Understanding Credit Card Processing Fees and How They Impact Your Spending

Using a credit card offers convenience and purchasing power, but it's important to recognize that every transaction involves costs. The fees associated with credit card payments consist of two main parts: the base costs of goods or services and additional merchant markups. Typically, 70 to 80% of your total payment covers the actual product or service price, while the remaining 20 to 25% accounts for processing fees.

Credit card processors cannot usually negotiate lower base rates, as these are standardized across providers. The most significant expense is interchange fees—charged by your bank’s issuing institution—yet neither your processor nor the card networks (Visa, Mastercard) profit from these charges. Interchange fees include transaction costs and commissions, with assessment fees added by card associations that vary with your credit arrangement.

Additional markups are added on top of these standard fees and may be negotiable depending on the processor and pricing model. For consumers, choosing a processor with lower markups can reduce overall costs, since interchange and assessment fees tend to be uniform across providers.

The information shared here serves as a general guide on credit card fees. While our research aims to provide helpful insights, readers should verify details independently and recognize that actual rates and offers might differ across platforms and providers.