Payment Processing Fees

What Works

• Understand your effective rate (total fees ÷ total volume)
• Negotiate interchange-plus pricing vs flat-rate when volume justifies it
• Batch transactions daily to avoid authorization-only holds
• Reduce card-not-present (CNP) transactions where possible — they cost more

Watch Out For

• Flat-rate processors (Stripe, Square at 2.9%) are simple but expensive at scale
• Contract processors often hide downgrades — read the interchange table
• Monthly minimums and PCI compliance fees add up quietly

Frequently Asked Questions

What is an effective payment processing rate?

Your effective rate is total fees paid divided by total card volume. For most businesses it ranges 1.8–3.2%. Above 3% is worth investigating.

What is interchange-plus pricing?

Interchange-plus separates the card network cost (interchange) from the processor markup. It's more transparent than flat-rate and usually cheaper at volume above $10k/month.

How do I reduce payment processing fees?

Accept more in-person (card-present) payments, negotiate your markup rate, reduce keyed-in transactions, and audit your statement for unnecessary monthly fees.