Credit Card Pricing

We know it’s confusing. Let us try to explain...

Today, credit card processing is everywhere and easy to take for granted, but it’s actually pretty amazing when you think about it - two complete strangers (you and your customer) can securely exchange funds from absolutely anywhere in the world without ever interfacing. It’s this power and capability that you’re paying for when you sign up for credit card processing.

Understanding pricing is one of the most confusing aspects of accepting credit cards. The price structure is mostly controlled by the big boys – Visa®, MasterCard®, Discover® and American Express®. While we can’t control how they set their pricing (and sort of think the process involves blindfolds and dartboards), we can ensure that our fees are clear and reasonable, and that we’ll do our best to explain how pricing works.

There are a bunch of different types of fees typically associated with credit card processing, but don’t worry - not every credit card company charges every fee listed below – we certainly don’t.


Account fees are charged to create and maintain a merchant services account. They usually stay the same regardless of how often you use your account or how many transactions occur.

Account fees are generally charged by the merchant services provider (someone like us) rather than the big boy card brands.

Here are some common account fees and what they’re used for:

  • Application Fee: This is a fee charged to process your application. Because credit card processors actually extend credit to each customer, a sophisticated (read = expensive!) underwriting process is necessary. This usually includes conducting a credit check, ordering a Dunn & Bradstreet report, and several hours of manual review and verification. This underwriting process can be costly and time consuming, so we charge an application fee to recover the costs of these efforts.
  • Gateway Fee: A gateway is the interface we’ve developed to connect with the financial services superhighway. It’s what allows us to communicate with the thousands of other financial institutions that exchange money to complete the electronic payments requested by cardholders. A gateway fee is associated with providing and maintaining this gateway. Kind of like a highway toll, but more powerful and much less irritating.
  • Statement Fee: A statement fee is a general account fee that helps us offset the costs of account maintenance. It’s allows us to distribute monthly statements, provide awesome customer service, maintain our processing systems, monitor transactions for fraud, comply with IRS reporting requirements, and oh-so-much more.
  • Telecommunications Fees: These fees are associated with transmitting data from your terminal to ours. When you use a portable or mobile terminal, you can expect a telecommunications fee.
  • PCI Compliance Fee: This fee covers the costs of complying with increasingly complicated security requirements as mandated by the card brands and proscribed by the PCI Security Standards Council ( monthly or annually, this fee protects you and your customers from potentially expensive security breaches.
  • Annual Fee: This is a common fee charged by merchant services providers that helps us comply with Internal Revenue Service (IRS) Reporting Regulations, supports or infrastructure and technical enhancements, and pays various fees to outside processing brands.

Transaction fees are associated with each individual transaction and are typically split between us and the relevant card brand.

  • Batch Fee: At the end of each day, it’s time to “run the batch.” This means you’ll settle your terminal or register by sending us a list of your completed transactions. ‘Batching’ ensures transactions are processed and recorded properly. A batch fee is often charged for receiving and processing this list of completed transactions.
  • Discount Fee: Sounds like an oxymoron, doesn’t it? This refers to the percentage of each credit or debit card transaction that you’re charged for. Sometimes this fee is expressed as a single number, and sometimes it’s broken out into the components listed below.
  • Interchange is the portion of the discount fee charged by the relevant card brand to process the transaction. Interchange fees vary by card type. For example, a debit card is generally the least expensive type of card to process. The interchange fee could be less than 1% of the transaction. On the other end, rewards cards, which require the card brand to provide incentives to consumers, are more expensive and can cost up to 4% of the transaction. Business cards are typically more expensive as well. A list of interchange fees is published by: Visa®, MasterCard®, Discover® and American Express®.
  • Mark-up is the portion of the discount fee charged by the merchant services provider. This can be as much as several percent of the transaction and may vary depending on the customer relationship, the perceived transaction risk, and other factors.

Transaction Fee: This a fixed fee charged for each transaction. Just like the discount fee, the transaction fee is typically shared between the card brand (Visa®, MasterCard®, Discover® or American Express®) and the merchant services provider.

The card brand sets a fee based on the type of card – similar to how the discount fee is set above. The merchant services provider sets a transaction fee based on the relationship or perceived risk of that transaction. A typical transaction fee might be $0.30, with a portion going to the network and a portion going to the merchant services provider.

Honestly, we don’t have a ton of control over credit card processing fees, but hopefully you now have a better understanding of where all of those pesky fees are coming from! At the end of the day, the fees are well worth the opportunity to provide your customers with the freedom of choice.