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Average Credit Card Processing Fees & Rates for Business

April 12, 2024

If they want to offer credit card payment options, businesses must pay credit card transaction fees. These are paid to credit card providers or payment processors. This is a vital part of any modern business. The Wall Street Journal shows that card payments now account for more than half of all consumer payments by dollars spent.

Although these fees are ubiquitous, they aren’t always the same. Business owners must keep current credit card processing fees and rates in mind. This way, they pay as little as possible. Furthermore, credit card processing fees can shift multiple times per year. It often depends on the company used.

Let’s take a closer look at what the average credit card processing fees are for businesses. We’ll also explore why these rates can change from time to time.

Here’s What We’ll Cover:

Average Credit Card Processing Fees in 2021

Who Determines Credit Card Processing Fees?

Can You Negotiate Credit Card Processing Fees?

Key Takeaways

Average Credit Card Processing Fees in 2021

It depends. Credit card transaction fees vary among each of the four major credit card networks. These are American Express, MasterCard, Visa, and Discover. Furthermore, total credit card processing costs consist of several types of fees.

All credit card companies will charge between 1.3% to 3.5% of a credit card transaction in fees. Average credit card processing fees for each major credit card network are:

Mastercard: 1.29% + $0.05 to 2.64% + $0.10
Visa: 1.29% + $0.05 to 2.54% + $0.10
American Express: 1.58% + $0.10 to 3.45% + $0.10
Discover: 1.48% + $0.05 to 2.53% + $0.10

The above values include both of the major fee types that payment networks charge. You can use the general ranges to calculate your estimated expenses. The expense amounts depend on how many customers used credit cards in the last year.

However, the values above don’t include the cost of payment processing. Payment processors’ fee structures can vary dramatically depending on the company you use.

Interchange Fees for Businesses

The interchange fee for a credit card transaction takes up the majority of the fee cost. These fees are paid every time a customer makes a payment with a credit card. The bank or financial institution that issued the card receives this fee. Imagine that a customer uses a Chase credit card with Visa. In that case, Chase gets the interchange fee for all transactions from that card.

The average interchange rate ranges for all four major card networks are:

Mastercard: 1.15% + $0.05 to 2.50% + $0.10
Visa: 1.15% + $0.05 to 2.40% + $0.10
American Express: 1.43% + $0.10 to 3.30% $0.10
Discover: 1.35% + $0.05 to 2.40% + $0.10

The fee structure above does not include the above-mentioned assessment fees. So they do not represent the full cost of each credit card transaction.

Credit Card Assessment Fees

Credit card assessment fees are fees paid to individual card networks like MasterCard and Visa. These fees are paid to the card networks so they can continue to operate and offer their services.

Assessment fees are cheaper than interchange fees. They depend on their own individual factors. These include transaction volume, the type of card used, and more. According to Wells Fargo, the assessment fees for the major card networks are:

MasterCard: 0.1375%
Visa: 0.14%/0.13% for credit card and debit card transactions, respectively
American Express: 0.15%
Discover: 0.13%

Both American Express and Discover are unique among credit card companies. They issue credit cards and operate payment networks independently. Thus, Visa and MasterCard credit cards are accepted more often. But American Express and Discover keep the fees for both interchange and assessment.

Payment Processing Fees

Payment processing fees are paid to the companies that accept credit card charges. They also send the transactions to payment networks.

This is accomplished through online payment gateways or through physical card readers. If your business uses a payment processor company, they may have also provided your business with equipment. This includes card readers or swipers.

Payment processing fees are usually broken down into sub-fees:

Per-transaction fees
Monthly service fees
Flat rate costs needed to process credit card transactions

Your payment processing fees are entirely dependent on the service provider you choose. Budget-savvy business owners may wish to sign up with affordable payment processing providers.

Who Determines Credit Card Processing Fees?

Three key parties determine the credit card processing rates. These are:

The card issuer, such as Chase, Bank of America, and so on
The credit card network, like Visa, MasterCard, and more
Credit card processors. These companies provide the equipment for processing credit card transactions for many businesses

Each of these parties has the power to adjust interchange rates and other costs. So total credit card processing fees can change several times per year. For example, Visa and MasterCard usually adjust their rates twice per year.

Credit card providers calculate their interchange fees by combining multiple factors. For example, interchange fees are calculated by adding:

The processing type. Swiping a credit card is cheaper than inputting a card’s information into a computer
The types of credit cards or debit cards. Business credit cards are more expensive than consumer credit cards in most cases
The card type brands used
The sales volume for card transactions or business type
The MCC or merchant category code. These four-digit numbers classify consumer transactions. Classifications are often made by business type. They’re also integral for cashback types of cards. After all, those cards need transaction types to be recorded. For instance, restaurant charges are classified differently than retail business purchases

Each major credit card company offers online files breaking down their interchange rates. Business owners can use these files to get a more detailed look at what they can expect to pay in credit card fees over the coming year.

Furthermore, credit card processing providers have different pricing models. Some offer flat-rate pricing, while others offer “interchange-plus pricing”. This model incorporates most fees into a single rate for easier comparison.

Can You Negotiate Credit Card Processing Fees?

Yes, but only with some of them. Your credit card processing company might leverage certain fees against your business. These include:

Terminal lease fees
Statement fees
Account fees
Payment gateway fees
Chargeback fees
PCI compliance fees
Credit card convenience fees
IRS reporting fees
Marked up discount rate fees
And more

None of these charges are required to process credit card transactions. Therefore, it’s smart to shop around for a more affordable credit card processing service that won’t levy these fees against you. Then you can accept credit card payments without paying high fees!

Say that you find a good credit card processing company that nonetheless charges high fees. In this case, you can negotiate with them to lower or eliminate these charges.

Speak to one of their customer service representatives and say that you’ll leave for a competitor if they don’t remove one or all unnecessary fees. This tactic is often successful since processing companies want to keep their customers as often as possible. They may even give you a discount rate!

Key Takeaways

It’s tough to narrow down a single average credit card processing fee range for your business. There are simply too many factors that go into how much credit card companies and processors charge.

However, the above ranges will give you a good idea of what charges you can expect for the upcoming fiscal year. Use these ranges and keep your eye on credit card companies’ websites. Their interchange and assessment fee ranges change relatively frequently.

By keeping an eye on credit card processing rates, you can switch payment providers or processing companies if they raise their rates. This will save your business money and allow you to spend that extra money elsewhere.

Did you find this article helpful? If so, check out our article on How to Charge Credit Card Fees to Customers to find out how you can minimize the financial impact of credit card processing fees.