Credit Card Processing Fees (2024 Guide) (2024)

FAQs

What is the going rate for credit card processing fees? ›

The average credit card processing fee, which will be taken out of a merchant's sales revenue, is in the range of about 1.5 percent to 3.5 percent. Merchants can negotiate their card processing fees and they are not set in stone.

Merchants paid $126 billion in credit card fees in 2022, an increase of 20% from the year before, and more than double from 2013, according to Nilson Report.

But passing on credit card fees to customers is legal in the majority of the U.S. Whether or not a merchant can charge them boils down to local laws and the parameters provided by payment processing networks. Being familiar with the restrictions in your area is important to ensure you aren't overcharged.

Places that prohibit surcharges

While surcharge fees are legal under federal law, there are a few states and one jurisdiction that prohibit surcharges, according to the National Merchants Association. The laws in Connecticut, Massachusetts, and Puerto Rico do not allow merchants to impose surcharges.

The answer is: yes, if your business operates in states where it is legal to do so. As of the time of publishing this, the practice of imposing additional fees on credit card transactions (i.e., credit card surcharges) is prohibited in only three U.S. locations: Connecticut, Massachusetts, and Puerto Rico.

How to Calculate Processing Fees. The formula for calculating processing fees is as follows: (order amount * percentage fee) + (transaction fee * number of transactions).

There are processing fees, flat fees, and situational fees. Some are negotiable; some aren't. Entering into an agreement with a payment processor is a lot like hiring a contractor to remodel your restaurant: it's important to get a few quotes and negotiate the fine points.

The American Express (Amex) and Visa merchant fee structures necessitate careful consideration for businesses. Visa generally imposes lower interchange fees, ranging from 1.15% plus 5 cents to 2.40% plus 10 cents, in contrast to Amex's higher fees ranging from 1.43% plus 10 cents to 3.30% plus 10 cents.

In 1985, California passed a law (Civil Code section 1748.1) that prohibited merchants from adding a surcharge (an extra fee) when customers pay by credit card instead of cash.

How do I tell a customer about my credit card processing fee? ›

Examples of Customer Notifications

For example, a point-of-entry disclosure could read as: “We impose a surcharge on credit cards that is not greater than our cost of acceptance.” In a point-of-sale scenario, your signage might display specific charges, such as: “We impose a surcharge of X% on the transaction.

What is the maximum credit card processing fee? Merchants are not allowed to charge more than 4% of each transaction as a credit card processing fee.

CONVENIENCE FEE NOTICE:

A convenience fee of $2 will be added to each credit card transaction to cover the costs associated with processing them. This fee helps us maintain the quality of our services without increasing our prices.

Use a different payment method.

Merchants often charge convenience fees or surcharges when credit cards aren't a standard payment method. If you have a rent, utility or tax bill, consider paying by check or electronic transfer instead.

The average credit card processing fee ranges between 1.5% and 3.5%. Just where do all these fees come from, and what can a merchant do to minimize them?

For most businesses, a good effective rate for credit card processing is between 2% and 4%. However, there are cases where a higher effective rate can be expected. To determine if you're being overcharged, you need to find out how much you should be paying.

If you choose to impose surcharges in the US, you are required to follow certain protocols and state regulations. You must notify the appropriate credit card associations before imposing fees, and your credit card surcharge must not exceed the cost of accepting the card or four percent of the total transaction.