Can You Decrease Credit Card Interchange Fees?

If you’re selling anything at all these days—online or in-person—it’s absolutely imperative to learn about interchange fees. They significantly impact the cost of accepting card payments. 

Understanding interchange fees enables merchants to effectively manage processing costs, negotiate better rates, make informed decisions about card acceptance, and ensure compliance with payment industry standards. Ultimately, knowing about what interchange fees entail, helps you make smarter decisions that improve financial performance and customer experience.


  • Credit card interchange fees are the fees that merchants pay to banks and credit card companies every time they accept credit cards. These fees help cover the costs of processing the payment and maintaining the card network.
  • Interchange fees themselves are non-negotiable and they’re charged whenever a merchant accepts credit card payments. That said, these fees can vary based on several factors like card brand, transaction location, etc.
  • Merchants can also offset the costs associated with credit card processing by implementing surcharging using a solution like CardX.
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What are credit card interchange fees?

Credit card interchange fees are the fees that merchants pay to banks and credit card companies every time they take a non-cash purchase. These fees help cover the costs of processing the payment and maintaining the card network.

The Anatomy of Credit Card Processing Fees

Let’s break down the nitty-gritty of credit card processing fees—because understanding where your hard-earned money goes when you accept card payments is crucial for any business owner, especially one of a small business. There are a variety of different fee types associated with processing credit card payments. 

Interchange fees 

First off, you’ve got interchange fees. They’re the heart and soul of credit card processing. These fees go to the card-issuing bank (think your friendly neighborhood Bank of XYZ) and are a fixed percentage of the transaction amount. They can vary based on factors like the type of card (debit, credit, rewards, etc.) and how it’s processed (swiped, dipped, or typed in).

Assessment fees

Then, you’ve got assessment fees. These go to the card networks themselves, like Visa, Mastercard, or American Express. It’s their slice of the pie for providing you with that universally accepted piece of plastic. Assessment fees are usually a small percentage of the transaction value.

Processor markup 

This is where your payment processor comes into play. They charge a markup on top of interchange and assessment fees, which covers their services, technology, and the convenience of it all. This markup can be a fixed fee per transaction or a percentage of the total amount, depending on your processing agreement.

Additional fees

Generally, processors toss in other fees, like monthly statement fees, gateway fees, or chargeback fees if customers dispute a transaction. Make sure you read the fine print on your processing agreement to know what you might be dishing out for these extras.

Can you decrease interchange fees?

The short answer is no. Interchange fees are set by the credit card networks (Visa, Mastercard, Discover, American Express, etc.) and are standardized for all people taking credit card payments. They are therefore non-negotiable. 

You will, however, see higher or lower interchange fees depending on a variety of factors, such as the card brand, the location of the transaction (whether it’s in-person at a point-of-sale or online) and more. This variety means there are strategies you can use to lower your overall costs associated with credit card transaction processing.

Strategies to lower your credit card processing costs

While you can’t decrease your interchange fees, there is a lot you can do to lower the overall costs of credit card processing, because there are many factors that go into determining how much you’ll end up paying. 

1. Negotiate with payment processors 

While you can’t negotiate interchange fees, you can negotiate the fees charged by your payment processor or merchant services provider. Be proactive in discussing your processing rates and ask for competitive pricing, especially if you have a high transaction volume.

2. Optimize transactions for lower rates 

Review your card acceptance policies. You may consider accepting only cards with lower interchange rates or encourage customers to use lower-cost payment methods like debit card transactions or ACH transfers. (There’s a reason many merchants don’t take Discover.) You can also use address verification services (AVS) to make card-not-present transactions more secure.

To incentivize your customers to use preferred methods, you may be able to provide discounts on cash purchases – or use surcharges for credit purchases. (Do be aware there may be local regulations in your area to prevent that, though.)

3. Regularly review and compare processing statements 

Periodically review your payment processing agreements to make sure you are getting competitive rates and that there are no hidden fees.

4. Switching to a processor with lower fees 

It’s important to periodically explore different payment processing solutions, such as payment gateways or integrated systems, that might offer more competitive rates and better efficiency. The payment processing landscape changes fairly frequently, so you may no longer be getting the best available deal. 

5. Batching transactions 

Batching transactions reduces credit card payment costs by consolidating multiple individual card transactions into a single batch or settlement. Instead of processing each transaction separately, businesses accumulate a group of transactions over a specific period (often a day) and submit them together for processing. This process is more efficient and cost-effective because it reduces the number of times the business incurs per-transaction fees, such as interchange fees and processing fees.

6. Use updated equipment and software

Using updated equipment and software reduces credit card payment costs by enhancing the efficiency and security of payment processing, thereby making it less likely you’ll have to face chargeback fees and other fees associated with fraud.

Alternative Solutions: Introducing CardX by Stax

CardX by Stax takes a distinct approach in the world of payment processing by opting to pass on the credit card processing fee directly to the customers (known as surcharging) instead of attempting to decrease or absorb it. This strategy offers transparency and allows businesses to maintain their profit margins while offsetting the cost of processing card payments.

It’s important to note that the legality of surcharging varies by location and is subject to regulations and card network rules. You should review local laws and card network guidelines to ensure compliance while transparently informing customers about the additional fee.

There are plenty of benefits to the surcharging model.

Immediate reduction in transaction costs for the merchant

This immediate cost reduction from credit card processing fees can significantly impact a company’s bottom line, allowing them to allocate resources more efficiently, invest in growth, or offer competitive pricing to their customers.

Compliance assurance for surcharging regulations

CardX’s model offers peace of mind when it comes to compliance with surcharging regulations. Navigating the complex legal landscape surrounding surcharging can be a daunting task for businesses. CardX by Stax not only provides the technical infrastructure to implement surcharging but also ensures that businesses stay compliant with local and regional laws, as well as card network regulations. 

Flexibility and adaptability: working online, in offices, and in-store

One of the key advantages of CardX’s model is its flexibility and adaptability to various business settings. Whether you operate primarily online, in-office environments, or in physical stores, CardX can seamlessly integrate with your payment systems. This adaptability ensures a consistent and user-friendly experience for both merchants and customers, regardless of the sales channel.

Comparing Direct Reduction vs. Surcharging

So what’s the difference between direct reduction (the merchant absorbing card processing fees) and surcharging? There are three main areas you need to compare when considering switching from one form to the other.

Financial implications for the business

Direct reduction impacts profit margins, possibly requiring price adjustments, and can affect tax reporting. It’s more expensive, at least up front, to the business than surcharging.

Feedback and reactions from customers

Surcharging maintains profit margins and offers pricing transparency but may yield mixed customer reactions. Because direct reduction is the most common form of credit card payment processing for businesses, customers may be put off by the additional fee—and need to be educated about how surcharging is better for their wallets,too.

Long-term sustainability and adaptability

Sustainability-wise, direct reduction can strain profits, necessitating adjustments. Surcharging ensures cost recovery but requires compliance with regulations and customer education for long-term success. 

Businesses should weigh these factors when deciding between these payment processing approaches.

Wrap Up

There are a lot of options available to merchants these days with interchange fees – a variety of pricing models from interchange plus to flat rate pricing. CardX makes payment processing fees simple for businesses—by passing them on to the cardholder.

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FAQs about Credit Card Interchange Fees

Q: What are credit card interchange fees?

Credit card interchange fees are the fees that merchants pay to banks and credit card companies every time they accept credit cards. These fees help cover the costs of processing the payment and maintaining the card network.

Q: Who charges credit card fees?

Interchange fees go to the card-issuing bank and are set by the card networks. Speaking of which,  assessment fees are charged by card networks like Visa, Mastercard, or American Express. Payment processors also charge a markup on top of interchange and assessment fees for their services and technology. In addition, there can be other fees like monthly statement fees, gateway fees, or chargeback fees which are generally introduced by payment processors.

Q: Can you decrease credit card interchange fees?

No, interchange fees are set by the credit card networks (e.g., Visa, Mastercard, Discover, American Express) and are standardized for everyone taking credit card payments. They are non-negotiable. However, the interchange fees can vary based on several factors like card brand, transaction location, etc. 

Q: How much do credit card interchange fees cost?

As of 2023, the average interchange rate is 0.3% for debit cards and 1.8% for credit cards. 

Q: Aside from interchange fees, what other costs are associated with credit card processing?

Aside from interchange fees, merchants are also charged assessment fees, payment processing markups, as well as PCI compliance fees and chargeback fees.