Credit card processing fees may not seem like much at first, but over time, the money adds up.. Not to mention, many processors add a hefty markup to transactions, alongside monthly minimum fees, transaction fees, gateway fees, PCI compliance fees, annual fees, interchange, and more.
While those credit card processing expenses may seem unavoidable, there are numerous ways to take control and save money on your bill every month. Here are the steps you can take to get the lowest credit card processing fees without sacrificing the services your business needs.
How to get the lowest credit card processing fees
1. Choose the right pricing structure
| Pricing structure | How it works | Transparency level | Best for | Key considerations |
| Interchange-plus pricing | Fees are split into two parts: interchange fees paid to banks and card networks, plus a processor markup added on top. | High | Growing and high-volume businesses | You can clearly see how much goes to the card networks versus the processor. Often one of the cheapest credit card processing options when volume increases. |
| Tiered pricing | Transactions are grouped into “qualified,” “mid-qualified,” and “non-qualified” tiers, each with a different rate. | Low | Rarely ideal for most businesses | Interchange and markup are bundled together, making fees hard to understand. Often results in higher processing fees and hidden markups. |
| Flat-rate pricing | One flat rate for all transactions, usually a percentage plus a per-transaction fee (for example, 2.5% + $0.30). | Medium | Small businesses with low transaction volume | Simple and predictable, but can become expensive as transaction volume grows. Less flexible than other pricing models. |
| Subscription pricing | Merchants pay direct-cost interchange fees plus a flat monthly subscription instead of a per-transaction markup. | High | High-volume businesses and scaling companies | Eliminates processor markups and makes monthly costs more predictable. Often leads to lower processing fees at scale. |
The first step in lowering your payment processing fees is to get familiar with how credit card processors make money. In the realm of payment processing, there are four main types of pricing structures: interchange-plus, tiered pricing, flat-rate, and subscription pricing.
Understanding each of these pricing models will enable you to figure out the right one for your business. Let’s look at them more closely below.
Interchange-plus pricing – With an interchange-plus pricing model, the payment processor breaks down your fees into two components:
- The interchange (i.e., the fees paid to the banks and credit card networks)
- The markup (which is added on top of the interchange fees — hence the term “interchange-plus”)
With the interchange-plus model, you’re able to see exactly how much of the transaction is paid out to banks and credit card associations and how much goes to your credit card processing company.
Tiered pricing – This refers to a pricing structure wherein the credit card processor categorizes transactions into different tiers — i.e., “qualified,” “mid-qualified,” and “non-qualified.”
Transactions that fall under the qualified category are charged a lower rate, while those that are considered non-qualified incur higher payment processing fees.
Credit card processors that use tiered pricing bundle up the interchange and their markup into these three categories, so you don’t see a breakdown of their fees. While tiered pricing may make your statement easier to read, it offers very little transparency into the processor’s markups.
Tiered pricing is the least favorable pricing structure for merchants, as it allows payment processors to hide their markups and charge higher than necessary fees.
Pro tip: If you’re looking for the cheapest credit card processing rates, stay away from tiered pricing.
Flat-rate pricing – Credit card processing companies that use this pricing model charge one flat fee for all transactions. This fee typically consists of a percentage plus a transaction cost — e.g., 2.5% + 30 cents per transaction, across the board.
Flat-rate pricing is easy to understand and makes forecasting simpler and more predictable. It may be a good option for small businesses that sell low-ticket items, as it helps keep fees to a minimum. However, if you’re a high-volume merchant that needs to process numerous credit card transactions per month, you’ll likely see better rates with interchange-plus or subscription pricing (see below).
Subscription pricing – With this pricing model, merchants get access to interchange rates and simply pay a flat subscription fee. This is the pricing model Stax uses. Rather than charging a markup on top of interchange rates (and taking a cut out of your sales), Stax simply charges a flat monthly subscription, and you only pay for direct-cost interchange on your transactions.
As you can see, not all pricing models are created equal. To maximize your savings, you need to run the numbers in your business and figure out which option makes the most sense for you.
2. Shop around for better rates
When you do the research and look for better credit card processing rates, you’re doing the best possible thing for your business. Chances are, your current processor isn’t giving you the lowest rate, and they’re tacking on ancillary fees to your monthly bill. Make sure that your business is getting the best deals for the services it needs.
Choose a payments partner that offers transparent pricing. When shopping around, ask the processors for a breakdown of their rates and fees so you know exactly how much you’re paying per month.
3. Negotiate with your processor
Sometimes you need to make your processor see that your business adds value to their business. You have to make them want to keep you, so convincing them that your business is valuable is important. Leverage your transaction volume if it’s high enough, and that’ll say enough about your value to them.
If you shopped around for better rates first, then you have even more leverage to negotiate your rate with your current processor. Say, “Hey! This company doesn’t charge a statement fee or a batch fee! I’m going to switch to them.” If your processor doesn’t try to keep your business and make you happy, it’s time to switch.
Note: If your payment processor agrees to lower your rates, make sure to get the new agreement in writing. It’s also best to keep a close eye on your merchant statements in the succeeding months to confirm that they’ve truly lowered your rates.
4. Reduce the risk of credit card fraud
If you’re considered a high-risk merchant account, your fees are going to be higher. High-risk industries mean that there’s a higher chance that your company will experience credit card fraud. There are two ways you can reduce this risk.
- Swipe as many cards as possible. The rates set by card brands (Visa, Mastercard, American Express) are higher when the cards are keyed in based on fraud risk, so swiping the majority of your card transactions is one way to reduce that risk.
- The other way to reduce the risk of fraud is by providing security information that protects the cardholder and validates their purchase. Utilize address verification service (AVS) and CVV checks for keyed-in transactions to ensure you meet the “best rate” criteria for interchange qualification.
5. Eliminate the third party
Most credit card processors (but not all) don’t actually process transactions themselves. Instead, they save on processing fees by signing up with a bank or institution that does the processing. This means that on top of paying your processor’s fees, you’re also paying middleman markups. Identify if you are working with an ISO or a direct-to-interchange provider. The goal isn’t just to “remove a middleman,” but to eliminate the layers of percentage-based markups that traditional providers add to the wholesale cost.
6. Set up your account and terminal properly
One simple mistake could lead to higher processing fees, so setting up your account the right way from the start can make all the difference. Provide the correct business information, such as the type of transactions, the type of business, and the frequency of transactions, because this matters to many processors (but not all).
It’s the same with the way your terminal is set up and used. Settle your batches daily. Most card networks require transactions to be cleared within 24–48 hours of authorization; failing to do so causes “interchange downgrades,” resulting in significantly higher rates.
7. Accept cards that work well for your business
Not all credit cards are treated equally. Certain credit cards/debit cards cost more to process than others. So, understand your card mix. While you generally must accept all valid cards of a brand, knowing if your customers use high-cost corporate or rewards cards can help you decide if a surcharging or cash discount program is necessary to offset those specific costs.
8. Consider surcharging
Surcharging lets you pass a portion of credit card processing fees to customers who choose to pay with a credit card. When done correctly, it can help offset processing costs without raising prices across the board. That said, surcharging comes with rules. Card networks and state regulations dictate how and when you can apply surcharges, and transparency is non-negotiable. Customers should know what they are paying before they tap or insert their card.
For best results, choose a reliable surcharging solution like CardX by Stax. CardX offers seamless, compliant surcharging to help you offset credit card processing fees. It enables you to automatically comply with surcharging laws at the state and federal levels, so you can implement a surcharging program with minimal risk.
9. Implement a cash discount program
A cash discount program encourages customers to pay with cash or debit cards by offering a lower price at checkout. Unlike surcharging, the discount is framed as a benefit rather than an added fee. This approach can feel more customer-friendly while helping small businesses reduce card processing fees.
Cash discount programs work well for in-person transactions and businesses with steady foot traffic. They can lower transaction fees, reduce reliance on credit card payments, and improve cash flow.
Note: Setup matters here. Your pricing, signage, and terminal configuration must be clear and compliant. When implemented properly, a cash discount program can help save money on payment processing without hurting the customer experience.
10. Be mindful of your payment technology choices
Smart technology choices help streamline card processing, improve transaction quality, and keep credit card processing costs under control.
With that in mind, your payment technology directly affects your processing fees. Be wary of:
- Older terminals
- Poorly configured systems
- A sub-optimal payment gateway
Such tools, when left unchecked, can lead to higher costs, more transaction fees, and unnecessary errors.
As such, choosing modern tools that support chip cards, mobile payments, and contactless transactions helps reduce risk and keep rates lower.
The same applies to online payments. A clunky checkout or outdated virtual terminal can increase failed transactions and chargeback fees.
So, look for payment solutions that match how you do business today, whether that is in person, online, or both.
11. Opt for a payment processor that offers strong customer support for merchants
Strong customer support is not just a nice-to-have. It can directly impact your costs. When issues go unresolved, businesses often end up paying higher fees, dealing with billing errors, or missing hidden charges on their statements.
A responsive payment processor helps you spot problems early and fix them fast. Look for credit card processing companies that offer clear communication, easy-to-reach support, and transparent pricing.
When you can quickly ask questions about fees, pricing models, or monthly costs, you stay in control.
12. See if automatic volume discounts are right for you
Automatic volume discounts can lower your processing fees as your transaction volume grows. For high-volume businesses, this pricing structure can make a meaningful difference in monthly costs.
The idea is simple. As you process more card payments, your effective rate goes down. That said, not all volume discounts are created equal. Some processors advertise discounts but still bake higher fees into their pricing model. Always ask how discounts are calculated and whether they apply to interchange fees or just processor markups.
13. Improve transaction quality
Transaction quality plays a major role in how much you pay to process credit card payments. Cleaner, well-qualified transactions (with Level 2 or Level 3 data) typically lead to lower credit card processing fees.
Ways to improve transaction quality include:
- Accept payments the right way. Swiped, tapped, or chip-based transactions usually cost less than keyed-in or manually entered card payments.
- Use the correct account and terminal settings. Misconfigured settings can push transactions into higher-fee categories.
- Enter accurate customer data. Correct information helps transactions qualify for lower interchange rates. Moreover, providing extra data (i.e., invoice numbers, tax amounts, etc.) helps you get the lowest possible interchange rates.
- Settle batches promptly. Delayed batching can result in higher processing fees.
- Use fraud-prevention tools for online payments. Address verification and security checks help reduce chargebacks and disputes with a customer’s bank.
Fewer errors mean fewer additional fees and fewer chargebacks. Over time, improving transaction quality is one of the simplest ways to lower processing costs.
14. Avoid unnecessary fees
Too many processors bundle and hide fees within other charges. Some fees shouldn’t even be added at all, let alone hidden. Take a look at your next merchant services bill, and ask yourself what these additional fees are actually for.
Merchant account providers are notorious for high markups and hidden fees. With Stax, you’ll never be charged unnecessary fees. Stax offers subscription-based credit card processing at a direct cost. This means zero markups, zero hidden fees, and no contract. Contact Stax to discover how you can get the lowest credit card processing fees.
Quick FAQs about lowest credit card processing fees
Q: What are the different pricing structures for credit card processing fees?
The main pricing structures include interchange-plus, tiered pricing, flat-rate pricing, and subscription pricing. Each structure has its own advantages and disadvantages depending on the business needs.
Q: How can businesses choose the right credit card processing pricing model?
Businesses should evaluate their transaction volume, average transaction size, and specific needs to determine which pricing model—interchange-plus, flat-rate, tiered, or subscription—offers the most cost-efficiency and transparency.
Q: What steps can I take to negotiate lower credit card processing fees with my provider?
Leverage your transaction volume, compare rates from different processors, and use competitive offers to negotiate better terms with your current provider. Ensure any new agreement is documented.
Q: How does reducing the risk of credit card fraud impact processing fees?
Lowering the risk of fraud can lead to reduced fees. This can be achieved by swiping cards instead of keying them in and by providing security information like billing zip codes and security codes.
Q: Why should businesses avoid tiered pricing for credit card processing?
Tiered pricing lacks transparency and often results in higher fees as processors bundle interchange and markups into categories, making it hard to see the actual costs. Focus on providers that offer “pass-through” pricing, ensuring you pay the direct cost of processing without hidden layers of profit.
Q: How can setting up your account and terminal properly help reduce fees?
Proper setup can prevent unnecessary charges due to incorrect transaction categorization. Batching transactions within 24 hours can also minimize processing fees.
Q: Why is it important to understand credit card processing fees?
Understanding these fees enables businesses to identify potential savings, negotiate better terms, and choose providers that offer transparent and competitive rates.
