Credit Card Processing Fees in 2025: A Friendly Guide for Merchants
Curious about the costs behind credit card processing? In this article, you can find actionable tips to save money, and explore trends that are shaping payment processing in 2025.
Learn about PayStream, and how we can help you can unlock the best solutions at the lowest rates with exceptional customer service, next day funding and no contracts.
Credit Card Processing Costs in 2025
Managing credit card processing costs is one of the biggest hurdles for businesses in 2025. From rising interchange fees to vague flat-rate pricing from SaaS providers, staying informed is crucial to protect your bottom line.
At PayStream, we work with businesses of all sizes to help them save money, navigate payment complexities, and stop overpaying. We offer a complimentary analysis and savings estimate and yearly audits for existing customers to ensure they’re getting the best possible tools and rates.
What Are Credit Card Processing Costs?
Credit card processing costs are the fees businesses pay to accept card payments. While these fees are necessary, they can vary widely, typically ranging from 2.3% to 3.5% per transaction.
Costs are influenced by:
Type of Business: Each business has a Merchant Category Code (MCC), and certain industries (e.g., restaurants, travel) are considered higher risk, resulting in higher fees.
Transaction Type: Card-Present transactions (swiped, dipped, or tapped) usually have lower fees compared to card-not-present transactions (online or over the phone) which are considered higher risk, resulting in higher fees.
Card Type Used: Premium rewards cards (e.g., travel or cashback credit cards) have higher interchange fees than standard credit or debit cards.
Transaction Size: Higher transaction amounts often incur higher fees in percentage-based pricing models, but flat-rate fees impact small transactions more significantly.
Processing Volume: Businesses with higher monthly transaction volumes can often negotiate lower rates or benefit from volume-based discounts.
Processing Method: Different methods, such as mobile processing, online gateways, or POS systems have varying cost structures. Online transactions often involve gateway fees and higher rates due to fraud risks.
Risk Profile of the Business: High-risk businesses (e.g., adult services, subscription models) are charged more due to higher rates of chargebacks and fraud.
Processor and Pricing Model: The processor’s pricing model (e.g., flat rate, tiered pricing, or interchange-plus) affects the fees. Interchange-plus pricing tends to be more transparent but may involve additional fees.
Chargebacks and Fraud Incidence: Businesses with frequent chargebacks or fraudulent activity are often charged higher fees to ofset the risk for the processor.
Additional Fee and Markups: Processors may add fees such as PCI compliance fees, statement fees, gateway fees and non-compliance penalties, which increase the effective rate.
Average Interchange Fees
Interchange fees, a major component of processing costs, vary by card type and network:
Visa: 1.30% - 3.44% (and higher per transaction for corporate and rewards cards)
Mastercard: 1.45% - 3.44% per transaction
American Express: 2.6% - 3.9% per transaction
Discover: 1.55% - 3.4% per transaction
Factors like the cardholder's rewards program or whether the transaction is in-person or online can also impact these rates.
Common Pricing Models from Payment Processors
Choosing the right pricing model is essential to control costs. Here's a quick breakdown:
Interchange-Plus Pricing (Recommended by PayStream):
How It Works: You pay the actual interchange fee plus a fixed markup.
Example: If the interchange fee is 1.8% and the markup is 0.3%, your total fee is 2.1%.
Pros: Transparent and fair.
Cons: May involve monthly fees and require some understanding of interchange rates.
Surcharge Pricing:
How It Works: Businesses add a surcharge (typically a percentage up to 4%) to credit card transactions to cover processing fees. Customers paying with credit cards bear the additional cost, while cash or debit payments avoid the surcharge. Note: The surcharge amount must be disclosed to customers at the point of sale and on receipts.
Pros: Reduces or eliminates credit card processing costs for the business. It encourages customers to use lower-cost payment menthods like cash or debit cards. Transparent pricing model shows customers the cost of credit card use. It’s also straightforward to implement with compatible POS systems.
Cons: It may deter customers who dislike paying extra fees. It’s also not permitted in some states (e.g., Connecticut, Massachusetts). It requires strict compliance with credit card brand rules and disclosure laws. It could negatively impact customer satisfaction or loyalty.
Dual Pricing
How It Works: Businesses display two prices for goods or services: a lower price for cash payments and a higher price for credit card payments. Customers who pay with cash receive a discount, while credit card payments are processed at the standard (higher) price. This pricing model is compliant in all U.S. states.
Pros: Fully legal in all states without additional compliance burdens. It reduces processing fees without explicitly adding a surcharge. Customers appreciate visible savings for cash payments. Encourages cash transactions, improving cash flow.
Cons: May require POS system upgrades to display and process dual prices effectively. Higher displayed credit card prices could be perceived negatively by customers. It requires clear communication to avoid customer confusion or dissatisfaction. Businesses may need to adjust pricing strategies to ensure margins are maintained.
Subscription/Membership Pricing:
How It Works: Pay a monthly fee plus a small transaction fee.
Pros: Cost-effective for high-volume businesses.
Cons: Can be costly for low-volume merchants if the monthly fee is high.
Credit Card Processing Fees Explained
Knowing what you're paying for is key to reducing costs. Here’s a quick overview:
Interchange Fees: Charged by card networks (e.g., Visa, Mastercard).
Processor Markup: The payment processor’s fee.
Assessment Fees: Additional charges from card networks.
Other Fees: Includes PCI compliance, chargebacks, and monthly account fees.
Trends in Credit Card Processing
Rising Interchange Fees: Major networks are raising fees to offset costs.
AI in Fraud Prevention: AI tools are improving fraud detection, lowering chargebacks, and reducing fees.
Contactless Payments: Mobile wallets and contactless cards are on the rise, and fee structures are evolving.
Buy Now, Pay Later (BNPL): This payment option is gaining traction but adds complexity to fee structures.
How to Reduce Credit Card Processing Costs
Want to keep more of your revenue? Here are some strategies:
Optimize Interchange Fees: Provide Level II and III data for B2B transactions to qualify for lower rates.
Change Your Processing Partner: Switch your processing partner to get better rates, better customer service, fewer fees, more transparency and more savings.
Negotiate Processor Markups: Many processors are open to lowering fees if you ask.
Leverage Processor Relationship: PayStream offers complimentary analasyis and savings estimates and 1:1 yearly reviews with existing customers.
Prevent Chargebacks: Invest in fraud prevention measures to avoid disputes and related fees.
Regulations and How They Affect You
New regulations in 2025 are shaping the payment industry:
PCI DSS 4.0 Compliance: Stricter security standards may require extra investment.
Credit Card Competition Act: Proposed legislation could lower fees by increasing competition among networks.
PayStream stays updated on these changes to keep your business compliant while reducing costs.
Looking Ahead: The Future of Payment Processing
Here’s what’s next for payment costs:
Increased competition among processors could lead to lower fees.
The rise of real-time payments and blockchain technology will drive innovation.
More consumers are turning to digital wallets and alternative payment methods.
By partnering with PayStream, you can stay ahead of these trends and focus on growing your business.
FAQs About Credit Card Processing Costs
Q: What are the average credit card processing fees for 2025?
A: Fees typically range from 2.3% to 3.5%. PayStream can help you identify where you’re overpaying and negotiate better rates.
Q: How can I lower my processing costs?
A: Start by booking a consultation with PayStream to audit your fees and find hidden savings.
Q: Are there hidden fees I should watch out for?
A: Yes. Many processors sneak in hidden fees. PayStream’s Complimentary Analysis & Estimate uncovers these to ensure transparency.
Credit card processing costs may seem overwhelming, but with the right tools and support, you can lower your fees and boost profitability. By understanding the components of these costs and keeping up with industry trends, you’ll be better equipped to save money.
PayStream is your trusted partner in payment optimization. From fee audits to compliance assistance, we’ll handle the hard stuff so you can focus on running your business.
📞 Contact us today to schedule your FREE consultation and start saving in 2025!