Sheet of data showing credit card processing fees.

Credit Card Processing Fees: 5 Things You Need To Know

When trying to run a successful business in 2022, it’s likely you’ll find paying credit card processing fees is an unavoidable expense. This is true for eCommerce businesses and brick-and-mortar businesses alike. These fees occur because there are many parties involved in an actual credit or debit card transaction and each party takes a small percentage of the total. The payment processor, financial institution, card network, issuing bank, acquiring bank, and payment gateway all play a role in each successful transaction. Merchants need to accept a variety of credit card payments, which makes credit card processing fees like these a cost of doing business.

Credit card processor fees aren’t always set in stone or flat-rate pricing. However, there is a level of disclosure as well as common fee structures for card-present and card-not-present (CNP) transactions, with card-present transactions incurring a lower fee. They’ll vary amongst the types of transactions and the four major players involved in the credit card processing industry: VISA, Mastercard, Discover and American Express or AMEX for short. These are unlike financial institutions and credit card companies like Bank of America and Capital One and different from the debit card issued with your bank account. Here is a list with some things you’ll want to know about in terms of credit card processing fees.

1. Interchange Fee

An interchange fee is a small percentage of money that your processor or merchant service provider charges for every credit card transaction. These fees are deducted from the total amount of that purchase, meaning you will receive less than what your customer paid when they use their card to make payment. Interchange rates vary by network, type of card, and other factors. Higher interchange fees vary depending on what type of card is used and other factors. They can be very frustrating for small business owners. The way that interchange rates work is every time a customer uses their credit card to make payment, the merchant who accepts that transaction must pay an interchange fee. This fee is usually between 1-2% of the total transaction amount. Interchange rates can vary by network. They are usually between 1-2% of the transaction amount, but this is not always the case.

2. Processing Fee

In regards to average credit card processing fees, no fee is greater than the processing fee because it’s incurred on every credit card transaction. If you pay attention to only one fee, it should be the processing fee. The type of merchant, processing volume, and other factors will determine the rate and percentage for these charges. Here are the five factors that heavily impact processing statement fees:

Type of Card

Credit cards, debit cards and pre-loaded reward cards have different rates. But even within credit cards, these rates differ. The most expensive type of credit card, in terms of processing fees, is generally a business credit card.


The major credit card processing companies or card brands/networks, including Visa, MasterCard, Discover, and American Express, have different interchange rates. Within these networks, different levels may also exist. For example, Visa’s Platinum- and Signature-level products offer different interchange fees.

Processing Type

How a credit card enters the system matters. Transactions swiped on a POS terminals like Clover, Square and others, entered the numbers manually, paid online as in PayPal, and handled as card-not-present are charged different processing fees.

Merchant Category Code

MCC is what credit card companies assign to cardholder/consumer transactions. These four-digit numbers are usually partially determined by the type of business and its risk level. For example, a restaurant will be in a different category than a supermarket or other business.

Annual Business Sales

The quantity, in units and currency, of transactions your business generates on a yearly basis.

3. Transaction Fee

The transaction fee is a flat, per-transaction fee charged on each transaction along with the processing fee. The transaction fee is usually about $0.10 for card-present transactions and $0.25 for CNP transactions. The fee is charged on all approved and declined transactions, as well as batches and returns or chargebacks. It’s a fee to access the processing network. Therefore it is charged every time the network is accessed.

4. Assessment Fee

Assessment fees are costs paid to credit card issuer networks like Visa, MasterCard, and Discover. As with lower interchange rates, assessment fees aren’t determined by the payment processor, but rather the credit card network. These fees are intended to cover the operating costs of credit card networks. Lower than the interchange rate, the assessment fee depends on factors such as the type of card used by the consumer, the merchant’s transaction volume, and other miscellaneous fees.

5. Pricing and Processing Fees

There are a few ways you can lower your costs in order to lessen the burden that these fees can have on your businesses’ overall profit. Inflation + COVID + worker shortages + credit card processing fees = more markup and less profit for your business. The top four credit card networks release their interchange rate fee schedule annually. There’s actually no standard model for card processing companies to follow when administering merchant account fees to process credit cards. Payment processors charge merchants credit card processing fees through different pricing models. These pricing structure models are: flat-fee/rate, discount rate, membership-based, tiered pricing, blended or bundled rate, and interchange plus pricing so that the up-front pricing is predictable month to month for small and medium sized businesses.

Pineapples POS Makes It Easy!

Benefit from free hardware, easy software onboarding, fully transparent payment processing fees and system integration. Our technology offsets credit card processing costs by applying a small fee to every sale, excluding cash and pin-based card transactions, not a monthly fee. Unlike other providers with extra steps, or require a separate terminal to implement the service fee, our technology is baked into the POS for smooth, one step, transactions. Try our cost saving program, and if it’s not the right fit for your business, we’ll switch you to traditional processing without any additional fees or higher rates. Pineapple POS is the top pick for local point of sale installation, PCI compliance service and support. Let the team at Pineapple POS go to work to find the best POS system and credit card processing services for your small business. Contact us today!