Understanding credit card processing fees can be difficult for many business owners. Merchant statements often include unfamiliar terms, different transaction rates, monthly charges, and additional fees that are not always easy to identify.
These costs can affect your profit margins, cash flow, and overall cost of doing business. The challenge is that the lowest advertised rate does not always represent what a business will actually pay.
Global Merchant Partners helps businesses understand their payment-processing costs and explore credit card, ACH, POS, and merchant service solutions suited to their transaction volume and operations.
What Are Credit Card Processing Fees?
Credit card processing fees are the costs a business pays to accept credit and debit card transactions.
When a customer uses a card, several financial and technology entities may be involved in authorizing, processing, and settling the payment. These can include:
- The customer’s issuing bank
- The merchant’s acquiring bank
- The payment processor
- The card network
- The payment gateway
- The merchant account provider
- The point-of-sale provider
The total amount a business pays may include transaction-based fees, monthly service charges, equipment costs, compliance-related fees, and other account expenses.
Because pricing varies by provider, card type, transaction method, and business profile, two businesses processing the same sales volume may not pay the same amount.
What Makes Up Credit Card Processing Fees?
Credit card processing fees generally consist of three main components:
- Interchange fees paid to the cardholder’s issuing bank
- Card-network assessment fees
- The payment processor’s markup or service fee
Businesses may also pay monthly account fees, payment gateway charges, equipment costs, chargeback fees, PCI-related fees, and other service charges.
Global Merchant Partners can help you better understand these costs and identify a payment-processing solution that fits your business.
Why Credit Card Processing Costs Matter
Every card payment carries a cost. Although an individual transaction fee may appear small, the total can become significant when multiplied across hundreds or thousands of monthly transactions.
For businesses operating on narrow margins, unclear or unnecessary fees can reduce profitability.
Processing costs can be especially important for:
- Retail stores
- Restaurants
- Professional service companies
- Contractors
- E-commerce businesses
- Subscription businesses
- Companies accepting high-value transactions
- Businesses with large monthly sales volumes
Regularly reviewing your payment-processing setup can help you understand where your money is going and whether your current arrangement still fits your business.
The Main Types of Credit Card Processing Fees
The total cost of accepting cards is usually made up of several different charges. Understanding each one can make your merchant statement easier to review.
1. Interchange Fees
Interchange fees are paid as part of the transaction process to the bank that issued the customer’s card.
The amount can vary depending on factors such as:
- Card type
- Credit or debit card
- Rewards or premium card
- Consumer or commercial card
- In-person or online transaction
- Chip-read or manually entered transaction
- Business industry
- Transaction amount
- Security information provided
An in-person chip-card transaction may carry a different cost from an online or manually entered payment because the level of transaction risk is different.
Interchange is one part of the total processing cost. It is not usually the only amount shown on a merchant statement.
2. Card-Network Assessment Fees
Card networks help facilitate communication between financial institutions during a transaction.
Assessment fees are generally associated with the card network used to process the payment. These fees are separate from interchange and the processor’s markup.
Assessment fees may be calculated based on transaction volume or other network-related activity.
Although these fees may be smaller than some other processing costs, they still contribute to the business’s total effective rate.
3. Payment Processor Markup
The processor markup is the amount charged by the payment-processing provider for its services.
This may include:
- Transaction authorization
- Merchant account support
- Payment technology
- Reporting tools
- Fraud-management services
- Customer service
- Account management
- Settlement support
The markup may be presented as:
- A percentage of each transaction
- A fixed amount per transaction
- A monthly fee
- A combination of percentage and fixed charges
- A bundled pricing rate
This is one area where providers may differ significantly.
Global Merchant Partners can help businesses review available processing options and understand how different pricing structures may affect their operations.
Learn more about our credit card processing solutions.
Common Monthly Merchant Account Fees
In addition to transaction charges, a business may see recurring monthly fees on its statement.
These may include:
Monthly account fee
A recurring charge for maintaining the merchant-processing account.
Statement fee
A fee for preparing and delivering a monthly processing statement, whether electronically or by mail.
Payment gateway fee
A charge associated with the technology used to securely transmit online payment information.
Virtual terminal fee
A monthly fee for software that allows a business to enter and process card payments from a computer or browser.
Minimum processing fee
A charge that may apply when the business does not generate a required minimum amount in processing fees during the month.
Software or platform fee
A charge for using a POS system, reporting dashboard, subscription platform, or payment-management tool.
Businesses should confirm which monthly services they are paying for and whether they are actively using them.
Additional Credit Card Processing Fees to Watch For
Some charges may only appear when a specific event occurs or when a particular service is used.
Chargeback fees
A chargeback occurs when a cardholder disputes a transaction through the card issuer.
The merchant may be charged a fee for the dispute, regardless of whether the business ultimately wins or loses the case.
Good transaction records, clear refund policies, signed agreements, delivery confirmation, and accurate billing descriptions can help businesses respond to disputes.
PCI-related fees
The Payment Card Industry Data Security Standard, commonly known as PCI DSS, establishes security requirements for businesses that handle cardholder data.
A provider may charge fees related to PCI compliance support, validation, monitoring, or noncompliance.
Businesses should ask what these fees cover and what actions are required to maintain compliance.
Equipment fees
Payment terminals, mobile card readers, receipt printers, and complete POS systems may involve:
- Purchase costs
- Rental fees
- Lease payments
- Installation fees
- Replacement costs
- Software subscriptions
Business owners should understand whether they will own, rent, or lease the equipment.
Long equipment leases deserve careful attention because the total cost may be much higher than the equipment’s original value.
Batch fees
A batch fee may be charged when a business closes or submits a group of transactions for settlement.
The amount may be small, but frequent batching can add to the monthly total.
Early termination fees
Some merchant agreements include a fee for ending the contract before the agreed term is complete.
Before signing, businesses should review:
- Contract length
- Renewal terms
- Cancellation requirements
- Termination charges
- Equipment obligations
Card-not-present fees
Online, phone, invoice, and manually entered transactions may carry different rates from in-person payments.
These transactions can be considered higher risk because the card is not physically presented to the merchant.
Businesses accepting card-not-present payments should ask about:
- Online transaction rates
- Gateway charges
- Virtual terminal fees
- Fraud-screening tools
- Address verification
- CVV requirements
Why the Advertised Rate May Not Be Your Final Rate
Payment-processing advertisements sometimes highlight a single low rate.
However, the final cost may depend on:
- The type of card used
- Whether the transaction is in person or online
- How the card information is entered
- The business’s industry
- Average transaction size
- Monthly processing volume
- Pricing model
- Equipment and software
- Additional account services
A headline rate may apply only to certain transaction types.
That is why businesses should compare the full pricing structure rather than selecting a provider based on one advertised percentage.
Common Credit Card Processing Pricing Models
Understanding the pricing model can help a business evaluate its statement more accurately.
Interchange-plus pricing
Under interchange-plus pricing, the business pays the applicable interchange cost plus the processor’s stated markup.
This model may make it easier to distinguish the processor’s charge from other transaction costs.
However, the statement may contain several different interchange categories because card types and transaction methods vary.
Tiered pricing
Tiered pricing groups transactions into categories, often described as qualified, mid-qualified, and non-qualified.
The rate charged depends on the category assigned to the transaction.
Businesses should understand:
- How transactions are categorized
- Which transactions receive the lowest rate
- What causes a transaction to move into a higher tier
- How much each tier costs
Flat-rate pricing
Flat-rate pricing generally applies one standard percentage and transaction fee across multiple card types.
This model can be easy to understand, but convenience does not automatically mean it is the most cost-effective option for every business.
Subscription or membership pricing
Some processors charge a monthly subscription or membership fee in addition to transaction-related costs.
This model may be suitable for certain transaction volumes, but businesses should calculate the full monthly expense before deciding.
Global Merchant Partners can help business owners explore payment-processing options based on how they accept payments and the volume they process.
How to Calculate Your Effective Processing Rate
Your effective processing rate helps show the overall percentage of card sales spent on payment processing.
To calculate it:
Total monthly processing fees ÷ Total monthly card sales × 100
For example, if a business processes $20,000 in card sales and pays $600 in total processing fees:
$600 ÷ $20,000 × 100 = 3%
The effective rate provides a broader view than one advertised transaction rate because it can include both transaction charges and other processing costs.
When calculating your effective rate, decide whether you are including:
- Transaction fees
- Monthly fees
- Equipment fees
- Software charges
- Chargeback fees
- One-time account charges
Use the same calculation method each month to make comparisons more meaningful.
Signs You May Be Paying More Than Necessary
A high processing bill does not automatically mean the provider is overcharging. The business’s transaction type, card mix, and service needs can all affect costs.
However, the following signs may justify a closer review:
- Fees have increased without a clear explanation
- The statement contains charges you do not recognize
- You are paying for equipment you no longer use
- You are paying for services your business does not need
- Your pricing model no longer fits your transaction volume
- Your business has grown significantly
- Most transactions are processed using a higher-cost method
- You have not compared providers in several years
- Your provider will not clearly explain your statement
- Your payment system lacks the features your business now requires
A review should focus on both cost and value. A slightly lower rate may not benefit the business if it comes with unreliable equipment, poor support, weak reporting, or limited payment options.
How Businesses Can Better Manage Processing Costs
Businesses may be able to improve their payment-processing setup by taking several practical steps.
Review statements regularly
Do not wait until fees become a major problem.
Review each monthly statement for:
- New charges
- Rate changes
- Unused services
- Unusual transaction categories
- Equipment fees
- Compliance charges
- Chargebacks
Use secure payment methods
Transactions processed with complete and accurate information may be less likely to be downgraded or flagged as higher risk.
Businesses should use:
- EMV chip readers
- Contactless payment technology
- Address verification for online transactions
- CVV verification
- Secure payment gateways
- Updated POS software
Avoid manually entering cards when possible
Manually entered transactions may cost more than properly processed in-person chip or contactless transactions.
Use card-present technology when the customer and card are physically available.
Compare payment methods
Credit cards are not the only way to receive electronic payments.
ACH processing may be useful for:
- Recurring invoices
- Membership payments
- Subscription services
- Business-to-business transactions
- Larger payments
- Direct bank payments
Explore our ACH payment-processing solutions.
Match the solution to the business
A restaurant, retail store, professional office, contractor, and e-commerce company may have very different transaction patterns.
The payment-processing setup should reflect:
- Average ticket size
- Monthly sales volume
- Online versus in-person sales
- Recurring payment needs
- Number of locations
- Number of employees
- Software integrations
- Customer payment preferences
Review Your Merchant Statement Carefully
A merchant statement should provide information about transaction volume, rates, fees, deposits, chargebacks, and account activity.
When reviewing your statement, look for:
- Total card sales
- Number of transactions
- Refunds
- Chargebacks
- Interchange categories
- Processor markup
- Monthly fees
- Equipment costs
- Gateway charges
- PCI-related charges
- Additional service fees
- Total amount deposited
If you do not understand a charge, ask the provider to explain it clearly.
A business owner should be able to understand what the company is paying for and why.
Questions to Ask Your Payment Processor
Use these questions when reviewing your current provider or comparing a new one.
What is included in the advertised rate?
Ask which cards and transaction methods qualify for the quoted rate.
What other monthly fees will I pay?
Request a list of account, statement, software, gateway, equipment, and compliance-related fees.
Is there an equipment lease?
Confirm whether the terminal is purchased, rented, or leased and calculate the total cost.
How are online and manually entered transactions priced?
Card-not-present transactions may have different costs from in-person transactions.
How are chargebacks handled?
Ask about dispute fees, notification procedures, response deadlines, and available support.
Can the pricing change?
Review the provider’s right to adjust rates or account fees.
What happens if I cancel?
Understand the contract term, renewal process, cancellation notice, equipment obligations, and termination fees.
Can the solution support ACH and recurring payments?
A flexible payment system may help the business choose a suitable payment method for different transactions.
How Global Merchant Partners Helps Businesses
Global Merchant Partners helps businesses understand their payment needs and explore solutions that fit how they operate.
Our available solutions may include:
- Credit and debit card processing
- Merchant account services
- ACH payment processing
- In-person payment solutions
- Online payment options
- Mobile payment processing
- Recurring payment capabilities
- POS systems and payment technology
- Gift card programs
- Payment-processing guidance and support
We consider factors such as:
- Business type
- Monthly transaction volume
- Average sale amount
- Payment channels
- Equipment requirements
- Online and in-person sales
- Recurring billing needs
- Existing business software
- Growth plans
Visit our merchant services page to explore payment options for your business.
Get Clearer About Your Payment-Processing Costs
Understanding credit card processing fees is an important part of managing business expenses.
The goal is not simply to find the lowest advertised rate. A strong payment-processing solution should also provide dependable technology, clear terms, appropriate security, useful reporting, suitable payment methods, and responsive support.
Global Merchant Partners can help you evaluate your current payment setup and identify options based on your transaction volume, sales methods, and business goals.
Speak With Global Merchant Partners
Are you concerned about confusing fees, outdated equipment, limited payment options, or a payment-processing setup that no longer fits your business?
Contact Global Merchant Partners for a personalized payment-processing consultation.
We will discuss how your business accepts payments, the services you currently use, and the solutions that may better support your operations.
Request a payment-processing consultation
Or call (877) 230-0012 to speak with the Global Merchant Partners team.
FAQ
What are credit card processing fees?
Credit card processing fees are the costs businesses pay to accept card transactions. They may include interchange, network assessments, processor markup, monthly account charges, equipment costs, gateway fees, and other service expenses.
What is an interchange fee?
An interchange fee is part of the transaction cost paid to the bank that issued the customer’s card. The amount can vary based on the card, transaction method, industry, and other factors.
Why do online credit card transactions cost more?
Online and manually entered transactions may carry higher costs because the physical card is not presented. This can increase fraud and dispute risk.
What is an effective processing rate?
The effective processing rate is the percentage of total card sales paid in processing fees. It is calculated by dividing total processing fees by total card sales and multiplying by 100.
Can a business lower its credit card processing costs?
A business may be able to improve its costs by reviewing statements, removing unused services, using secure card-present technology, comparing pricing models, and choosing a payment setup that fits its actual transaction activity.
How can Global Merchant Partners help?
Global Merchant Partners can help businesses understand their payment needs and explore credit card processing, ACH, POS, merchant account, gift card, and related payment solutions.
