Credit Card Merchant Fees Explained

Swipesum details all you need to know about merchant account fees! Find out more on understanding merchant service fees and merchant account rates.

Swipesum details all you need to know about merchant account fees! Find out more about  merchant service fees and merchant account rates.

Does it feel like you’re spending too much on merchant fees? Swipesum helps businesses just like yours save money by delivering customized payment solutions. Our expert team of payments specialists will help you:

  • Find the best combination of payment tools and tech for your unique needs.
  • Reduce the cost of your payment processing arrangement by negotiating with providers on your behalf.
  • Audit your monthly statement with our proprietary software for ongoing savings.
  • Provide continuing payments support so you can focus on the core needs of your business.

Schedule a free consultation to learn more!

What Are Merchant Fees?

Merchant services fees are charges you pay whenever a customer uses a card to make a purchase from your business. These fees are part of the cost of payment processing services. The fee amount can vary based on the providers, banks, card issuers, and type of payment involved.

Merchant services fees explained in the simplest way possible: Payment processing providers need to pay for the costs of operating their businesses. And, of course, they want to make a profit along with addressing those costs.

Some merchant account providers charge a fixed fee per transaction without charging any additional fees. Others charge a little more than what the credit card issuer would charge directly. Some providers have a tiered pricing system that depends on card type and other variables.

No matter the provider you work with, you can’t avoid some kind of cost to your business. From Quickbooks merchant services fees to Chase merchant services fees, they’re simply inescapable.

While you can’t cancel out all of these fees, you can find the right provider to reduce their impact on your finances. Using the option that’s best for your business is crucial for limiting unnecessary costs.  

The best provider depends on the specifics of your business. Key factors include everything from the most common types of card transactions you process to overall transaction volume and more. That’s why Swipesum builds a customized payments strategy for each and every one of our clients.

What Are the 3 Different Types of Merchant Account Fee Pricing?

There are three different types of pricing models that influence what fee you will be charged.

Flat-Rate Pricing Model

A flat-rate pricing model involves the merchant account provider charging you either:  

  • A flat rate fee for each transaction,
  • A fixed percentage on each transaction,  
  • Or, a mixture of the two each time a card is swiped.

The fixed percentage is usually between 1.75% - 3% and includes a per-transaction fee. This pricing model is the best for small businesses because it’s very transparent.

Interchange Pricing Model

An Interchange pricing model (usually called Interchange Plus or Cost Plus) describes how companies like Visa and MasterCard charge a processing fee for each transaction. This is called the rate of interchange.

Some merchant account providers will mark this up a little and charge you extra. Luckily, SwipeSum can help decrease these unnecessary fees for you.

Tiered Pricing

Finally, tiered pricing has a more diverse array of cost structures, and it’s the least transparent. Tiered pricing depends on the type of card being used — whether it’s credit, debit, or prepaid. It also includes a bunch of different costs that, while they can be beneficial, might not even show up on your statements.

It can also depend on how you accepted the card. Was it present or not, and was it keyed in or swiped? Overall, this pricing model is the most complicated and the least worth your time, especially if you run a small business.

Universal Merchant Account Fees

No matter the pricing model you use, there are account fees that will always show up on your statements. These fees include the following:

Authorization Fees

The authorization fee is charged every time a card is swiped, even if the card is declined. When any transaction is processed, information is sent back and forth between the acquiring bank (your business account) and the issuing bank (Visa, MasterCard, etc.).

Transaction Fees

Merchant service providers use transaction fees to describe the per transaction fee they collect. Depending on your plan, it may also include the percentage applied or authorization fee.

Assessment Fees

Assessment fees are charged by the cardmember associations for various expenses including fraud prevention and network operations. Merchant service providers often pass them along to their customers.

Rates per transaction are typically around:

  • Amex: 0.15%
  • Discover: 0.13%
  • MasterCard: 0.13%
  • Visa: 0.14%

It is important to note that for flat rate pricing structures, most of the time the only thing on the statement is the transaction and authorization fee. For example, Stripe is 2.9% + $0.30, and they do not have any other fees.

Scheduled Fees

There are also “flat” merchant account fees. While these are fixed or scheduled fees, they can vary widely by amount. Common scheduled merchant account fees include:

Monthly or Annual Fee: Some providers simply charge a percentage of your transactional revenue for a fee, while others charge monthly. That depends on who you work with.

Monthly Minimum Fee: If a processor charges on revenue and you don’t reach a certain minimum, they may charge you a fee for not reaching this floor.

Processing Commitment Fee: Like the monthly minimum fee, if you fail to transact a certain number of times per month, you might be charged a processing commitment fee.

Statement Fee: This fee is charged to cover the printing and mailing costs for credit card statements if you don’t receive them virtually.

Payment Gateway Fee: Some merchant service providers have their own payment gateways or third-party services. Your MSP may or may not charge for this.

Situational Merchant Account Fees

A customer taps to pay using a cafe’s payment terminal.

These are also known as incidental fees. They are oftentimes included in the fine print of your contract. Common situational merchant account fees include:

PIN Debit Transaction Fee: This can occur if you accept a transaction that requires PIN verification.

Address Verification System Fee: This can occur if you have to verify a user’s address for security reasons. It usually costs $0.01 per transaction.

Retrieval Request Fee: If a customer doesn’t recognize a transaction and they flag it, you’ll be charged. That covers the cost of the issuing bank collecting receipts and another evidence to corroborate the transaction. This fee is usually small.

Chargeback Fee: When a customer wants to return something, you’ll be charged this fee. Remember, the chargeback fee is in addition to the fee that accompanies processing a transaction.

Batch Fee: You can be charged a flat fee for settling a lot of transactions at once.

Cancellation or Termination Fee: You can be charged a fee for terminating your agreement early.

Voice Authorization Fee: If you have to make a call in order to authorize a transaction, you can be charged a fee.

PCI Non-Validation Fee: This fee applies when you aren’t PCI-compliant and/or your system isn’t sending along that PCI verification to the participating banks in a transaction.

Application/Setup Fee: Some MSPs charge you to get set up.

Some unethical merchants will include even more hidden fees than the ones listed above. It’s important to carefully read your terms and sign with a provider you trust.  

If you’re thinking “It shouldn’t have to be like this!”, we agree.  Since no one can simply change the way the market works, we’re here to help you find an MSP that works for you.

Red Flag Fees

Some fees aren’t anything more than a way to get extra money out of your business. We can help with identifying these red flag merchant account fees. When a provider is otherwise a good fit for your business, we’ll work to negotiate these fees down on your behalf.

“Creative” Processor Fees: Sometimes processors make up their own fees. Ridiculous, we know.

Jacked-Up Assessment Fees: It doesn’t hurt to double-check that you’re being charged what the card association (Visa, MasterCard, etc.) actually charges.

Fluctuating Discount Rates: Some companies may inflate their discount rates until you question them. Many companies will say that their costs went up, but they might not tell you if you don’t ask.

ERF/Integrity Fees: These fees mean you’re doing something wrong when processing a payment, like swiping a chip card.


In conclusion, the merchant account fees you’ve been charged aren’t set in stone.

If you’re not being charged a flat rate, then your fees are up for negotiation with every statement you receive. Sometimes, even flat-rate processors will negotiate with you if you have enough volume.

When you negotiate, your goal is to lower either the credit card processing percentage or reduce the markup on the interchange-plus plan. Some providers may bring both down.

SwipeSum has years of experience negotiating to support businesses in this ongoing effort. We have also developed our own software, called Staitment, that can automatically detect any unnecessary fees and save you money.

One more thing to remember about merchant services fees: Your price may vary based on how you process payments. Your payment gateway is either a point of sales system in the store, a mobile phone reader, or an online portal. Fees vary based on the risk of fraud posed by each type of gateway, with online being the riskiest and therefore the priciest.

Pick your merchant services provider carefully – you don’t want unnecessary costs when you can save money! Remember, you don’t have to take this task on alone. With Swipesum, you have expert support on your side throughout the process.

Book Your Free Consultation!

Michael Seaman

Michael Seaman

Michael is the co-founder and CEO of Swipesum. A veteran of the payments industry, Michael and his brother Stephen have led Swipesum since its inception in 2016. In his free time, Michael enjoyes time with his three children.

Read more


Meet one of our payments experts to see if working together makes sense.

We will schedule a quick consultation call to go over how you're currently handling merchant services, and present a proposal at no cost.

Man smiling while folding his arms



We help businesses make intelligent payment decisions.

Learn more about Swipesum

audit Your Statements

Start with a free audit of your payments processing statements

Schedule an audit


Connect with a payments expert and get a free initial consultation

Book consultation

By submitting this form you agree to receive information about Swipesum product updates via email as described in our Privacy Policy and Terms & Conditions.