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5 Tricks to Lower Your Credit Card Processing Fees

Julianna Lopez
Julianna Lopez
Business News Daily Contributing Writer
Updated Oct 11, 2022

Are you paying too much for credit card processing? Here are five things you can do to lower your rates.


  • Credit card processing fees are often negotiable.
  • Accepting card payments in person and making sure your account and terminal are properly set up can save you money.
  • Account fees can add to your overall processing costs and some of these are also negotiable.
  • This article is for small business owners who want to know what they can do to lower their credit card processing fees.

With everything small business owners have to think about, credit card processing fees may not be something that automatically comes to mind. The fees may not seem like a lot by themselves, but those small percentages processors take for every transaction can quickly add up. And when you combine transaction fees with assessment fees, authorization costs and monthly fees, your monthly credit card processing bill can balloon to an astronomical amount.

Editor’s note: Looking for a credit card processing solution for your business? Fill out the below questionnaire to be connected with vendors that can help.

5 ways to lower your credit card processing fees

Unfortunately, you can’t avoid credit card processing expenses, but merchants can take steps to save thousands of dollars each month.

1. Negotiate with credit card processors.

The best way to negotiate with payment processors is to be seen as a merchant that adds value, thus making the vendor want your business, said Rey Pasinli, executive director at Total Apps, a merchant service provider.

You can negotiate with credit card processors by leveraging your transaction volume. This is because the more you sell, the more transactions you perform, and the more value it adds to the processor, Pasinli said. [Interested in finding the right credit card processor for your business? Check out our best picks.]

“Processors, just like any other business, can negotiate with their suppliers off of the volume of processing their clients complete,” he said. “The more you give them, the more negotiating power they have upstream to lower their overhead in different areas. In turn, they can lower your rates if it is worthwhile to them.”

2. Reduce the risk of credit card fraud.

The higher security risk you pose as a merchant, the higher your credit card processing fees will be. You have two primary ways of reducing the risk for credit card fraud: swiping credit cards and entering security information, said Jeffrey Gehrs, president at Electronic Merchant Systems, a credit card processing company.

“Swipe as many cards as you can,” Gehrs said. That’s because the rates set by card brands like Visa and MasterCard are higher when the cards are keyed in based on fraud risk, he explained. “With new technology, like cell phone swipers offered by full merchant-service providers and microprocessors like Square, there are few excuses to not swipe the majority of your cards.” [Read related article: 5 Important Things to Know Before Accepting Online Credit Card Payments]

Merchants can also lower the risk of fraud by providing security information that protects the cardholder and validates the purchase. An effective way is to always enter the billing ZIP code and security code when prompted, Gehrs recommended.

“This seems like a small nuisance, but bypassing this step could cost your business over 1% of each sale,” he said. “Similar to keying in sales, forgoing this process means a higher rate due to fraud risk.”

3. Use an address verification service.

To take a step further in reducing credit card fraud, use an address verification service (AVS), a system that verifies the cardholder’s billing address with the card issuer. This fraud-fighting tool has a big benefit in the world of e-commerce, including limiting chargebacks.

During the checkout process, the customer enters their address, which is then compared to the address on file with the issuing bank. Once the comparison is made, the issuing bank sends an AVS code to the merchant, who can then use the code to authorize or reject the transaction.

Both Visa and MasterCard support AVS globally, and in the U.S., Visa incentivizes businesses to use AVS by providing a lower interchange rate when merchants perform an AVS check on transactions.

4. Properly set up your account and terminal.

Sometimes, a simple mistake can lead to higher credit card processing fees. Avoid this by setting up your account the right way from the start, said Fenella Kim, founder and CEO of Reliance Star Payment Services. If you set up your account improperly, you risk incurring higher processing fees from providing incorrect business information.

“Setting up the account properly [impacts] how the fee structure works,” Kim said. “The type of business, type of transactions and frequency of transactions matters.”

Similarly, the way your terminal is set up and used also affects processing fees. Kim suggests making a habit of processing transactions within 24 hours, which lowers the number of transactions for that period and thus reduces processing fees. [Check out our reviews of the best point-of-sale systems to help track sales and accept payments.]

“If you do your batch process every day, it is more cost-effective instead of every few days or a few times a week,” she said. “Don’t wait, [because] the longer you wait to process, the higher the fees and rates.”

5. Consult with a credit card processing expert.

Most small business owners know next to nothing about credit card processing. Gain a better understanding and an advocate by consulting a credit card processing expert. Not only can these professionals debunk credit card processing myths, but their knowledge and relationship with processors can also help you get lower rates for your business.

“Here is the secret that merchants are always shocked to find out: Regardless of their size or amount of volume, virtually all credit card processors buy their rates directly from Visa, MasterCard and Discover for the exact same price,” said Robert Livingstone, president and founder of, a credit card processing consulting company. “Therefore, all credit card processors have the capability to resell these rates at the exact same price to different businesses.”

Knowing insider information like this can help small businesses gain an edge with vendors.

“Businesses are under the false impression that they have to keep switching their credit card processor in order to see a savings,” Livingstone said. One reason is that when businesses call their current credit card processors to negotiate better rates, they’ll get almost nowhere, he said.

Instead, Livingstone and his staff negotiate the lowest possible credit card processing fees with their existing vendors. “This means no switching or cancellation fees and zero downtime by switching from one processor to another,” Livingstone said. “If there is a savings, we split it with the client. If there is no savings, our services are free.”

Key takeawayKey takeaway: In addition to negotiating for lower rates, you may also be able to lower your credit card processing fees by accepting cards in-person as much as possible, making sure your account and terminal are set up properly and using AVS.

What are credit card processing fees?

Credit card processing fees are the fees your business pays each time a customer or client pays you via debit or credit card. Additionally, some card providers charge account fees and incidental fees that contribute to the overall cost of accepting credit and debit cards from your customers.

Types of credit card processing fees

There are a lot of different types of fees to keep track of when you’re accepting credit cards. The main cost that you should consider when you’re shopping for a payment processor is the rate it charges for each transaction. The rate is made up of three parts:

  1. Interchange fees. The credit card networks set these fees, which your bank pays to your customer’s bank for each purchase to offsets the risks of the transaction, such as card fraud, and other handling costs. Your processor passes this charge along to you as part of your rate. This fee varies, depending on your industry, the type of card your customer uses, the acceptance method, and the amount of the sale. Since these fees are set by the card networks, everyone pays the same rates and they are non-negotiable.
  2. Assessment fees. The card brands charge this fee so they can afford to allow customers to use their card brand. This fee also covers the costs of processing transactions on the card provider’s payment network. These fees are usually lower than interchange fees, but they’re also non-negotiable.
  3. Payment processor markup fees. This fee is the credit card processor’s margin on each transaction. It covers its operating expenses and is where the processor makes its money. This is the only negotiable part of the processing rate.

In addition to transaction fees, you may also encounter incidental and account service fees. [For credit card processors with the lowest fees and rates, check out our review of Clover.]

Incidental fees are triggered by certain actions. Here are some examples:

  • Chargeback fee. If you have a customer who disputes a transaction, you’re charged this fee. Some processors will refund it if you win the dispute.
  • Batch fees. These are small daily fees that cover the costs of settling your daily deposits.
  • AVS fee. Usually costing just a few cents per transaction, this is the cost of using an anti-fraud tool that verifies the cardholder’s address and zip code.
  • Voice authorization fee. Voice authorization is another anti-fraud tool in which the terminal prompts you to call the credit card company, who wants more information before it approves or declines the transaction. This doesn’t happen frequently, but when it does, you’re charged this fee.

Account service fees are ongoing fees that the processor charges to maintain your account and you may be able to negotiate some of these. Here are some examples:

  • Monthly fee. Also called a monthly statement fee, this covers the costs of the payment processors’ support services such as monthly statement preparation and customer service.
  • Payment gateway fee. This is also charged monthly and covers the costs using a payment gateway to accept credit cards online.
  • PCI compliance fee. Most processors require you to fill out an annual questionnaire to certify that you comply with data security standards. Some provide assistance or insurance as part of their fees. This can be included in the monthly fee or charged separately, and some processors may be willing to waive it for you.
  • PCI noncompliance fee. If you fail to maintain your PCI compliance, you are charged this fee each month until you are in compliance.
  • Monthly minimum fee. Many service providers require you to process a certain dollar amount of transactions each month or generate a certain dollar amount in processing fees. If you don’t meet that minimum, you will be charged this fee.

Average credit card processing fees by major credit card network

Here are the average processing fees that each of the major credit card networks charge, as reported by The Motley Fool’s personal finance website. Remember, these averages do not include the processor’s markup, as that amount varies from processor to processor.


Average Credit Card Processing Fees

Visa1.29% + $0.05 to 2.54% + $0.10
Mastercard1.29% + $0.05 to 2.64% + $0.10
Discover1.53% + $0.05 to 2.53% + $0.10
American Express1.58% + $0.10 to 3.20% + $0.10

Additional reporting by Max Freedman.


Image Credit: Anatta Tan/Shutterstock
Julianna Lopez
Julianna Lopez
Business News Daily Contributing Writer
Julianna Lopez is a freelance writer, editor, and social media marketer. She loves all things New York, books, movies and theater.