Reducing Costs: Strategies for Managing Credit Card Merchant Fees

Some credit card merchant fees are mandatory, but many businesses end up with excessive costs. Learn more about managing credit card merchant fees.

You can’t completely cut credit card merchant fees out of your business budget. The service providers who facilitate these transactions are operating businesses, too. Just like your company, card issuers, payment processors, and card networks need to earn revenue to continue operating.

That said, your business can and should keep its credit card merchant fees at a manageable level. Not all merchant fees are set in stone — many are negotiable. Additionally, the merchant account pricing model you choose can have a major influence on costs.

Let’s first briefly define and discuss merchant credit card fees. Then, we’ll look at strategies that can reduce credit card fees for merchants and ultimately save money for your business.

Understanding Credit Card Merchant Fees

Payment processing can feel incredibly complex at times. However, merchant fees for credit cards are a simple concept — at least on the surface.

Any cost you pay for a customer to make a card-based payment at your business is a merchant account fee. Follow that link to find a full rundown of the many merchant services fees that providers charge. That blog also offers a review of the foundational pricing models used by providers. Those play a major role in the cost paid by your business for accepting credit card payments.

The complexity of credit card merchant fees stems from the multiple pricing models and many required and optional fees. We’ll cover pricing models in more detail in the next section. For now, we’ll share the key facts to remember about them. Pricing models are not equivalent, and choosing the wrong one can lead to additional and avoidable costs.

In terms of fees themselves, they fall into many categories. Some are non-negotiable and standard across the industry. These include authorization fees (to authorize payment) and transaction fees (the cost charged per transaction). Others are situational, like chargeback fees and batch fees.

Finally, certain credit card transaction fees for merchants are simply additional costs tacked on by the credit card processor. They may charge excessively high assessment fees or set a high discount rate, or simply invent additional charges. 

With that in mind, let’s look at how to keep credit card merchant fees manageable for your business.

A credit card is swiped in a terminal.

How You Can Manage Merchant Credit Card Fees

1. Choose the Right Pricing Model for Your Business

There are three distinct types of pricing structures used to charge credit card merchant fees. They are:

  1. Interchange-plus: This model offers a transparent pricing structure. Specifically, it separates universal, non-negotiable interchange costs from optional processor fees. This makes it much easier to track costs and determine if you’re getting a good deal. We find it’s a good fit for a wide variety of merchants.
  2. Flat rate: Flat rate pricing involves a flat rate, fixed percentage, or combination of the two charged for each transaction. It’s simple and pretty transparent, so it’s often a good fit for small businesses.
  3. Tiered: A tiered pricing model involves many potential costs and can differ with each customer's purchase. The processing costs change based on the type of transaction. This model is known for its lack of transparency, and that makes it a poor choice for most merchants.

Interchange plus and flat rate pricing gives merchants more visibility. 

Does your company currently have a contract that includes tiered pricing? It’s most likely in your best interests to make a change. Not sure where to start? Swipesum can help with vendor-agnostic consulting and evaluation.

2. Negotiate Payment Processor Fees Whenever Possible

Some credit card merchant fees are set in stone, like the interchange rate set by banks and credit card companies. Additionally, service providers may simply refuse to negotiate certain fees in certain circumstances.

However, many other merchant credit card fees are negotiable. It’s always important to remember that working with a processor is a mutually beneficial relationship. They provide a service to your business, but your company also offers them revenue. 

By providing value to a processor, your business has the leverage to negotiate. And the larger the volume of transactions your business delivers, the more leverage it can have.

It can seem difficult to negotiate with payment processors. That’s especially true if you don’t have a deep background in this field (and few business owners do). Swipesum can put expertise on your side and lead the negotiation process on your behalf.

3. Find the Processor That Best Aligns With Your Business

Just in North America, there are thousands of payment processing solutions available. They each have their unique advantages and disadvantages — characteristics that set them apart from other processors.

A payment processor that focuses on large companies may provide competitive rates and great services at that scale. However, their offerings may not be as relevant or cost-effective for a small business. Remember that there are plenty of options out there, almost certainly including a processor that strongly aligns with your needs.

With so many potential partners, finding the right processor may seem like a daunting task. The expert advisors at Swipesum can help you locate a great payment processing partner to support your business.

4. Manage Potential Payment Processing Security Risks

Credit card fraud leads to many ethical and legal problems. Those concerns aside, this issue also increases costs for payment processors and banks. Those costs are generally passed onto businesses, including yours.

Payment processors set higher credit card merchant fees for businesses they view as presenting a risk. However, you can take some simple steps to reduce the potential for risk — and keep your fees more manageable.

Swiping or tapping cards instead of manually entering card details for in-person transactions is a good place to start. If your business doesn’t follow this practice already, make the change. For  transactions where the card isn’t present, ensure you collect the CVV.

Capturing each customer’s full name, billing address, and ZIP code also helps to verify identity. That means it reduces the risk of fraud.

Swipesum is here to keep credit card merchant fees low with independent consulting, negotiation support, and much more. Let us help your business get on top of credit card merchant fees!

No items found.
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.