Credit card transaction fees are charges that merchants must pay to process customer payments made with a credit card. These merchant charges are commonly referred to as credit card processing fees, but this usually refers to a combination of different fees, including interchange fees, processing fees, and assessment fees – all of which are separate fees involved in processing a credit card transaction. They’re also informally referred to as swipe fees or merchant fees.
More info about credit card transaction fee amounts:
Typical credit card transaction fees average 1.5% to 3.5% per transaction, but they can go higher than that. The price merchants pay depends on the card issuer, the card network, the payment processor, the payment method (swipe, dip, etc.), and the merchant category. The interchange fee alone is a percentage of the transaction amount, plus a flat fee – 1.5%, plus $0.15 per transaction, for example.
Credit card processing fees are baked into the prices everyone pays for things, so the consumer rarely sees evidence of these charges. But perhaps you’ve seen a sign at a store noting a $5 or $10 minimum for credit card purchases. That’s because each credit card transaction costs the merchant, and transactions under a certain amount may not be worth it to the business owner. One reason why some merchants do not accept American Express credit cards is because they charge the highest transaction fees of the four major credit card networks.
Here’s an example of credit card transaction fees from the four major card networks:
Example Interchange Fee
1.89% + 10 cents
1.65% + 10 cents
2.3% + 10 cents
1.9% + 10 cents
Here's when consumers have to pay processing fees:
There are some rare occasions when a credit card surcharge – or a “checkout fee” – will apply to a purchase on the consumer end, including small-dollar purchases and when a merchant doesn’t usually accept credit. The minimum spending requirement to avoid credit card surcharges can be up to $10, legally. Debit cards are exempt from this rule. But merchants aren’t always good at telling credit cards and debit cards apart.
By law, merchants aren’t allowed to charge the customer more than the actual cost of processing the transaction or 4% of the purchase amount —whichever is lower. Some states have even outlawed credit card surcharges altogether, including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma, Texas, and Utah.
Still, the credit card transaction fees that merchants pay aren’t the only types of transaction fees you might encounter. There are also fees for specific types of credit card transactions that credit card users may have to pay, such as cash advance fees, balance transfer fees and foreign transaction fees.
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