KEY POINTS
- SWIPE FEES SURGE: U.S. families spent an average of $1,102 on credit and debit card swipe fees in 2023.
- PROCESSING FEES VARY: Credit card processing fees for merchants ranged from 1.15% to 3.15% per transaction, depending on card type and merchant category.
- CHOOSING PAYMENT PROCESSORS: Merchants have options like interchange-plus, flat rate, subscription, or tiered models to manage credit card processing costs effectively.
Key findings are powered by ChatGPT and based solely off the content from this article. They are reviewed by Jack Caporal, our research director. The author and editors take ultimate responsibility for the content.
In 2023, credit card companies in the U.S. earned $135.75 billion from processing fees charged to merchants. Families paid an average of $1,102 in swipe fees in 2023, according to the Merchants Payments Coalition.
The money made from these fees increased at a faster rate than the actual money spent on purchases, adding fuel to the already fierce debate between credit card companies and businesses that complain about so-called swipe fees.
Businesses claim that raising interchange fees, which are paid by merchants on each transaction made with a credit or debit card, worsen inflation and pinch consumers because businesses could opt to pass the cost of higher interchange fees onto consumers.
Most merchants need to accept credit card payments, which makes credit card processing fees a cost of doing business. For more on how much those costs can be -- and how they vary among credit card companies -- we've collected all the latest data.
What are the average credit card processing fees for merchants?
The average credit card processing fee, sometimes referred to as a "swipe fee," is 2.24%, according to the Merchant Payments Coalition.
Credit card processing fees for merchants equal approximately 1.15% to 3.15% of each credit card transaction, per data compiled by The Motley Fool Ascent. The exact amount depends on the payment network (e.g., Visa, Mastercard, Discover, or American Express), the type of credit card, and the merchant category code (MCC) of the business.
Note that debit cards have a different pricing model, and they usually cost less for merchants. This is why you may only see a convenience fee for a credit card, and not a debit card purchase.
Here are the average credit card processing fees for the four payment networks (also called "card networks"):
| In Person | Online & Manually Keyed | |
|---|---|---|
| Visa | 1.79% + $0.08 | 2.43% + $0.25 |
| Mastercard | 1.98% + $0.08 | 2.51% + $0.25 |
| American Express | 2.68% + $0.08 | 3.18% + $0.25 |
| Discover | 2.05% + $0.08 | 2.40% + $0.25 |
Data source: Helcim (2024).
These averages, sourced from the payment processing company Helcim, are weighted based on card-type distribution. Different credit cards carry different processing fees.
These are the range of credit card processing fees for those payment networks:
| Payment network | Average credit card processing fees |
|---|---|
| Visa | 1.23% + $0.05 to 3.15% + $0.10 |
| Mastercard | 1.15% + $0.05 to 3.15% + $0.10 |
| American Express | 1.10% + $0.10 to 3.15% + $0.10 |
| Discover | 1.56% + $0.10 to 2.40% + $0.10 |
Data sources: Visa USA Interchange Reimbursem*nt Fees published on April 13, 2024, Mastercard 2023–2024 U.S. Region Interchange Programs and Rates, Wells Fargo Merchant Services Payment Network Pass-Through Fee Schedule, and Wells Fargo Payment Network Qualification Matrix effective April, 2024.
Those ranges include the two types of fees that payment networks charge for each transaction: interchange fees and assessment fees. They don't include payment processing fees, because fee structures vary considerably depending on the credit card processor you choose.
Now, let's take a closer look at the fees that get taken out of every credit card transaction.
Types of credit card processing fees and costs
The two fees discussed above, interchange fees and assessment fees, are non-negotiable credit card fees for merchants. They're often referred to as base costs or the discount rate. The payment network charges these fees on every transaction involving one of their cards. Here are where those fees go.
Interchange fees
The bank that issues the credit card receives the interchange fee. For example, if you have a Visa credit card issued by Chase, Chase receives the interchange fees on your transactions.
Assessment fees
The payment network receives the assessment fee. In the example above, Visa would receive the assessment fee on every transaction where you used your Chase Visa card.
Payment processing fees
This is paid to the company that accepts the credit card payment and sends the transaction to the payment network, either through a physical card reader or an online payment gateway. Depending on the payment processing company, costs for this service could include any of the following:
- A per-transaction fee
- A monthly service fee
- The price of the equipment used to process transactions
What makes Discover and American Express different
Discover and American Express do double duty, because they issue credit cards and operate their own payment networks. Their cards may not be accepted at quite as many businesses as those of Visa and Mastercard, but they do get to keep both the interchange and assessment fees, giving them a much larger cut of each transaction.
Average credit card interchange fees
| Payment network | Interchange fee range |
|---|---|
| Visa | 1.23% to 3.15% |
| Mastercard | 1.15% to 3.15% |
| Discover | 1.56% to 2.40% |
| American Express | 1.10% to 3.15% |
Data sources: Helcim (2024); Mastercard (2024); Visa (2024).
Note: These aren't the highest and lowest interchange fees for each payment network. We've removed some of the outliers (like Mastercard's 0.00% + $0.75 for credit payments on utility bills) to make the table better reflect the average fee range.
Discover credit card processing fees have the lowest range, excluding outliers. Mastercard and Visa aren't far behind. For many merchants, processing fees will be almost the same whether the customer pays with a Visa, Mastercard, or Discover credit card.
American Express has consistently been the most expensive payment network, which is one reason why it's accepted by fewer merchants. In 2018, American Express announced the largest drop in its fees in 20 years. That brought it more in line with other credit card networks.
What determines your interchange fees?
With each payment network, there are several factors that affect where your interchange fees fall within the ranges above. Here are the most significant:
- Merchant category: Every merchant has a merchant category code (MCC) corresponding to its business type. Payment networks charge different interchange fees based on the business's MCC. For example, a supermarket has different fees than a restaurant.
- Type of credit card used: Networks have various types of cards with their own sets of benefits. Cards that offer more benefits, such as travel rewards or purchase protections, usually have higher interchange fees. A World Elite Mastercard will have higher interchange fees than an Elite Mastercard, a Visa Signature Preferred Card will have higher fees than a Visa Signature Card, and so on.
- Processing method: Interchange fees can change based on whether the card was swiped or inserted (payments made through contactless credit cards are also grouped in this category for transaction fee purposes), keyed in, or not present (in the case of online or phone transactions). This is in part because the risk of fraud varies based on the processing method. Card-not-present (CNP) transactions carry a higher risk of fraud and/or chargebacks, and interchange fees are often higher on these transactions.
American Express also uses transaction amounts to determine its interchange fees, with higher-value transactions costing merchants less.
How often do payment networks update their interchange fees?
Payment networks generally update their interchange fees on a yearly basis. This doesn't mean they raise rates every year.
Visa and Mastercard skipped fee changes in 2020 and 2021 due to the COVID-19 pandemic, but updated interchange fees in 2022. Those companies have agreed to lower swipe fees annually for the next three years as part of a proposed settlement to a class action lawsuit. Retailers have accused Mastercard and Visa of offsetting lower swipe fees with plans to raise network assessment fees.
Swipe fees are paid by the retailer to the card-issuing bank. Network assessment fees are charged by card networks, like Visa and Mastercard, to the retailer's acquiring bank for using their network.
Changes to credit card processing fees are difficult to parse. Fees depend on what type of merchant is party to the transaction, what type of credit card is being used, and whether the card is present or the transaction is done online. With dozens of merchant categories, multiple card types, and other variables that determine rates, it can be tough to determine the overall effect of interchange fee changes on merchants if fees increase in some categories and decrease in others.
Credit card assessment fees
| Visa | Mastercard | Discover | American Express |
|---|---|---|---|
| 0.14% | 0.14% for transactions under $1,000; 0.15% for transactions over $1,000 | 0.13% | 0.17% |
Data sources: Helcim (2024); Mastercard (2024); Visa (2024).
The assessment fee is the payment network's cut, and it's a much smaller portion of each transaction.
American Express is the most expensive payment network, but this time around, Mastercard has the lowest rates, especially for transactions of $1,000 and over. That being said, the differences in assessment fees between each payment network are generally minuscule.
Credit card processing fees and costs
While merchants must pay the interchange and assessment fees set by the payment networks, they have more flexibility with payment processors.
Not only are there many credit card processors available, all with their own pricing strategies, but merchants may also be able to negotiate these rates.
The following types of payment processing models are available: interchange-plus, flat rate, subscription, and tiered. Here's how each model works and the fees you'd pay with several popular payment processors.
Interchange-plus
| Payment processor | Cost per swiped retail transaction | Cost per online transaction | Monthly fee |
|---|---|---|---|
| Clover | 2.6% + $0.10 | 2.6% + $0.10 | $15 |
| Helcim | 0.4% + $0.08 | 0.5% + $0.25 | $0 |
| National Processing | 2.5% + $0.10 | 2.9% + $0.3 | $9.95 |
| Payline | 0.4% + $0.10 | 0.75% + $0.20 | $10 (retail); $20 (online) |
| Payment Depot | 0.2% to 1.95% | 0.2% to 1.95% | $0 |
Data sources: Helcim, National Processing, and Payline pricing pages.
The interchange-plus model keeps all your fees separate. The payment processor charges you exactly what the payment network charges on the transaction and adds its own separate markup. This model also requires a flat fee per month.
Note that even though this model is called "interchange-plus," the payment network's assessment fee is charged as well.
Let's say your retail business chooses Helcim. On each transaction, Helcim would deduct the interchange fee, the assessment fee, and its own fees of 0.4% plus $0.08.
This model is a popular choice, because it's affordable for all types of businesses and it has a transparent fee structure. On every sale, you'll know exactly how much the card network and your credit card processor charged.
Flat rate
| Payment processor | Cost per swiped retail transaction | Cost per online transaction | Monthly fee |
|---|---|---|---|
| PayPal | 2.99% + $0.49 | 3.49% + $0.49 | $0 |
| Square | 2.6% + $0.10 | 2.9% + $0.30 | $0 |
| Stripe | 2.7% + $0.05 | 2.9% + $0.30 | $0 |
Data sources: Square and PayPal pricing pages.
The flat-rate model is all about simplicity. You're charged the same rate on every transaction, which makes it easy to predict your payment processing costs. And you can use this model without paying a monthly fee.
That simplicity comes at a cost, though. Under the flat-rate model, credit card fees can be much higher.
There is one key advantage PayPal and Square offer over some interchange-plus competitors: They don't have monthly fees. They could be more affordable if your business has very low sales volume and wouldn't save enough in credit card transaction fees to offset the monthly cost of a monthly interchange-plus processor fee.
Subscription
| Payment processor | Cost per swiped retail transaction | Cost per online transaction | Monthly fee |
|---|---|---|---|
| Stax (formerly Fattmerchant) | Base costs + $0.08 | Base costs + $0.15 | $99 to $199+ depending on processing volume |
| Finix | Base costs + $0.08 | Base costs + $0.15 | $79.00 and up |
Data sources: Company pricing pages.
With the subscription model, you sign up for a membership with the payment processor and pay a monthly fee. You'll then pay the base costs on each transaction plus a very small payment processor fee.
You may be wondering what separates the interchange-plus and subscription models, considering their similar fee structures. In this case, it's a difference of degrees. The subscription model has much more expensive monthly fees in exchange for much cheaper transaction fees.
This model is best suited for businesses with high sales (at least $10,000 per month). You'll likely get the lowest credit card processing fees, and that helps justify your payment processor's monthly fee.
Tiered
| Payment processor | Cost per swiped (retail) transaction | Cost per invoiced transaction | Cost per keyed (online) transaction | Monthly fee |
|---|---|---|---|---|
| Intuit QuickBooks | 2.4% + $0.25 | 2.9% + $0.25 | 3.4% + $0.25 | $0 |
Data source: Intuit QuickBook pricing page.
In the tiered model, each transaction is grouped into one of the payment processor's tiers, and each tier has a set fee amount. The payment processor determines which transactions go into which tiers, and it often bases this on a transaction's interchange fees, which are included in the rate.
One popular setup with this type of payment processing has the following tiers: qualified, mid-qualified, and non-qualified. The qualified tier has the lowest transaction fees, followed by the mid-qualified tier, and the non-qualified tier is the most expensive.
The tiered model usually isn't a good choice, because it tends to be more expensive than other options. Since many types of transactions are grouped into a limited number of tiers, some transactions will have much higher processing fees than they would under other pricing models.
Equipment costs
In addition to the costs above, merchants that accept in-person transactions also need equipment. Costs vary significantly depending on the merchant's needs.
Basic mobile readers are available for $20 to $50, although some payment processors (Square included) offer one for free. Terminals and registers are more expensive, as a standard terminal can cost $150 and an advanced register can cost $1,000.
How much do credit card companies charge merchants?
When your business processes credit card payments, there will be multiple fees taken out of the total transaction amount (you may also pay a fee when a customer pays with a debit card, but these are usually less). The non-negotiable credit card network fees can vary:
- From 1.10% + $0.10 to 3.15% + $0.10 in interchange fees.
- From 0.14% to 0.17% in assessment fees.
The most important factors in what your business pays will be its MCC and the type of credit card the customer uses.
Next, your payment processor will take its cut, unless you've chosen a processor that charges one flat rate to cover all the fees in the transaction.
With credit cards becoming more and more popular, the typical merchant doesn't have much of a choice but to pay a processing fee to the card issuer and payment processor. By knowing how much you'll pay on each transaction, you can price your products appropriately and ensure you're making enough money on each sale.
Some businesses also charge a credit card convenience fee (or offer a cash discount) to cover the cost of the processing fees above.
How do credit card swipe fees impact consumers?
Some retailers have opted to tack a surcharge onto purchases made with a credit card in order to pass swipe fees on to consumers. The National Retail Federation, which supports efforts to lower credit card swipe fees, claims that swipe fees cost Americans over $1,000 a year through either higher prices or credit card swipe fee surcharges.
On the side of the debate, large retailers and credit card companies claim that processing fees are necessary to maintain credit card rewards and pay for fraud protection.
Credit card surcharges are illegal in Massachusetts and Connecticut. Credit card surcharges were expressly prohibited until a class action lawsuit in 2013 allowed states to begin allowing merchants to charge customers an extra fee to offset credit card processing fees.
With Visa and Mastercard reportedly readying another fee increase and legislation to limit swipe fees still under debate on Capitol Hill, the credit card swipe fee battle isn't going away anytime soon.
Sources
- Helcim (2024). "Discover Card USA Interchange Rates"
- Helcim (2024). "Pricing"
- Intuit QuickBooks (2024). "Get started with QuickBooks Payments and QuickBooks Checking"
- Mastercard (2024). "Mastercard 2023–2024 U.S. Region Interchange Programs and Rates"
- Merchants Payments Coalition (2024). "Mastercard Plans to Raise Credit and Debit Card Fees by Over $250 Million Despite Settlement."
- Merchants Payments Coalition (2024). "Merchants Tell Fed Debit Card Swipe Fees Should Be Competitive."
- Merchants Payments Coalition (2024). "Swipe Fee Cost for Average Household Tops $1,100."
- National Processing (2024). "Pricing"
- Payline (2024). "Pricing and Interchange."
- Payment Depot (2024). "Pricing Plans"
- PayPal (2024). "PayPal Merchant Fees"
- Square (2024). "Understanding our fees"
- Stax (2024). "Pricing"
- Visa (2024). "Visa USA Interchange Reimbursem*nt Fees"
