Credit card processing fees have three layers: interchange (paid to the bank that issued the card), assessments (paid to Visa, Mastercard and the other networks), and the processor’s markup. Interchange and assessments are the same for everyone. The markup, and the way it is packaged into a pricing model, is where two businesses with identical sales can pay very different bills.
Once every fee is counted, many owners lose 3% to 4% of every card sale. On $30,000 a month, that is roughly $900 to $1,200 a month, every month. Here is where that money goes, and how to keep more of it.
The three layers of every card fee
1. Interchange: the biggest piece
Interchange is the fee the card-issuing bank charges for every transaction. It is set by the card networks, published in long rate tables, and passed through by your processor. You cannot negotiate it.
It changes based on the card and the way it is taken, and the networks revise their tables, usually in April and October. A few approximate reference points:
| Card type | Approximate interchange |
|---|---|
| Visa CPS Retail credit | about 1.51% + $0.10 |
| Mastercard Merit III credit | about 1.65% + $0.10 |
| Premium / rewards credit | about 2.6% + $0.10 |
| Regulated debit (big-bank debit, Reg II) | 0.05% + $0.21 + $0.01 |
Two things to notice. Rewards cards cost you a lot more than standard cards, and you have no say over which card a customer pulls out. Debit is cheap on a percentage basis, but the fixed 22 cents hurts on small tickets. A $5 coffee on regulated debit costs you about 4.5% of the sale.
The regulated debit cap is in legal limbo. A district court vacated it in August 2025 but stayed its own ruling, and the Eighth Circuit heard argument in May 2026. For now, the cap still applies.
2. Assessments: the network’s cut
Visa and Mastercard each charge a small fee on volume that runs through their networks, plus small per-transaction network fees. Assessments are typically in the range of about 0.13% to 0.15% of volume. On $30,000 a month, that is roughly $40 to $45. Like interchange, they are not negotiable.
3. The processor’s markup: the only part that is up for grabs
Everything above interchange and assessments is the processor’s revenue. It can show up as a percentage, a per-transaction fee, a monthly fee, or a dozen small line items with official-sounding names. This is the layer pricing models are built to package, and the layer that is often hidden. Our list of hidden credit card processing fees covers the line items to look for.
The three pricing models
How a processor bundles those three layers is the pricing model. The model matters as much as the rate.
Flat rate
One percentage plus a per-transaction fee for every card. Flat-rate plans commonly run 2.6% to 2.9% plus 10 to 30 cents.
- Good: Simple and predictable. Easy to budget.
- Bad: You pay the same rate on a cheap debit swipe as on a premium rewards card. The processor keeps the difference. As volume grows, you overpay more.
Tiered
The processor sorts every transaction into buckets, usually “qualified”, “mid-qualified” and “non-qualified”, each with its own rate. The processor decides which card lands in which bucket.
- Good: The quoted “qualified” rate looks low.
- Bad: It is the most opaque model there is. Rewards cards, keyed cards and business cards often get pushed into the expensive buckets. You cannot check the math against interchange tables, because the buckets are the processor’s own invention.
Interchange-plus
You pay actual interchange and assessments, passed through at cost, plus a visible markup, such as a percentage plus a few cents per transaction, and any other processor fees listed separately.
- Good: The most transparent model. You can see exactly what the processor earns and compare quotes apples to apples.
- Bad: The statement is longer, and the total still moves around with your card mix. A cheap markup can be undone by monthly fees elsewhere on the statement.
For a side-by-side table of the three, and who each one suits, see flat rate vs. tiered vs. interchange-plus. For a full walk-through of the transparent model, see interchange-plus pricing explained.
Worked example: $30,000 a month
Let’s put real numbers on it. Here is a business doing $30,000 a month in card sales, with a $30 average ticket. That is 1,000 transactions a month.
For the interchange-plus line, we assume a simple card mix:
- 60% standard credit: $18,000 across 600 transactions
- 20% premium / rewards credit: $6,000 across 200 transactions
- 20% regulated debit: $6,000 across 200 transactions
Using the interchange figures above, that mix works out to:
| Piece | Calculation | Monthly cost |
|---|---|---|
| Standard credit interchange | ~1.58% × $18,000 + $0.10 × 600 | ~$344 |
| Premium credit interchange | 2.6% × $6,000 + $0.10 × 200 | ~$176 |
| Regulated debit interchange | 0.05% × $6,000 + $0.22 × 200 | ~$47 |
| Assessments | ~0.14% × $30,000 | ~$42 |
| Pass-through cost | ~$609 |
That $609 is roughly the floor. Every processor pays it. Now, here is what you would pay under each model:
| Pricing model | Assumed terms | Monthly cost | Effective rate | Per year |
|---|---|---|---|---|
| Flat rate (high end) | 2.9% + $0.30 | $1,170 | 3.9% | $14,040 |
| Flat rate (low end) | 2.6% + $0.10 | $880 | 2.93% | $10,560 |
| Tiered | Varies with downgrades | Often at or above flat rate | Hard to know | Hard to know |
| Interchange-plus | $609 + 0.30% + $0.10 markup | ~$799 | ~2.66% | ~$9,590 |
The markups and card mix are assumptions for illustration. Your mix, ticket size and statement fees will change the numbers. Monthly fees such as PCI, statement and gateway fees are not included.
The difference between the high-end flat rate and interchange-plus is about $4,450 a year on this example. And on interchange-plus, you can see that the processor’s share is about $190 of the $799. On the other models, you can’t see it at all, which is what makes it hard to negotiate.
See your number. Plug in your monthly volume and average ticket and get the dollar figure in under a minute. Run the savings calculator
Why your real rate is higher than your quoted rate
The rate you were quoted is rarely the rate you pay. Common reasons:
- Card mix drift. More customers carry rewards cards every year, and those cost more.
- Keyed and online transactions. A card-not-present transaction carries higher interchange and often a higher processor rate.
- Monthly fees. Statement fees, PCI fees, gateway fees and minimums are not in the “rate” at all.
- Rate creep. Some processors raise the markup with a one-line notice buried in a statement.
The only number that tells the truth is your effective rate: total fees ÷ total card volume. Our guide on how to read a merchant statement shows you where to find both numbers.
How to lower your credit card processing fees
In order of impact:
- Calculate your effective rate first. You can’t negotiate a number you don’t know.
- Get off tiered pricing. If your statement says “qualified” and “non-qualified”, you’re on tiered.
- Ask for interchange-plus with every fee above cost in writing. Then compare offers on the total above cost, priced on your own card mix.
- Strip out junk fees. Statement, PCI non-compliance, and minimum fees are often removable just by asking, or by completing your PCI questionnaire.
- Avoid long contracts and equipment leases. Early-termination fees of $295 to $495 or more, and non-cancellable leases, are what keep owners stuck on bad pricing.
- Sell to businesses? Send Level 3 data. Corporate and purchasing cards cost far less when invoice line items go with the payment. See what is Level 3 processing.
How Mojo helps
Mojo Payments runs on cost-plus pricing on Clover and our virtual terminal and gateway: interchange and card-brand fees at cost, no tiers, no “non-qualified” surcharges, month-to-month. On top, we build a pricing program from your own statement: each part of the bill priced separately, the lowest price on the payments you run most, and tools such as Level 3 data and PIN debit prompts that lower the cost of the rest. Apply online with 1–3 recent statements and we’ll return a quote within 24 hours that shows every fee line, current next to proposed, and the card mix it’s based on. If we can’t lower your total, we’ll say so. Get your free statement review.
Frequently asked questions
What are typical credit card processing fees for a small business?
Many small businesses pay around 3% to 4% of card volume once every fee is counted. Flat-rate plans commonly run 2.6% to 2.9% plus 10 to 30 cents per transaction, and junk fees on top can push the real number higher.
What part of a credit card processing fee is negotiable?
Only the processor's markup. Interchange is set by the card networks and paid to the card-issuing bank, and assessments go to Visa and Mastercard. Everything else on the statement is the processor's to set, and therefore yours to question.
Which pricing model is cheapest: flat rate, tiered, or interchange-plus?
For most businesses above about $10,000 a month, interchange-plus with a small markup costs less than flat rate, and tiered is usually the most expensive and hardest to check. Interchange-plus is also the only model where you can see exactly what the processor earns.
How do I calculate what I actually pay in processing fees?
Add every fee on your monthly statement and divide by your total card volume. That is your effective rate. At $30,000 a month, every 0.1% is $30 a month, or $360 a year.
This guide is general information, not legal or financial advice. Card-brand rules and state laws change, so confirm specifics for your business.