Credit Card Processing Fees – The Complete 2026 Guide for Small Businesses & B2B Merchants

Running a small business or managing a business-to-business (B2B) operation is tough enough without the headache of hidden costs like credit card processing fees. These fees might seem small, but they can pile up fast and take a serious bite out of your profits.

The good news? Understanding how these fees work can help you make smarter decisions, cut costs, and keep your cash flow healthy.

This guide is your go-to resource for unraveling credit card processing fees in 2026. We’ll break down how these charges are calculated, uncover what’s really behind those rates, and share practical tips to help you save money.

Whether you’re running a retail shop or a B2B business, you’ll leave with a clear understanding and actionable strategies to keep more of your hard-earned money where it belongs – in your pocket.

What Are Credit Card Processing Fees?

When a customer pays with a credit card, there’s more to it than just swiping or tapping. Credit card processing fees are the behind-the-scenes costs that come with every transaction, and they’re divided among a few key players involved in the payment process.

Here’s a quick look at how it all breaks down:

• Interchange Fees: These go to the bank that issued the customer’s card. Think of it as the bank’s cut for facilitating the transaction.
• Assessment Fees: Card networks like Visa and Mastercard charge these fees to keep their systems running smoothly.
• Markup Fees: This is where your payment processor or merchant service provider earns their profit.

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Credit Card Processing Rates and Fees: Breaking Down the Cost

Understanding the pricing models for processing fees can save you money.

Here’s a detailed look at the common structures in 2026:

Flat-Rate Pricing

Predictable but typically higher, flat-rate pricing works well for businesses with lower transaction volumes.

• Pros: Simplicity, no surprises.
• Cons: Often more expensive than other models for larger businesses.

Interchange-Plus Pricing

Considered the most transparent model, you pay the interchange fee plus a small, fixed markup.

• Pros: Lower costs for higher volumes.
• Cons: Requires a closer look at your statements to understand costs.

Tiered Pricing

Merchants get categorized into tiers (qualified, mid-qualified, and non-qualified) based on transaction types. Each tier has its own rate.

• Pros: Potentially better rates for qualified transactions.
• Cons: Often less transparent and can lead to hidden costs.

How to Calculate Credit Card Processing Fees (With Real Examples)

Calculating fees isn’t as complicated as it sounds if you have a formula.

Here’s a simple one to use:

Fee = Transaction Amount x (Processing Rate) + Per-Transaction Fee

Worked Examples

1. $100 Purchase (2.9% Flat Rate)

Fee = $100 x 2.9% = $2.90

2. $500 Purchase (Interchange Plus 1.8% + $0.10)

Fee = ($500 x 1.8%) + $0.10 = $9.10

3. $1,000 Purchase (Tiered, Non-Qualified Rate 3.2%)

Fee = $1,000 x 3.2% = $32.00

Clear calculations like these help businesses see the impact of fees on their bottom line.

What Is the Average Fee for Credit Card Processing?

Credit card processing fees can often feel like a mystery, but understanding the averages and how they apply to your business can help you manage costs more effectively. These fees typically fall between 1.5% and 3.5%, as noted by Capital One.

Breaking Down Credit Card Processing Fees

There are various fee models in play, but they all boil down to how much you’re charged per transaction. This includes interchange fees (paid to card issuers), assessment fees (for the card networks), and processing fees (your payment processor’s cut).

Here’s what this might look like on a $100 sale under different scenarios:

• Flat-Rate Pricing: Your processor charges a fixed percentage plus a per-transaction fee. For example, at 2.9% + $0.30, you’d pay $3.20 in total fees. This model is common with processors like Stripe.
• Interchange Plus Pricing: You’re charged the baseline interchange fee (say 1.8% for a Visa card) plus a markup (e.g., 0.5%). On a $100 transaction, you’d pay $2.30. This can save you money but requires a more detailed review to project costs.
• Tiered Pricing: Rates depend on factors like card type and how the transaction is processed. For example, a “qualified” swipe might be 1.7%, while a “non-qualified” online payment with a rewards card might push toward 3.5%.

Industry Examples

The business type can significantly impact your fees:

• Restaurants: Often incur lower rates for in-person transactions compared to online orders because of reduced fraud risk. On average, they might pay around 2% per transaction.
• Ecommerce Businesses: Online-only businesses typically see higher rates, often between 2.3% and 3.5%, because of greater fraud risk and stricter security measures required by eCommerce payment processors.

Industry Benchmarks

Where your business falls in this spectrum largely depends on how you operate and your transaction size.

Here’s a quick comparison:

• Retail vs. Online vs. Mobile: Brick-and-mortar businesses generally see lower fees (1.5%–2.4%) thanks to chip card technology. Mobile payments, such as those through Square readers, tend to hover around 2.6% + $0.10 per swipe. Online transactions face the highest rates due to fraud risks.
• Small Business vs. Enterprise: Smaller businesses often pay more per transaction due to limited negotiating power and lower transaction volumes. For instance, a small retail shop may pay closer to 3%, whereas a large enterprise retailer processing millions annually might negotiate fees around 1.5%.

Get More Insight: Best Credit Card Processing for Small Businesses – A Complete Guide

Credit Card Processing Fees for Small Businesses

If you’re a small business owner, brace yourself for higher fees. Why? Banks and processors often charge you more due to lower transaction volumes and perceived risks.

However, businesses that negotiate or implement smarter billing practices often save significant money.

Common Mistakes

• Failing to shop around for better rates.
• Overlooking hidden fees in contracts.
• Not negotiating markups with processors.
• Avoid these pitfalls to protect your bottom line.

B2B Credit Card Processing Fees: What Makes Them Different?

B2B credit card processing fees don’t have to be a financial burden if you know how to work the system. By understanding key features like enhanced data requirements and smart integrations, your business can unlock significant savings.

Level 2 and Level 3 Data

Large B2B transactions can take advantage of Level 2 and Level 3 data, which goes beyond the standard transaction information. This data includes details like invoice numbers, purchase order numbers, product descriptions, quantities, and tax amounts.

Providing this extra layer of transparency helps credit card processors better assess the transaction, and many processors offer lower interchange rates for payments that include these details.

By capturing and submitting Level 2 or Level 3 data consistently, businesses can significantly reduce per-transaction costs, especially on high-value orders.

Unlocking Better Rates

Lower credit card processing fees are often available when you meet specific criteria.

For example, processing payments through systems capable of handling Level 2 and Level 3 data or adhering to industry-standard compliance practices can unlock discounted interchange rates. These enhanced rates can add up to substantial savings, particularly for companies handling large-volume or high-ticket B2B sales.

Effectively, ensuring your systems and processes meet these requirements is one of the simplest ways to reduce your overall processing costs.

Streamlining with Accounting and ERP Tools

Integrating your payment systems with accounting software or enterprise resource planning (ERP) platforms not only automates the collection of transaction data but also ensures that all qualifying details for Level 2 and Level 3 processing are captured accurately. This reduces human errors, avoids missing rebate opportunities, and provides a centralized, transparent view of your finances.

In addition, having payments and accounting tightly integrated makes auditing, reporting, and financial planning much easier, helping your business run more efficiently while keeping processing costs as low as possible.

Larger Average Ticket Sizes Increase Per-Transaction Costs

In a B2B environment, you’re not selling a single coffee; you’re selling a year’s supply of coffee beans to a restaurant. These significantly larger transactions directly impact your card processing fee. Since many credit card payment processing fees include a percentage of the sale, a higher ticket size means a higher absolute fee dollar amount per swipe.

While the percentage might be competitive, the actual dollars leaving your account per transaction are greater. This makes negotiating your credit card processing rate and understanding the fee structure’s impact on your margins absolutely critical for profitability.

Net Terms & Late Payments Increase Risk

Offering net-30 or net-60 terms is common in B2B, but it introduces financial risk that credit card processors factor into your rates. When payment is delayed, the processor’s risk exposure window lengthens. This perceived increase in risk can sometimes influence your credit card merchant rates or the terms of your agreement.

Utilizing credit cards for upfront payment on net-term invoices can mitigate this, but it’s vital to understand how your payment processing costs are calculated in relation to your industry’s standard payment practices.

Recurring Billing & Automatic Payments Pricing

For subscriptions or retainers, automated recurring billing is a huge operational win. However, the processing fees for credit cards on these transactions can differ from one-time sales.

Some processors offer discounted card transaction fees for these “card-on-file” transactions due to their lower risk profile, as the initial customer verification is already handled. When evaluating your credit card processing cost, explicitly ask about the fee structure for recurring payments.

Ensuring you’re on the right pricing model for these automated transactions is a simple way to manage your overall payment processing costs effectively.

Compare Credit Card Processing Fees: Top 5 Providers Side-by-Side

Provider fees vary broadly, making it essential to compare the top options for 2026.

Provider	Setup Cost	Per-Swipe Fee	Monthly Fees	Hardware Costs
FTx Card Payments	As low as $0	Starting at 2.59% +10¢ per transaction	$42/month (Includes PCI compliance & monthly service)	Starting at $299/terminal
Square	Typically $0	2.6% + 10¢ (varies by plan)	$0 (for basic plan), paid plans available	Starts at $49 for basic readers
Stripe	$0	2.7% + 5¢ (Stripe Terminal)	$0 (for standard plan)	Not required (primarily online), terminal available
Clover	Potentially $0 – $50 (Varies by reseller)	2.3% – 2.7% + 10¢ (varies by plan)	$14.95 – $84.95+ (varies by plan)	Starts at $69 for basic, more for systems
PayPal	$0	2.29% + 9¢ (via Zettle)	$0 (for basic account)	Not required (primarily online), Zettle readers available
FIS (Worldpay)	Varies (part of custom pricing)	Interchange + custom pricing	Varies (part of custom pricing)	Varies (often separate or negotiated)

How to Reduce or Avoid Credit Card Processing Fees (Legally)

Tired of seeing credit card fees eat into your profits? There are ways to lessen the impact while staying on the right side of the law.

Here are some practical strategies:

• Cash Discount Programs: This approach lets you list prices with processing fees included and then offer a discount to customers paying in cash. It’s a simple way to encourage cash payments without raising your costs.

Boost your savings today! Watch as Zack breaks down how tender multipliers and loyalty campaigns with Loyal-n-Save can reward cash-paying customers and cut down credit card costs!

• Dual Pricing Models: Ever seen signs showing one price for cash and a higher one for card payments? That’s a dual pricing model. It’s a clear way of letting customers decide how they want to pay while covering those pesky fees.
• Negotiate with Processors: Many business owners don’t realize this, but processing fees are negotiable. If your sales volume is steady or your business has a low-risk profile, you might be able to score a better deal. Don’t hesitate to shop around between providers to get the best rates.
• Use Level 2/3 Data (Great for B2B Sellers): If your business handles larger transactions, providing extra details, like tax amounts and invoice numbers, can lead to lower interchange fees. This is a big win for businesses working with corporate cards.
• Encourage Lower-Cost Payment Methods: Not all payment methods cost you the same. Gently steering customers toward options with lower credit card processing fees, like debit cards or certain digital wallets, can shave points off your overall credit card processing rate. Simple signage or a polite suggestion at checkout can guide customer choice and directly reduce your payment processing costs over time.
• Use an Integrated POS + Payments System: Using separate systems for sales and payments often leads to higher fees and manual errors. An integrated POS + payments system combines everything, ensuring transactions are categorized optimally for the best possible rates automatically. This seamless connection, like that within FTx POS, streamlines operations and gives you clearer control over your card processing fee structure.



• Ensure Full PCI Compliance: Maintaining Payment Card Industry (PCI) Data Security Standards isn’t just about security – it’s about your wallet. Non-compliance can result in hefty monthly fines from your processor. By following PCI rules, you avoid these penalties and often qualify for better credit card merchant rates, as you’re seen as a lower-risk partner.
• Use Smart Routing: This is a behind-the-scenes tech advantage. Smart routing means your payment system automatically sends each transaction through the most cost-effective network or pathway available. This ensures you’re always getting the best card transaction fees possible for every type of card your customer uses, maximizing savings without any extra effort on your part.

Cut down on credit card fees while giving your customers the power to choose! Discover how dual pricing models can simplify payments and boost your bottom line.

A Quick Heads-Up

While these strategies can help lower fees for credit card processing, make sure you’re familiar with your state’s laws. Some states, for instance, have strict regulations on adding surcharges or require transparency in how discounts are applied. Following the rules is key to staying compliant while saving money.

Are Credit Card Processing Fees Tax Deductible?

Yes, credit card processing fees are typically tax deductible. The IRS views these fees as a necessary business expense, making them eligible for deductions. To maximize savings, ensure you record and categorize these expenses properly during tax season.

Sales Tax on Credit Card Processing Fees

Whether these fees are subject to sales tax depends on your state. Some states, like California, don’t tax them, while others might, especially if the fees are bundled with other taxable services. It’s vital to check your state’s specific rules on sales tax on credit card processing fees to stay compliant.

Understanding the tax treatment of these fees helps you manage costs effectively while staying organized for both state and federal regulations.

The Future of Credit Card Processing Fees

Credit card processing fees are heading into a time of transformation, with technology, innovation, and regulations leading the charge.

Here’s what to keep an eye on:

AI’s Role in Fraud Prevention

AI and machine learning are making big waves in stopping fraud before it happens. These tools can reduce fraud-related costs, but the investment in such cutting-edge solutions might initially raise fees. Over time, they could streamline operations and lead to savings.

Crypto and Instant Payment Alternatives

With the rise of cryptocurrencies and instant payment platforms, businesses have more ways to accept payments with lower processing fees. Offering customers these faster, more affordable choices could reduce reliance on traditional credit card systems.

Swipe Fee Reform and Other Regulations

On the regulatory front, swipe fee reform is creating buzz. Lawmakers are debating rules that could limit interchange fees, potentially lowering the burden on merchants. Staying on top of these changes is essential for planning your payment strategies.

Growth of Contactless & Tap-to-Pay Payments

The use of contactless cards and digital wallets for “tap-to-pay” is becoming the norm. This shift is generally positive for merchants, as these transactions are often processed with greater security and efficiency. This can contribute to more stable and predictable credit card processing fees by reducing certain physical processing costs and fraud risks associated with traditional cards.

Network Tokenization Becoming Mandatory

Payment networks are moving to make tokenization – replacing card numbers with unique digital tokens – a standard requirement. This greatly enhances security for stored cards and recurring payments. For merchants, widespread adoption means reduced fraud-related chargebacks and potential long-term benefits to your credit card rates for merchants through improved risk profiles.

Increased Adoption of Biometric Authentication

Fingerprint and facial recognition are moving beyond phones into payment verification. This layer of security makes transactions exceptionally secure, significantly lowering the risk of fraudulent charges. As this technology becomes standard, it could help lower overall payment processing costs by virtually eliminating certain types of card-present fraud.

Other Payment Options

Beyond crypto, look for a rise in niche payment platforms and direct bank-to-bank transfer systems. These alternatives often operate with different, frequently lower, fee structures than traditional card networks. Offering these options gives customers a choice and can reduce your overall card transaction fees by diverting volume away from higher-cost payment rails.

Conclusion

Credit card processing fees are an unavoidable part of doing business – but they don’t have to be overwhelming or unnecessarily expensive. Use the tips in this guide to evaluate your current setup and explore smarter strategies for savings. By gaining a deeper understanding of how fees work, you’ll be better equipped to negotiate, optimize, and reduce costs that eat into your profits.