Learn what merchant account fees include (rates, assessments, incidentals) and how to cut them. See pricing models, red flags, and real ways to lower costs.
Are merchant account fees eating into your profits?
If you’re like most business owners, credit card processing costs and confusing statements make it hard to tell what you’re really paying. This guide breaks down every type of merchant account fee, from interchange and assessment fees to the hidden charges most providers won’t mention, and shows you how to reduce them.
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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. Merchant service fees include transaction fees, account fees, and incidental fees, which can significantly impact a business owner’s finances. The fee amount can vary based on the providers, banks, card issuers, and type of payment involved. Merchant fees can also vary depending on the payment method, such as credit or debit card, and the card payment system used.
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. Credit card processing fees, which are a major component of these costs, can significantly impact a business’s bottom line. Credit card companies and credit card networks play a central role in setting and collecting these fees. Interchange fees, which are set by the card networks, are a significant part of these credit card processing fees.
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, including whether the transaction involves a credit or debit card. Payment networks, such as Visa and Mastercard, and issuing banks are also involved in determining the final fee structure for each card payment.
Merchant statements are intentionally complex, packed with hidden fees and confusing line items, making it nearly impossible to audit them accurately without deep industry knowledge.
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.
There are three different types of pricing models that influence what fee you will be charged. Accepting debit card payments can lead to lower transaction fees compared to credit card processing, which can help minimize overall processing costs. Additionally, understanding the discount rate associated with each transaction can further help in managing and reducing these costs.
A flat-rate pricing model involves the merchant account provider charging you either:
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. Additionally, the 'qualified rate' is often used to describe the lowest possible rate for transactions that meet certain criteria.
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.
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.
No matter the pricing model you use, there are account fees that will always show up on your statements. These fees include the following:
PCI compliance fee is another common charge that ensures your business adheres to the Payment Card Industry Data Security Standards.
Early termination fees are another important consideration. These fees typically apply when businesses try to close their accounts before the end of a long-term contract, leading to unexpected charges.
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.).
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 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:
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.
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. A monthly fee provides a more predictable cost structure, appealing to businesses looking to save money. 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. The payment gateway fee can vary depending on the provider.
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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. This is often referred to as an early termination fee and can lock merchants into unfavorable agreements, impacting their ability to switch providers.
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.
A batch fee is a charge imposed by payment processors when multiple transactions are grouped together and submitted for settlement at the end of the business day. This process, known as batching, helps ensure that all credit card transactions from a specific period are finalized and transferred into the merchant’s bank account. While the cost of a batch fee is typically low, usually ranging between $0.10 to $0.30 per batch, it’s important to note that this fee is charged every time you submit a batch, regardless of the number of transactions. At Swipesum, we always recommend reviewing your processing agreement to ensure you’re not being overcharged on batch fees, especially if you run multiple batches throughout the day. Properly managing batching times can help minimize these costs.
A PIN debit transaction fee is a cost incurred when a customer uses a debit card and enters their PIN for authentication, instead of signing for the transaction. PIN debit transactions are often more secure and less prone to fraud, which is why they're typically priced lower than credit card transactions. The cost of a PIN debit transaction typically includes a fixed fee, usually around $0.20 to $0.75 per transaction, plus a small percentage, usually around 0.5%. While these fees are generally lower than credit card processing fees, they can add up quickly for businesses with high transaction volumes. At Swipesum, we help merchants optimize their payment processing setup by evaluating the mix of card types and transaction methods to ensure you’re always paying the lowest possible fees.
Some fees aren’t anything more than a way to get extra money out of your business. Hidden fees can often be buried in the fine print, making them hard to spot. 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. Different payment processors can charge merchants differently based on transaction types and risk levels, so choosing a reputable payment processor is crucial to ensure compliance and minimize fees.
“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.
The major factor complicating merchant account fees is each fee is designed for its own purposes, which are different from other charges, causing you to pay numerous additional charges on your account statement. Merchant services fees are also generally confusing on purpose to hide margin. Another problem that is complicated is how many transaction fees you are charged on your merchant account and other fees you charge on credit cards (such as MasterCard and Visa). The processor simply collects the charge and sends it to an authorized entity. This type of fee is non-negotiable during registration.
A number of variables influence the cost and quality of credit and debit card transactions, but with higher transaction amounts and processing volume the fees should decrease. These include the type of cards used, the payment processors, the acquisition banks, the clients' banks whether it's a digital or in-person transaction and the card company that issued the card to its customers, all discount rates applied by the payment processing company, and whether it applies to the card issued by
You can negotiate all fees when shopping for a merchant account. Note that wholesale fees passed on to another company or entity are no longer negotiable and all markup fees imposed directly on your provider are fair game. Some of the most reliable companies will usually waive the late termination fee for the duration of the contract. Monthly minimums may be reduced in negotiations as well.
To significantly lower your processing costs, and reduce them over time, speak with a payments consultant and regularly audit your merchant processing statements.
While it isn't currently widespread, some providers are still charged a one-time fee for processing your merchant application and perhaps another fee for the setup of the accounts when approved. This is straight commission for the sales rep, and is a $0 cost to a payment processing company. Avoid providers that charge such fees. Except in cases of high-risk businesses where additional account approval may justify paying setup costs. Note: if you're not receptive to bad credit, your account may still have an invalid credit history.
A merchant account fee is the cost a business pays to accept credit and debit card payments. It covers interchange fees, card network assessments, and your payment processor’s markup. These fees typically range from 1.5% to 3.5% per transaction, depending on card type, industry, and payment method. At Swipesum, we analyze your statements to identify which portions are negotiable so you only pay what’s necessary.
Small businesses generally pay between 2% and 3% of each transaction, with online or keyed-in payments at the higher end due to increased fraud risk. Choosing an interchange-plus pricing model can often bring your costs closer to 1.7%–2.2%. Swipesum helps small businesses benchmark rates, remove hidden markups, and build a pricing plan that scales as they grow.
An interchange fee is set by the card networks (Visa, Mastercard, Discover, Amex) and paid to the issuing bank for processing each transaction.
It varies by card type, transaction method, and industry. Although non-negotiable, these fees can increase through downgrades if data is missing or entered incorrectly.
The merchant service charge is the total amount you pay to accept card payments, which includes:
Processing fees represent just the markup portion of the total service charge.
An authorization fee is charged every time your processor requests transaction approval from the issuing bank—even for declined transactions.
Typical cost: $0.01–$0.10 per authorization.
If you see excessive authorization charges, it may indicate failed payment retries or a misconfigured gateway. Swipesum can help you fix that setup to reduce these micro-fees.
A monthly minimum fee applies when your total processing volume doesn’t meet a provider’s minimum threshold. You pay the difference to hit that target. These fees are often unnecessary. Swipesum negotiates to remove or reduce monthly minimums, especially for seasonal or growing businesses.
The fastest ways to reduce merchant account fees include:
Swipesum’s consultants manage all these steps, often saving clients 15–40% on processing costs.
Yes. Common hidden merchant fees include:
Chargeback fees are penalties (usually $15–$25) when a customer disputes a transaction.
You can reduce chargebacks by:
Yes. PCI compliance fees cover the costs of meeting Payment Card Industry Data Security Standards (PCI DSS).
Non-compliance can trigger higher fees or fines.
When comparing providers:
A gateway fee covers the technology that transmits payment data securely to the processor.
Typical cost: $10–$25/month
Many processors push equipment leases that cost far more than purchasing outright.
Buying your terminal or POS upfront usually saves hundreds per year.
An early termination fee (ETF) is charged when you cancel your contract before the term ends.
These can often be waived or negotiated out before signing. Swipesum reviews contracts and helps merchants exit unfair agreements without paying ET fees.
Processors frequently raise rates annually in Q1 following Visa/Mastercard interchange updates.
You can renegotiate anytime, especially if your volume has grown or competitors offer better rates.
Swipesum tracks network rate changes and proactively renegotiates on your behalf.
Yes. Merchant account fees fall under Operating Expenses → Payment Processing Fees on your income statement.
Tracking them properly improves budgeting and can qualify as a tax-deductible expense.
Swipesum helps clients reconcile fees and streamline accounting integrations.
A legitimate processor shouldn’t charge an application or setup fee. If you see one, it’s usually a markup from a reseller. Swipesum never charges setup fees and helps merchants avoid predatory onboarding costs.
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.
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Michael Seaman
Michael Seaman is the co-founder and CEO of Swipesum. A veteran of the payments industry and former employee at one of the largest payments companies, Michael, along with his brother Stephen, has led Swipesum since its inception in 2016. Swipesum is committed to providing innovative payment solutions and exceptional service to its diverse clientele. In his free time, Michael enjoys traveling with his wife Kelsey and their three children, pole vaulting, and engaging in typical Midwestern dad activities.
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