Explanation of Credit Card Processing Costs and Fees
Estimated reading time: 2 minutes
Credit card processing varies between 1.5% and 3.5%, depending on numerous factors, including the issuer, payment processor, and more.
Credit card issuer rates vary by brand
Card networks have their own fees for credit and debit transactions. The top three networks and their average transaction costs are:
- American Express is the most expensive, with fees ranging from 1.58% to 3.3%.
- Discover charges fees of 1.53% to 2.53%.
- Mastercard charges fees from 1.29% to 2.64%.
However, these are card network fees and not card issuer fees. The card issuer charges the business a small percentage of the transaction fee plus a flat fee.
How much does Visa charge merchants?
Visa transaction fees vary from 1.29% to 2.54%.
Credit card processing fees for small businesses
Base or wholesale costs, such as those by American Express, which range from 1.58% to 3.3%, are non-negotiable fees that your payment processor must collect. However, you’ll likely pay between 1.3% and 3.5% of the transaction cost in fees when you add all fees together.
You may pay higher fees if you’re in an industry with a high chargeback rate because you’re a riskier business.
Many transactions also have a small transaction fee. For example, you may pay 1.58% of the transaction plus $0.10 for the transaction.
Small businesses will have to pay multiple fees for accepting cards, including:
- Per-transaction fees
- Monthly service fees
- Equipment fees
Assessment fees are also charged to the small business, and it’s a small fee of 0.13% to 0.15% in most cases. For example, let’s assume that Capital One issues a person a credit card. Visa will receive this fee for every purchase to cover their own processing costs.
