For many small business owners, credit card processing fees may seem like a hefty price to pay for providing convenience to customers. Even if you consider them to be a cost of doing business, credit card fees can quickly eat away at your already slim profit margins.
Merchants paid a record $172 billion in payment processing fees in 2023. This figure may continue to climb as inflation rises and credit card networks boost their processing rates.
This article explores the key factors that influence credit card processing rates in 2025, particularly helpful for small business owners looking to keep their credit card transaction fees as low as possible.
Let’s get started.
TL;DR
- The credit card processing fees a business pays, are a combination of the different fees charged by key players in the payment processing ecosystem. Since each player sets its own rates, credit card processing fees can vary based on your choice of credit card processing service provider, their fee structure, and the types of transactions you process.
- Interchange and assessment fees are set by card networks and are non-negotiable. Merchants can, however, negotiate with their payment processor to cut costs, tweak pricing, or secure better rates.
- Choosing a credit card processor that offers transparent pricing, strong customer support, and top-tier security is the key to lowering processing costs. Always review pricing models, monthly fees, per-transaction markups, hidden fees, and contract terms before making a decision.
How Credit Card Processing Fees Work
Whenever customers swipe, tap, or dip their credit or debit cards at a payment terminal, it sets a complex network in motion, resulting in approval or rejection of the payment. While credit card transactions might seem instantaneous, multiple players work behind the scenes to transfer information and funds, ensuring the payment is processed smoothly. This applies to both card present transactions and card-not-present transactions.
However, these players also take a slice of the transaction amount, before the earnings arrive in your merchant account. Following are the key entities involved in credit card processing.
- Merchant – The business accepting credit cards from customers.
- Credit card processor – The payment processing company that the merchant partners with. The credit card payment processor often provides the equipment and technology that allow businesses to process such payments.
- Acquiring bank – The merchant’s bank that receives and disburses the funds.
- Credit card network – Mastercard, Visa, American Express, and Discover are the biggest payment networks in the US. They facilitate transactions by connecting merchants, credit card processors, and banks while establishing rules, regulations, and fees for processing payments.
- Credit card issuer (or issuing bank) – These are financial institutions that issue credit cards to customers. Also known as card companies or card issuers (e.g., Chase, Bank of America, etc.), they approve or decline credit card transactions, pay the merchant, and bill the cardholder.
The credit card processing fees a business pays, is a combination of the different fees charged by the entities mentioned above. Since each player sets its own rates, credit card processing fees can vary based on your choice of credit card processing service provider, their fee structures, and the types of transactions you process.
Types of Credit Card Processing Fees
As mentioned above, the credit card processing fees you pay are a sum of fees charged by various financial institutions. On average, you may end up paying 1.5% to 3.75% as credit card processing fees on a per transaction basis.
The range mentioned above is based on an average. The exact fees you pay can vary depending on the type of card used, the card issuer, the credit card network, the type of transaction, and the pricing model (e.g., flat rate pricing, interchange-plus pricing, tiered pricing, etc.) of your payment processor. Below the key components of credit card processing fees.
Interchange fees
This fee is usually the biggest chunk of your overall credit card processing fees. While a credit card network like Mastercard sets the interchange rates, the fee itself goes to the card issuer. So, if a customer uses a Mastercard payment card issued by Chase, Mastercard sets the interchange fee but it’s Chase that collects it.
Interchange fees cover transaction processing costs, fraud prevention costs, and the risk incurred by the issuing bank if the cardholder fails to pay. This fee isn’t a fixed rate for all transactions. It fluctuates based on factors such as card type and transaction type. Riskier transactions, such as online purchases where the card isn’t physically present, often have higher fees.
In most cases, the interchange fee is a percentage of the transaction amount plus a small flat fee.
Assessment fees
Assessment fees go to the payment network or the credit card network. You pay this fee for using their payment infrastructure. In the previous example, Mastercard retains the assessment fee from the overall credit card processing fee.
Usually, the assessment fee is not charged per transaction but on a monthly basis, and it is much smaller than the interchange fee.
Payment processor fees
Payment processors charge their own payment processing fees for facilitating transactions. These fees vary by provider and pricing model. They may include per-transaction charges, monthly fees, or additional costs for fraud protection and other services.
Other fees (Incidental fees)
Besides the fees mentioned earlier, merchants may also incur some of the fees below.
- Chargeback fee – A merchant has to pay this fee if a customer disputes a charge and wins.
- PCI compliance fee – This fee is usually charged by the payment processor or acquiring bank to ensure the business follows Payment Card Industry Data Security Standard (PCI DSS) requirements to protect customer data.
- Monthly or annual fee – Some processors charge ongoing fees for account maintenance, reporting, and other features.
- Early termination fee – Many credit card processors charge this fee if a merchant cancels their contract before the agreed-upon term. This helps the processor recoup lost revenue.
Interchange and assessment fees are set by card networks and are non-negotiable. Merchants can, however, negotiate with their payment processor to cut costs, tweak pricing, or secure better rates.
Average Credit Card Processing Rates in 2025
Below are the credit card transaction fees charged by different card networks in 2025.
| Card Network | Interchange Fee
(per transaction) |
Assessment Fee
(total transaction volume) |
| Mastercard | 1.15% + $0.05 to 2.95% + $0.10 | 0.14% |
| Visa | 1.15% + $0.05 to 2.70% + $0.10 | 0.14% |
| Discover | 1.35% + $0.05 to 2.40% + $0.10 | 0.13% |
| American Express | 1.43% + $0.10 to 3.30%+ $0.10 | 0.17% |
These rates are estimates and may change based on your merchant agreement, transaction details, and network updates. For the latest figures, check with your card network or payment processor.
Retail businesses pay the lowest credit card processing fees (1.3-2.7%), since in-person transactions carry lower fraud risk. eCommerce rates are higher (1.8-3.5%) due to online fraud concerns. B2B transactions (1.8%–3.2%) may qualify for lower credit card processing fees with detailed transaction data.
Credit Card Processing Pricing Models
Payment processors generally use one of the following pricing models to calculate the fees you’ll pay to process transactions. Choosing a processor that offers a pricing model best-suited for your business needs will help you in the long run. This will directly impact how much you end up paying for card transactions.
Interchange-plus pricing model
In this model, merchants pay the interchange fee plus a fixed per-transaction fee (the processor’s markup). This structure is preferred for its transparency but can be complex to understand. Interchange-plus rates of various credit card processors can range from 0.2% + $0.08 to 2.6% + $0.10 for card-present transactions, and 0.2% + $0.10 to 2.9% + $0.30 for online transactions. Some even charge an additional monthly service fee.
Flat rate pricing model
In this model, a fixed percentage is charged as processing fees per transaction. This allows merchants to easily predict their credit card processing fees but is often higher than other models. The fees for in-person transactions can range from 2.6% + $0.05 to 2.99% + $0.49, while online transactions may vary from 2.9% + $0.30 to 3.49% + $0.49.
Tiered pricing model
In a tiered pricing model, the payment processor groups transactions into tiers (qualified, mid-qualified, non-qualified) with qualified transactions having the lowest and non-qualified transactions having the highest rates. Not only is this model difficult to understand but also lacks transparency.
Latest Changes That Can Affect Processing Fees
Of the $172 billion that merchants paid in processing fees in 2023, $170 billion accounted for interchange and assessment fees alone. In 2025, Visa raised its Misuse of Authorization Fee (from $0.09 to $0.15), while Mastercard increased its Excessive Authorization Attempts Fee ($0.30 to $0.50).
These changes mean merchants could see even higher costs, especially for failed or repeated credit card transactions. There’s a faint hope—lawmakers are pushing for legislation that could finally ease the burden on businesses.
Some Factors That Influence Your Processing Costs
In addition to the above factors, the following also have some bearing on how much you’ll pay in processing fees:
- Business type – Due to lower fraud risk, retail businesses often pay lower credit card processing fees than eCommerce businesses.
- Transaction method – In-person transactions have lower credit card processing fees than online and keyed-in payments.
- Transaction volume – You can negotiate better rates if you have high sales volumes.
- Card type – Premium rewards and corporate cards often have higher interchange fees than standard credit cards.
- Merchant Category Code (MCC) – Card networks assign different interchange rates based on your industry, meaning some businesses naturally pay higher or lower fees.
How to Reduce Your Credit Card Processing Fees
Choosing a credit card processor that best suits your small business’s needs is the key to lowering processing costs.
- Research different pricing models and choose a processor that offers what’s best for your business.
- Ensure your processor uses secure payment methods, address verification, and fraud detection tools to minimize chargebacks and fraud.
- Compare different payment processors and negotiate lower markup fees to cut down on overall costs.
- Encourage customers to use lower-cost payment options like contactless payments, PIN-based debit, or ACH transfers.
Compare the total cost and not just the processor’s advertised rates. You must carefully review monthly fees, per-transaction markups, and contract terms before making a decision. Look out for hidden fees like PCI compliance, early termination, and chargeback fees. Always make sure to prioritize providers with transparent pricing, strong customer support, and top-tier security to protect your transactions.
Final Words
Credit card processing fees are likely to continue being a major expense for small business owners in 2025. Thankfully, you can stay ahead in the game by finding the right processor.
Choosing the right pricing model, reducing fraud, and negotiating payment processor fees can help you lower costs. Review your business finances and your processing costs regularly, and compare payment service providers to make sure you’re getting the best deal.
Stax offers a transparent subscription model with 0% markup on direct-cost interchange. You pay a fixed subscription fee based on your processing volume instead of a per transaction cost which tends to add up quickly and can eat away all your profits. Plus, you can benefit from a variety of added features such as dashboards and analytics, digital invoicing, securely stored customer payment data, and lots more.
