Card Processing Fees?

Credit card processing costs can vary depending on several criteria, such as the type of card used, the value of the transaction, and the risk connected with the transaction.


Common charge structures include a flat cost plus a percentage of the total transaction amount. The flat cost is often a few cents, whereas the percentage fee averages 2% to 3% of the total transaction value. These charges cover payment processing and settlement expenses. As processing fees vary widely from one processor to the next and from one industry to the next, businesses must research and compare prices before settling on one. Chargebacks, overseas transactions, and regular account maintenance may incur extra costs with certain processors. Accepting credit card payments can be convenient for customers and can help firms boost sales, despite the added expense.

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