Credit card processing fees, explained line by line
Every card payment is split three ways: the card-issuing bank, the card network and your processor. The first two are the same no matter who processes for you. The third is the part you can negotiate, and the part most businesses overpay.
By Josh Elsass, PresidentLast reviewed November 4, 2026
Where every card fee goes
Interchange depends on the card and how it is taken. A rewards credit card costs more than a basic debit card. A card tapped or dipped at the counter costs less than one typed in by hand, because the fraud risk is lower. Visa publishes its US rates in its interchange reimbursement fee schedule.
| Part | Who gets it | Can you negotiate it? |
|---|---|---|
| Interchange | The customer's card-issuing bank | No. Visa, Mastercard, Discover and American Express set the rates. |
| Assessments (network fees) | The card network | No. They are the same for every processor. |
| Processor markup | Your processor and sales rep | Yes. This is the part a rate review looks at. |
Debit cards
Debit from large banks is capped at 21¢ + 0.05% by federal law
Under the Federal Reserve's Regulation II, issuers can also add up to 1¢ for fraud prevention, so a $40 debit sale costs at most 24¢ in interchange. A federal appeals court struck down the Fed's method for setting the cap on October 26, 2026 and sent it back to the Fed. For now, the cap stays in place.
Source on the debit cap: Global Financial Regulatory Blog, November 2026.
The ways processors price, and the ones PayVault offers
PayVault offers interchange-plus, flat rate and tiered pricing, plus surcharging and dual pricing programs, on either of our two processing platforms. A rate review shows which one costs you least on your own card mix.
| Pricing model | How it works | Best for | Good to know |
|---|---|---|---|
| Interchange-plus | The actual interchange and network fees, passed through at cost, plus a fixed markup you can see | Most established businesses | Your markup is shown as a percentage plus cents per sale, so it is easy to compare. |
| Flat rate | One percentage plus a few cents on every sale. Square, for example, charges 2.6% + 15¢ in person and 3.5% + 15¢ keyed in (Square). | New or smaller businesses that want one simple number | You pay the same rate on low-cost debit cards as on premium rewards cards. |
| Tiered | Sales are grouped into a few set rates, such as qualified, mid-qualified and non-qualified | Businesses that want a simple, predictable statement with a few set rates | Ask which tier your most common cards fall into, so there are no surprises on your statement. |
| Surcharging or dual pricing | Customers who pay by card cover the cost of the card fee | Businesses that want to cut their processing cost the most | Surcharges are capped at 3% and never allowed on debit. See the rules. |
How to read your processing statement
- 1
Find your effective rate
Divide total fees by total card sales for the month. $1,150 in fees on $40,000 in sales is an effective rate of 2.88%. That is the one number to compare processors on.
- 2
Look for fees that are not per sale
Monthly statement fees, PCI or "PCI non-compliance" fees, monthly minimums, batch fees, annual fees and equipment lease payments.
- 3
Check whether your rates changed
Compare this statement with one from six or twelve months ago. Small increases are easy to miss.
- 4
Know which pricing you are on
Lines like "qualified" and "non-qualified" mean tiered pricing. Separate interchange lines mean interchange-plus. One rate on everything means flat rate.
Ways to pay less to accept cards
- Pass your card fees to customers. With a compliant surcharge, dual pricing or cash discount program, customers who pay by card cover the cost and you keep your full sale. A credit card surcharge is capped at 3% and cannot be added to debit cards. Dual pricing and cash discounts have no percentage cap. See our surcharging guide.
- Move to interchange-plus pricing if your volume supports it.
- Tap or dip cards instead of keying them in. For card-not-present sales, send address verification (AVS) and the card security code.
- Close out (batch) your sales every day. Late batches can cost more.
- Stay PCI compliant so you don't pay a non-compliance fee. See how we protect card data.
Common questions
What is a normal credit card processing fee?
It depends on your card mix and how you take cards. Compare effective rates, not advertised rates. A free rate review shows you yours.
Is interchange-plus always cheaper than flat rate?
Usually for established businesses with steady volume, but not always for very small or seasonal ones. The deciding factor is the markup and the monthly fees.
Why did my fees go up when my sales did not?
Common causes are more rewards cards, more keyed-in sales, a rate increase from your processor, or new monthly fees.
Can I pass processing fees to my customers?
Yes, with a compliant surcharge, dual pricing or cash discount program. Surcharges are capped at 3% and not allowed on debit cards or in some states. See our surcharging guide.
About the author
Josh Elsass
President, PayVault Solutions
Josh Elsass is President of PayVault Solutions, where he leads merchant sales and the agent and ISO partner channel. A payments executive with more than two decades of sales leadership in payment processing and business financing, he has worked with thousands of small businesses and enterprises nationwide and has been part of three successful company exits, building the sales channel behind each one. Before PayVault, he served as Chief Sales Officer and then President, Operating Companies at Simpay, where he strengthened every sales channel and oversaw day-to-day operations. Josh has built his career on one conviction: the best companies value clients, partners and employees equally. At PayVault, that means pricing explained line by line for every merchant and terms in writing for every sales partner.
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