Every card payment you accept costs you something. The fee is split between the bank that issued your customer’s card, the card scheme, and the companies that process the payment for you. For most merchants it is one of the largest costs they never look at closely.
If you run a high-risk business, those fees are usually higher, and there are extra costs that low-risk merchants rarely see. This guide explains what credit card processing fees are made of, the pricing models providers use, the extra charges to look for, and how to keep your costs under control.
Key takeaways
- Card processing fees have three main layers: interchange (to the card issuer), scheme fees (to Visa, Mastercard and others) and the acquirer’s or processor’s markup.
- In the EU, interchange on consumer cards is capped at 0.2% for debit and 0.3% for credit. Commercial cards and cards issued outside the EEA are not covered by those caps.
- Interchange++ (IC++) pricing shows each layer separately. Blended and tiered pricing are simpler but make it harder to see what you pay.
- High-risk merchants often pay a higher markup and face extra costs: rolling reserves, card scheme registration fees, chargeback fees and higher monthly fees.
- In the EU and the UK you can’t add a surcharge for paying with a consumer card, so fees have to be built into your prices.
What are credit card processing fees?
Credit card processing fees are what a merchant pays to accept card payments. Several parties are involved in every transaction, and each takes a share:
- The issuer: the bank that issued your customer’s card. It receives the interchange fee.
- The card scheme: Visa, Mastercard, American Express and others. They charge scheme fees for using their networks.
- The acquirer: the bank or payment institution that processes card payments for you and settles the money to your account.
- The processor, gateway or payment service provider: the companies that provide the technology and services around the payment. Sometimes these are the same company as the acquirer.
The three main layers of card fees
Interchange fees
Interchange is paid by the acquirer to the card issuer on each transaction, and passed on to you. It depends on the card and the transaction:
- Card type: debit cards usually cost less than credit cards, and premium or rewards cards cost more in markets where interchange isn’t capped.
- Consumer or commercial: business and corporate cards carry higher interchange.
- Where the card was issued: cards issued outside your region usually cost more.
- How the payment is made: card-not-present payments can cost more than in-store payments.
In the EU, the Interchange Fee Regulation caps interchange on consumer cards at 0.2% of the transaction for debit cards and 0.3% for credit cards. The UK kept the same caps for domestic transactions. The caps don’t apply to commercial cards or to most cards issued outside the EEA, which is why international sales often cost more. See our guide to cross-border payments.
Scheme fees
Scheme fees are charged by the card schemes for using their networks. They cover authorisation, clearing, settlement and other services, and they often include extra charges for cross-border transactions. The ISA fee on Visa transactions is one example. Scheme fees are not capped, and the schemes change them from time to time.
Acquirer or processor markup
This is the part your provider keeps for its service and risk. Unlike interchange and scheme fees, it is negotiable, and it is where providers differ most. High-risk merchants usually pay a higher markup, because the acquirer carries more chargeback and fraud risk.
Pricing models
| Model | How it works | Good to know |
|---|---|---|
| Interchange++ (IC++) | You pay the actual interchange, plus the actual scheme fees, plus a fixed markup from your provider. | The most transparent model. Your statement shows each layer, so you can see exactly what you pay and why. |
| Blended (flat rate) | One rate for all card transactions, sometimes plus a fixed fee per transaction. | Easy to understand, but you may pay the same rate on cheap debit cards as on expensive commercial cards. |
| Tiered | Transactions are grouped into tiers (often “qualified”, “mid-qualified” and “non-qualified”), each with its own rate. | The provider decides which transactions fall into which tier, which can make costs hard to predict and compare. |
When you compare offers, ask each provider to show what you would have paid last month under their pricing, using your actual transactions.
Other fees to look for
Per-transaction and gateway fees
Many providers add a fixed fee per transaction on top of the percentage, and some charge separately for the payment gateway, either per transaction or monthly.
Monthly and account fees
- Monthly or account fees for keeping the merchant account open.
- Statement or reporting fees, sometimes charged separately.
- Monthly minimums: if your fees in a month are below an agreed minimum, you pay the difference.
Setup and termination fees
Some providers charge a one-off setup fee for onboarding and integration, and a termination fee if you close the account before the end of the contract term. Check the contract length and notice period before you sign.
PCI compliance fees
Merchants that accept cards must comply with the Payment Card Industry Data Security Standard (PCI DSS). Some providers charge a fee for compliance support, and some charge a non-compliance fee if you don’t complete your annual self-assessment. How much work PCI DSS means for you depends mostly on how you integrate: a hosted payment page keeps most card data away from your systems.
Chargeback fees
Your acquirer charges a fee for every chargeback, usually whether you win or lose the dispute. If chargebacks are frequent, these fees add up quickly, and a high ratio can also lead to card scheme monitoring under programmes such as Visa VAMP.
Cross-border and currency conversion fees
Payments with cards issued in another country or region often carry extra scheme fees and higher interchange. If your provider converts currencies for you, there is usually an FX margin too.
Other service fees
Depending on the provider, you may also see fees for address verification (AVS), refunds, account updater services, or alert and pre-dispute services that help you avoid chargebacks.
Extra costs for high-risk merchants
- Higher markup: to cover the acquirer’s extra risk.
- Rolling reserve: a share of your sales held back for a period to cover future chargebacks. It isn’t a fee, but it affects cash flow. Read our rolling reserve guide.
- Card scheme registration fees: certain merchant categories, such as adult, gambling, dating and some nutraceuticals, must be registered with the card schemes, and acquirers usually pass the registration fees on.
- Higher chargeback fees and stricter monitoring.
Can you pass card fees on to customers?
In the EU and the UK, merchants are not allowed to add a surcharge for paying with consumer debit or credit cards that are covered by the interchange caps. Rules for commercial cards and for other countries differ. In practice, most merchants build card costs into their prices instead.
How much will you pay?
There is no single answer, because your fees depend on:
- your industry and merchant category;
- your business model, for example subscriptions or one-off sales;
- your average transaction size and monthly volume;
- the mix of cards your customers use, and where they were issued;
- your chargeback and fraud history;
- your acquirer and provider.
The best way to compare is to ask for a full fee schedule and run your own transactions through it.
How to manage and reduce your fees
- Ask for IC++ pricing where possible, so you can see each layer.
- Compare several offers using your real transaction data.
- Read the contract for minimums, termination fees and notice periods.
- Keep chargebacks low: it lowers chargeback fees and improves your negotiating position. See our guide to preventing chargebacks.
- Price in local currency in your main markets, and avoid unnecessary conversions.
- Renegotiate once you have a stable processing history.
Frequently asked questions
What are credit card processing fees for merchants?
They are the costs a merchant pays to accept card payments: interchange to the card issuer, scheme fees to the card networks, and a markup to the acquirer or processor, plus any fixed or monthly fees in the contract.
What is interchange?
Interchange is the fee paid to the card issuer on each card transaction. In the EU, interchange on consumer cards is capped at 0.2% for debit and 0.3% for credit. Commercial cards and most cards issued outside the EEA cost more.
What is IC++ pricing?
Interchange++ pricing means you pay the actual interchange, the actual scheme fees and a fixed markup from your provider, each shown separately. It is the most transparent pricing model.
What is a gateway fee?
A gateway fee is what some providers charge for the payment gateway, the technology that sends card details from your checkout to the acquirer. It can be per transaction, monthly, or included in your overall rate.
Why do high-risk merchants pay higher fees?
Because the acquirer takes on more chargeback, fraud and regulatory risk. High-risk merchants usually pay a higher markup and may also have a rolling reserve, card scheme registration fees and higher chargeback fees.
Can I charge customers a fee for paying by card?
In the EU and the UK, surcharges on consumer debit and credit cards are not allowed. Rules for commercial cards and other countries differ, so check the rules where you sell.
How can I lower my card processing fees?
Compare offers using your real transactions, ask for IC++ pricing, keep chargebacks low, avoid unnecessary currency conversions and renegotiate once you have a stable processing history.
Next step
Fasto works with adult, subscription, nutraceutical, gaming, dating and hospitality merchants. Approval typically takes two to three weeks.
Get a free quote for a high-risk merchant account.
