If you don’t look closely at your credit card processing statement, you should. When a merchant accepts credit card payments, several types of fees contribute to the total cost. While some of these fees are mandated by the card networks (Visa / Mastercard) and non-negotiable, other fees are described by many merchants as “junk” fees since they are generally small, esoteric fees that few understand.  Merchants need to have a clear understanding of what fees they are charged, why they are charged, to whom they are paid, and whether or not they are negotiable. 

Merchants may pay some of these fees indirectly via a blend “merchant discount” rate applied to all of their payment card transactions, or they may pay Interchange, plus fees/assessments on a “passthrough” basis, along with a processor acquirer markup.  The latter method is commonly known as IC++. It is notable that in addition to either of these models, merchants may pay other fees directly to their processor or acquirer. IC++ provides you visibility into what you are being charged; often, the IC++ model provides lower costs and details of fees.  And remember that many of the fees (with the notable exception of Interchange) are negotiable.

Here is a list of many of the common fees merchants pay – they are generally divided among three main entities: the issuing bank, the card network, and the payment processor or acquiring bank.

🔹 1. Interchange Fees (Paid to the Issuing Bank) – Non-Negotiable

These are the largest components of credit card processing fees and are non-negotiable. They are set by card networks and paid to the bank that issued the card.

• Typical Range: 1.15% – 3.00% + a fixed fee (e.g., $0.10)
• Varies by:
  • Card type (debit, credit, rewards, business)
  • Transaction type (in-person vs online)
  • Merchant category (grocery store vs luxury retailer)
  • Risk level of the transaction

🔹 2. Assessment Fees (Paid to the Card Network) – Non-Negotiable

These are fees charged by Visa, Mastercard, Discover, or American Express for using their network.

• Visa: ~0.13% of the transaction amount
• Mastercard: ~0.1375%
• Discover: ~0.13% – 0.14%
• American Express: Charges both assessments and its own acquiring fee (often higher than other card networks’ fees)

🔹 3. Processor/Acquirer Fees (Paid to Your Payment Processor or Acquiring Bank) – Negotiable

This is the markup your merchant services provider adds for handling the transaction. This is the negotiable part.

• Flat rate: Some charge a fixed percentage (e.g., 2.9% + $0.30 per transaction – often referred to as a “discount fee”)
• Interchange-plus pricing: Interchange + a set markup (e.g., +0.30% and $0.15)
• Tiered pricing: Categorizes transactions into tiers (qualified, mid-qualified, non-qualified), which can be opaque and expensive.

🔹 4. Monthly and Annual Fees – Negotiable

Recurring fees charged by the processor or acquiring bank.

• Monthly fee: $5 – $30/month (e.g., account maintenance)
• PCI compliance fee: $50 – $150 annually (or monthly)
• Annual fee: Sometimes added by legacy processors

🔹 5. Per-Transaction Fees – Negotiable 

Charged in addition to percentage-based fees.

• Typically $0.05 – $0.30 per transaction
• Varies depending on provider and hardware/software used

🔹 6. Gateway Fees – Negotiable

Charged when using an online payment gateway like Authorize.Net, Stripe, etc.

• Monthly fee: $10 – $30/month
• Per transaction: $0.05 – $0.10

🔹 7. Chargeback Fees – May be Negotiable (at least in part)

Fees incurred when a customer disputes a charge.

• Typical fee: $15 – $25 per chargeback
• Can also include additional penalties if the merchant has a high chargeback rate

🔹 8. Terminal or Equipment Fees – Negotiable

For physical stores that use card readers or terminals.

• Purchase cost: $150 – $600
• Rental fees: $5 – $30/month

🔹 9. Early Termination or Cancellation Fees – Negotiable

Applies if you cancel a processing contract early.

• Can range from $100 to $500, or based on remaining monthly fees

🔹 10. Cross-Border & Currency Conversion Fees – Mostly Non-Negotiable

If you accept cards from international customers.

• Cross-border fee: 0.40% – 1.00%
• Currency conversion fee: 0.20% – 1.00%

🔹 11. Batch Processing Fees – Negotiable

Charged when you close out your transactions for the day.

• Typical cost: $0.10 – $0.25 per batch

🔹 12. FANF / NABU Fees – Non-Negotiable

Charged by Visa / Mastercard on a per-location/volume basis.

• Typical cost: $2.00 – $4.00, location or variable based on volume for online merchants.

🔹 13. Optional Add-On Services / Miscellaneous Fees – Mostly Negotiable

For value-added services like analytics, fraud detection, or loyalty programs.

• Costs vary depending on service and provider

Here is a table of some of the more esoteric fees that may be assessed

Fee Name	Amount	When Charged
Processing Integrity / Misuse	~$0.045+ per event	Improper authorization or settlement
AVS / CVV Fee	~$0.01 – $0.05	Each AVS/CVV check
Voice Auth Fee	~$0.65 – $1.50	Manual approval via phone
Retrieval Request Fee	~$2 – $15	When info is requested on a transaction
Monthly Minimum Fee	Varies (~$10 – $25)	When not enough fees are generated
PCI Non-Compliance Fee	$19.95 – $50/month	Until PCI compliance is validated
Cross-Border + ISA	Up to 1.8% total	International transactions
1099-K / IRS Filing Fee	~$10 – $30 annually	Year-end reporting

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By Dean Sheaffer

To learn more about payment card fees and how to negotiate them, contact Dean Sheaffer at TeamPaytech.com or +1-484-269-1719.