How much are credit card merchant fees? (2024)

FAQs

How much are credit card merchant fees? ›

The typical fee for credit card processing ranges from 1.5% to 3.5% of the total transaction. Who pays credit card processing fees? Merchants typically pay credit card processing fees, though these fees are an operating cost and thus can affect how merchants price their goods and services.

For merchants, it can be almost impossible to run a business without taking credit cards. However, the fees from these transactions can eat into profits, making it hard for some merchants with a small spread to stay afloat. The average credit card processing fee ranges between 1.5% and 3.5%.

Types of merchant fees

The amount is a percentage of the transaction value and may include a fixed fee. Interchange rates vary based on factors such as the type of card used, the transaction's risk level, and whether the transaction was in person or online.

Every time a customer swipes their credit card, the merchant — whether a restaurant, a store, a deli or Amazon — pays fees to credit card companies, processors and banks. Online orders require even higher credit card fees because the risk of fraud is higher.

If you choose to impose surcharges in the US, you are required to follow certain protocols and state regulations. You must notify the appropriate credit card associations before imposing fees, and your credit card surcharge must not exceed the cost of accepting the card or four percent of the total transaction.

But passing on credit card fees to customers is legal in the majority of the U.S. Whether or not a merchant can charge them boils down to local laws and the parameters provided by payment processing networks. Being familiar with the restrictions in your area is important to ensure you aren't overcharged.

Credit card organizations generally impose a fee per transaction to merchants, which is made up of an assessment fee to the card network and an interchange fee paid to the bank issuing the credit. This fee would be 1.5% to 3.5% of the transaction value plus a fixed cost of $0.10 to $0.30.

A good effective rate for payment processing depends on several factors, including your business type. For most businesses, a good effective rate for credit card processing is between 2% and 4%. However, there are cases where a higher effective rate can be expected.

If your total sales volume is $100,000 in one month, you will be charged the card-not-present FANF rate for $10,000 of volume for that month (10% of $100,000.) You could expect to pay $15 in card-not-present FANF costs.

What is the maximum credit card processing fee? ›

Cap of 4% on surcharges.

The surcharge that merchants pass on to consumers cannot exceed the cost merchants are charged by credit card payment processors. The current cap on these fees is 4%. “In some cases, the processor will reduce the cost if the merchant balks at 4%,” said Fortney.

Credit card processing fees are paid by the merchant, not by the consumer. Businesses and their acquiring banks pay credit card processing fees to the consumer's credit card issuer, credit card network and payment processor. On average, credit card processing fees can range between 1.5% and 3.5% of the transaction.

Whether accepting payments online or in person, banners, posters, and other appropriate types of signage should inform customers that an extra fee, such as a surcharge, will be added (as a separate line item) to the final dollar amount of their credit card purchases.

Convenience fees are normally a flat fee or a small percentage of the total payment, but they can add up to a substantial sum if the payments are large or recurring. You may be able to avoid convenience fees by paying with cash or another form of payment.

The merchant discount rate (MDR) is a fee charged to a business by the company that processes its debit and credit card transactions. Before accepting debit and credit cards, merchants must set up this service and agree to the rate. The merchant discount rate is typically between 1% and 3%.

The merchant services provider, or payment processor, will charge a fee to facilitate the credit card transaction. Processing fees can range from 1.5% to 3.5% typically, but in some cases can be as high at 6% per sale.

The average merchant processing fee typically ranges from 1.5% to 3.5% of each transaction's total amount. It includes interchange fees set by card networks, payment processor fees, and other charges. But actual rates vary based on business type, transaction volume, and card types.