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How to Lower Your Credit Card Processing Fees

Donna Fuscaldo
Donna Fuscaldo
Senior Finance Writer Staff
Updated Jan 23, 2023

Are you paying too much for credit card processing? Find out how you can reduce the amount you pay for transactions.

Credit card processing fees are unavoidable for merchants who want to accept credit and debit card payments, but that doesn’t mean you should overpay. Not all the fees are set in stone and some can be negotiated. Whether you’re shopping for a new credit card processor or just want lower rates from the one you’re already working with, here’s how to get lower fees on transactions.

Editor’s note: Looking for the right credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

4 ways to lower your credit card processing fees

Getting the best rate for in-person and online card payments is particularly important during the COVID-19 pandemic. E-commerce has taken center stage and those transactions typically cost more than in-person processing fees.

“When it comes to in-person payments, merchants learned to negotiate for better rates because it’s such a big part of their business,” Nicolas Beique, CEO of Helcim told “E-commerce was always a side thing for a lot of merchants until this year.”

When it comes to credit card processing fees, there are some that are negotiable and others that aren’t. The interchange and card-brand fees charged by the card issuer and card network are non-negotiable – but there’s wiggle room for the processor to lower its markup. That’s where you should focus your efforts. To get the best rate, follow these four strategies.

1. Do your homework before you call your credit card processor.

Negotiating your credit card processing fees isn’t easy. With so many moving parts it can be difficult to ascertain what the fees are for, let alone if they are negotiable. But if you don’t understand them, you may not get the lowest cost possible.

Go over your statement to find fees that can be reduced before engaging with your processor. Knowledge is power when negotiating.

“There are so many different fees that processors can charge. It’s difficult to call them and say you want lower fees if you don’t know what they are,” said Matthew Rej, a partner at Merchant Cost Consulting. “You really need to understand your statement to grasp how to reduce your fees.”

2. Get a better pricing model.

If you are on a bundled (or tiered) pricing model it’s hard to get an idea of what fees you are paying and how it stacks up compared to competitors. Transparency is key to getting a lower price, which is why you should ask your processor to move you to an interchange-plus or flat-rate model. In both instances, you’ll know how much you are paying for every type of transaction.

3. Negotiate away the premium for e-commerce payments.

Card-not-present transactions are riskier and thus, more expensive to process. Nevertheless, this type of processing was often an after-thought to merchants who did most of their business in person. That’s changed with the pandemic, but the rates merchants pay for card-not-present sales haven’t decreased.

“The line between in-person and online sales are starting to blur. You want a processor that doesn’t charge a premium just because you are accepting payments online,” said Beique.

4. Avoid the PCI fee.

To ensure merchants handle their customers’ credit card information properly, they are required to follow standards known as the Payment Card Industry Data Security Standard or PCI DSS. The idea is to lower the risk of the credit card information falling into the hands of hackers and thieves. 

To ensure PCI compliance, some credit card processors charge a PCI fee and in exchange, provide services to make sure you are meeting the standards. In other instances, credit card processors charge no fee but don’t offer any services. There are also some questionable credit card processors that charge the fee but provide nothing in the way of service. Those are the ones you want to avoid. If this is how your existing processor operates, you may want to try to get it waived or reconsider your relationship.

“PCI fees are notorious in the industry,” said Beique. “Merchants in the e-commerce space see PCI non-compliance fees and jump through hoops to avoid them. E-commerce is complicated and processors take advantage of that.”

Beique said PCI fees can vary widely, but it’s best to find a processor that doesn’t charge it. “You want to find a vendor that makes you secure without a fee. The PCI fee is just a cash grab,” he said.

What are reasonable credit card processing fees?

The amount you pay to process credit and debit card payments varies, based on the type of card, how the payment is accepted, the dollar amount of the sale, and the credit card processor you work with.

American Express, Mastercard, and Visa all charge their own rates to accept their cards which are laid out below.

  • Visa, Mastercard and Discover: 1.5% to 2.5%
  • American Express: 2.5% to 3.5%

The credit card processing companies then add a markup to these rates. They have different pricing structures that can affect how much you pay. Here are the three most common:

  • Interchange-plus pricing: With an interchange-plus or interchange pass-through model, the processor passes on the interchange and assessment fees to the merchant and then adds a separate markup fee. This approach gives you the most transparency. You know how much you are paying on top of the interchange and assessment costs when using the provider. Industry experts recommend this pricing model for most businesses.
  • Tiered or bundled pricing: With this pricing model, the interchange and assessment fees are bundled together with the processor’s markup. The processor categorizes the types of transactions as qualified, mid-qualified and non-qualified and assigns a fee for each tier. It requires work on the part of the business owner, to ask how much each tier costs and what type of transactions it includes. It’s difficult to spot hidden charges if you have a tiered pricing model.
  • Flat-rate pricing: With this model, you pay either a flat percentage of the transaction or a flat rate plus a per-transaction fee. The rates can be higher than other models, but you don’t get hit with any added fees (monthly fees, gateway fees, annual fees, etc.) that can raise the overall cost of accepting card payments. There is also no contract with this pricing model. This is usually the most economical pricing model for businesses that process less than $5,000 per month.

[In the market for a new credit card processor or thinking about making a switch? Check out our guide and reviews.]

What are credit card processing fees?

Credit card processing fees are the fees merchants pay every time a customer completes a transaction with a debit or credit card. Credit card processing fees, sometimes called the discount rate, are comprised of three parts: interchange fees, assessment fees, and the payment processor’s markup. These fees are expressed as a percentage of the sale and a flat fee.

  • Interchange fees: Charged by the card-issuing bank, this is a non-negotiable fee that merchants must pay on every transaction made using a payment card. When customers use a credit card to purchase an item, a bank or financial company provides the merchant with the money upfront. To minimize their risk, they charge an interchange fee. This fee varies, depending on the card type, sales ticket amount, acceptance method and the merchant’s industry – there are hundreds of rates. An in-person credit card payment, where the likelihood of fraud is limited, costs less than an e-commerce credit card payment or a keyed-in purchase over the phone. Debit cards typically have a lower interchange rate than credit cards. These fees are reviewed twice a year by the credit card companies.
  • Assessment or service fee: To process payments on a card network, payment processors are required to pay assessments to the card networks, which they pass on to merchants. The assessment fee is small, but also non-negotiable. The fee varies based on the card network and is dependent on the type of transaction and the amount of the sale. These fees are reviewed twice a year by the credit card companies as well.
  • Payment processor’s markup: This part of the fee is set by the credit card processor and is the only part of the rate that is negotiable. The processor’s margin covers its operating costs and profits – this is where it makes its money. This fee varies from one credit card processor to the next and is the area to focus on when you’re shopping for a new credit card processor or trying to negotiate rates with your existing service provider.
Image Credit: DERO2084 / Getty Images
Donna Fuscaldo
Donna Fuscaldo Staff
Donna Fuscaldo is a senior finance writer at and has more than two decades of experience writing about business borrowing, funding, and investing for publications including the Wall Street Journal, Dow Jones Newswires, Bankrate, Investopedia, Motley Fool, and Most recently she was a senior contributor at Forbes covering the intersection of money and technology before joining Donna has carved out a name for herself in the finance and small business markets, writing hundreds of business articles offering advice, insightful analysis, and groundbreaking coverage. Her areas of focus at include business loans, accounting, and retirement benefits.