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How much should I expect to pay for merchant services?

I am curious who people recommend for merchant services and how much they charge. Bank of America charges 1.99% and 20 cents per transaction, $16 monthly fee (which includes payment gateway), $94 for PCI and a $99 set up fee. I used to use them and these fees are less than they were a year ago, but I still wonder if they are reasonable. Also, does anyone have any recommendation for recurring subscription services. I have used Pin Payments, which was previously Spreedly, but it's been over a year. Thanks.

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Fees depend on a number of variables including size of average transactions, number of transactions, and annual/monthly volume. The industry is highly competitive. I am a member of Costco they offer On Site and In Store
1.38%¹ Plus 19¢ per transaction, Online 1.99%¹ Plus 25¢ per transaction and
On-the-Go 2.49%¹ $0 per transaction. Service is sponsored through Elavon.

One thing to note about those rates is that they are usually only for "Qualified" transactions. It is equally important to know what the downgrades are to Mid- and Non-Qualified rates. Often, these are much higher on plans that offer very low Qualified rates, and unless the bulk of your business is coming in as Qualified you may find that the rates are averaging much higher than you think.


A lot of misinformation is floating around out there, made more confusing by different pricing styles and overall lack of merchant understanding. The BofA plan isn't all that bad, but it isn't that great, either. You have lots of elements to consider with regard to overall costs, and this includes the impact of your monthly and annual fees on your REAL overall percentage cost. Merchant services should not end up with an effective cost over 4% of total card volume. If you are doing under $5000 in card sales monthly, a higher percentage plan that covers most transaction fees and comes with no additional fees is likely to save you money, and definitely if you are doing less than $2000 monthly this is something you should consider. If you are doing more than $5000, chances are you will be better served by an Interchange Plus account, but you would have no problem beating the BofA rates.

Transaction fees are often split so as to give the illusion of being less. A processor may charge $0.03 to cover THEIR costs, but they will still "pass through" the additional expenses charged by the card brands, ranging from $0.10 for most credit cards to $0.22 for check/debit cards. I am not sure whether the BofA pricing is meant to be inclusive, but I think it is, which means they might eat a few cents processing check/debit cards (which cost about $0.25 total, or $0.22+$0.03) but then rake in a nice profit on credit cards (which cost about $0.13 total).

I consult on these solutions often, so feel free to ask more specifics if you would like.

In general, I try to get my clients down to around 2% monthly after all fees are considered. Depending on card types used, it may not be possible every month -- some cards are more expensive to process than others, and you cannot always tell by looking at them (MasterCard World Perks business cards, for example). Knowing your client base helps a lot in getting the best terms for your business.

This is super helpful. I do have to say this area does leave my head spinning, particularly when you throw in the recurring payments...and all the fees do add up. Thanks again for the great information.


Hi Mary-Alice! As mentioned here the 1.99% is on the higher end for credit card processing even in a card-not-present situation. I would generally set up an account at a 1.65% to handle this type of transaction. As far as PCI fees our company only charges $4.95 a month and it is waived for the first 12 months. We have no set-up fee.

I would recommend Authorize.net for you gateway as well as for recurring payments. They are very flexible on how you can set-up the payments with an easy to use interface.

I offer a comprehensive side-by-side analysis based on your current processing situation. Feel free to contact me if you would like more information on having one prepared for your company. I can be found via searching for Total Merchant Services.

Have a stellar day!

Chris Judy
Total Merchant Services


I do not have a recommendation for recurring subscription services, but I can comment on the merchant services side of your question.
I can tell you that 1.99% is a little high when compared to the market rate. I ran credit cards for a restaurant and other businesses and our typical rate was 1.3-1.5%. it was a little higher for American Express, but we used so little of that, it didn't make a difference. You should definitely shop around. I know a lot of the companies will wave all set up fees and PCI and will have no monthly fee. They will most certainly not charge .20 cents a transaction. I think we were charged .03 cents per transaction.
These aren't the worst rates out there, but I would suggest looking into companies that focus all of their energy specifically into merchant services. They are typically cheaper with rates, can work with you on setup fees and customer service is generally great.
If you supply your merchant statement to any merchant company, they will work to save you a lot of money and you can work your way down to where you are actually saving a lot more money than at your current rates.
Good Luck.

Thanks for the helpful information. I will definitely shop around!

Just remember that everybody and their dog want's your business so shop around.


I use Intuit Payment Network (https://ipn.intuit.com) There is no monthly fee. They charge 50 cents for a bank payment, or 3.25% to receive a credit card payment. Since I use QuickBooks, I just send my clients a PDF invoice which has a link for payment. I can also set up recurring requests online, which automatically sends out an e-mail to my regular clients.


Negotiable: Set Up fee, when it gets down to it tell them u will sign with if they completely waive the set up fee.
What payment gateway are u using, $16.00 sounds fair?
Ask what is the mid-qualified and the non-qualified rates are....
and then Ask them for "Cost-Plus" pricing, way more advantageous than tiered pricing.
$94.00 sounds correct for PCI Compliance however, make sure it's a one time fee.
What is ur average ticket, small tickets stay away from pin, large ticket take pin number every chance you can get...


1.99% + $.20 is just the base rate, not the total cost of all the rates. There are hundreds of different rate surcharges both in your favor and not. Debit Cards, Rewards Cards, Corporate Cards, and the new High-Net worth Cards influence the different rates. Additionally your industry determines much of these different fees. There are different programs for Retail, ecommerce, Restaurant, B2B, Non-Profit, Fuel, Insurance, Real Estate, etc. There are also network fees as well.
Most software solutions offer reoccurring services; some charge more for the feature. The more important is the total gateway cost with the gateway authorization & settlement fees.
Average Ticket & Average Volume help determine how a processor prices all of these. There is no specific formula for “one-size-fits-all” to know how much you should expect to pay for merchant fees. The average ticket size really influences the total cost or “effective rate” you should expect to pay. For example the above rate is 3.99% on a $10 transaction and 2.19% on a $100 transaction less the different card types and other network fees.


It typically depends on your specific needs, average sales volume, and risk pool that your business is in. Also the rates are generally specific to the type of card that is used IE, its a higher rate for a Visa Rewards card than it is for a standard Visa or debit card. If anyone says they have the same rate across the board, they are either making a lot of money off of you or they don't want to take the time to actually consult on what will work best for you bottom line and business.

From my experience as a wholesale merchant service provider, bank rates are usually inflated compared to what you can actually obtain. The fact of the matter is that people don't know what they don't know and just assume they are getting a "reasonable" rate.

With regard to recurring subscription services are concerned, are you looking to handle this remotely IE through some type of phone app, or are you wanting to implement and online payment acceptance method? Reason being is that again with a good company behind you, there should only be one single provider so you don't have to shuffle through multiple accounts and receive multiple bills or rates.

On another note, be picky if you are looking to use a mobile solution. There are mobile point of sale systems out there that work real well but if you are looking for something less sophisticated, you've got a ton of choices. Popular products include those from Intuit, Square, and even many banks. But then again there are hidden fees they don't point out for example, a non swiped transaction fee versus a swiped transaction fee. In my opinion, there's one mobile solution out there that beats everyone else hands down and only charges 1 fee no matter if the card is present or not. Reach out directly; I'd love the opportunity to discuss this further and walk you through the process


If there was a young man, the highest functional positions such as you. A friend of the employer. And has no relationship to work in practice. And always does things to disrupt the work. And his view is doing so for the sake of work. What is the most appropriate way to deal with him?

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I can't speak for the USA, but certainly in the UK, the issue of merchant services charged by Banks and Debit/Credit Card issuers vary dramatically- particularly the banks.

It seem that you have similar issue in the USA, as the Merchant Services can be very expensive as a set up, particularly if you have more than one till or transaction device. Most of the UK is now Chip 'n PIn and many of the devices are hand-held using infra red or low frequency signal between the card reader and the connection to the internet.

I think really it comes down to quite literally haggling. Regrettably in the UK, the banks have been allowed to form a cosy consortium, and the so called regulatory body is fast becomming one of the same. The smaller your turnover, the greater the cost per transaction, although the actual hardware and handling is relatively inexpensive.

The only problem with the set up fee is that you need to have an internet router as well, therefreo by default an internet set up. That can be £100 for a start, just to get a broad band line plus the additional packages attached. Then you need to register with the bank and the relevant operators i.e. Visa and Mastercard, who are really a duoply of the market; costing anything up to £150; finally there is a cost to the retailer of cost per transaction.

As for recurring subscription charges, I think again it is a question of shopping around and trying not get locked in to long term contracts. Many operators have "honey traps" where the initial outlay is small to begin with and then in year 2 the servicing costs jump; meanwhile you are locked in to an agreement for may be five years.

Again, it is a case of shop around, and most certainly read the small print. I know that this is not a direct answer to your question, but merely a warning on how you enter the agreement and the contract term.

They charge the banks roughly between 1.7-2.5% per transactions and a rental of anything up to £100 per month, depending on the number of handsets or processors you have. If it is just a single unit on a counter top, it may not be more than £50 rental. Needless to say, by the time that hits the retailer you have got VAT (20%) to contend with which makes it more expensive.

As it is sold to the retailer, with an online clearing system and with chip and pin, the fraud level is brought down (for them, not the retailier you will note !) and the cost of actually processing a payment from their point of view is only a few pence. However the advantage to the retailer is that they know the funds are cleared at point of sale, and it is suggested by the card operators that the costs are covered by the risk of returned cheques and loss of money.

However, as a purchaser you are protected from fraudulent use, by the recall scheme which means that if an entry appears on your statement which is fraudulent, or incorrect, you can recall the item. So there is safety on both side. That said, Credit and now Debit Card fraud is one of the biggest issues in banking (apart from the fact that half of our clearing banks are effectively bankrupt) hence the argument for online clearing.

I don't know whether you have the equivalent of the Financial Conduct Authority or the Central operation that monitors the Banking industry in the USA; but it may be worth speaking with them. The other thing to bear in mind is that the handling fees may also be set in part by the State you are operting from.

I would say research with care before you enter any agreement. Sorry to appear vague but it really is quite cut throat in the UK, so I would imagine as bad in the USA.

I am going to follow your advice and shop around carefully. Seeing all these responses makes me realize there are definitely a lot of factors to consider, particularly the anticipated size and frequency of transactions. Thanks for sharing your experiences.

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