What’s the actual cost of payment processing

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What’s the actual cost of payment processing

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Have you ever wondered how many payment cards are there in the world? Recent studies revealed the answer. By 2023, there will be 29,31 billion credit, debit and prepaid cards in circulation, three times more than there will be people.

We can only imagine the number of transactions made with all those cards worldwide and how much the global payment industry would generate in payment processing fees.

Now that we’ve found the forest let’s look for the trees. How much does a business like yours pay for payment processing? How much does it cost to process a single credit card transaction? Which payment processing fees do merchants pay, and why are they supposed to do it? Continue reading for answers.

Brushing up on payment processing

First, it’s worth recalling the basics of payment processing.

Payment processing is the name for a set of procedures and interactions between participants needed to settle a transaction.

The list of the participants includes customers, or cardholders, merchants, issuing and acquiring banks, and payment processors.

Here are all the steps of payment processing:

  • A customer makes a purchase on the merchant’s website using a credit card.
  • The acquiring bank sends an authorisation request to the payment processor.
  • The payment processor submits encrypted transaction details to the card association connected to the issuing bank.
  • Card association contacts the customer’s issuing bank.
  • The issuing bank accepts or rejects the transaction, depending on the customer’s balance and other factors.
  • The issuing bank then sends the transaction status to the processor.
  • The processor redirects the information to the acquiring bank so that the merchant can receive funds.
  • A customer is notified about the result.

So, basically, payment processing consists of authorisation, funding, and settling of a transaction. This knowledge gives us a decent foundation to segue to the fees and the cost of payment processing.

What are payment processing fees?

Payment processing fees are the costs that merchants incur when accepting online payments and in-store credit card payments. Many factors are affecting the size of a payment processing fee, including, but not limited to, the payment method involved (if it’s a card, then card type), transaction risk assessment, and payment provider’s pricing model.

Payment processing fees breakdown

There are three types of payment processing fees merchants are supposed to pay to accept card payments: interchange fees, assessment fees, and processing fees. Let’s take a closer look at each type.

Interchange fees

Interchange fees are also known as issuing bank fees, as the merchant’s bank pays them to the issuing bank. These fees consist of financial risk charges and fixed business costs. They apply to every single card transaction and account for the largest share of all processing costs, reaching up to 90% of what merchants pay.

The interchange fees size is non-negotiable. It is set and revised twice per year by payment networks, like Mastercard and Visa. Numerous factors affect interchange fees sizes, such as card network, card type, payment flow (online transaction, swiping the physical card, mobile payment, etc.), MCC, merchant’s industry, and others.

Assessment fees

Assessment fees are also called dues and assessments, or card association/network fees, as payment processors collect them to pay directly to the card networks. These fees are also non-negotiable. They’re calculated based on the total monthly transaction volume, ranging between 0,09-0,15%, with an additional percentage charged on international transaction volume.

Same as interchange, assessments are set by card networks and revised two times per year.

Processing fees

Processing fees are what merchants pay their payment processors for the use of the software and their services. The types, size and the way these fees are charged are totally up to the payment processor, so every merchant has to examine the pricing before entering into an agreement with a payment partner. It’s worth noting that the payment market is very competitive, so processors and service providers usually try to make their pricing reasonable.

Most commonly, processing fees are charged per transaction or once a month. They can be calculated as a percentage, fixed, or combined. Payment processors may charge various kinds of fees, like setup fee, transaction fee, monthly fee, chargeback fee, PCI compliance fee, etc. Basically, these fees comprise the cost of a payment gateway for your business.

payment processing fees infographics

How much does it cost to accept card payments

We’d love to provide a clear and universal number answering this question, but unfortunately, there’s no single response. That’s because the price you pay for processing one card transaction is a complex critter calculated as follows:

Interchange fee (depends on numerous factors, from your industry to the client’s card type) + Assessments (depend on card networks and your monthly sales volume) + processing fees (provider markup) = how much a transaction costs you.

Moreover, the cost of payment processing and card payment acceptance isn’t limited by the transaction processing fee. You’ll have to spend some amount on equipment if you want to accept card payments in-store, or on software to accept transactions online. Also, many payment service providers charge a one-time setup fee and a monthly fee for using their infrastructure.

Make sure you know the pricing of the chosen payment partner well enough to avoid facing unexpected charges. It’s also helpful to price your goods or services fairly to make the processing costs bearable for you.

How to save on payment processing fees

There are two ways to cut the cost of online payment processing. You can either find the tips on what can be done in our previous article “7 tried and true ways to save on payment processing fees” or just contact us.

Serving companies that work with multiple payment providers, Corefy empowers them to save on payment processing fees without lowering conversion rates. We’re ready to share our knowledge and tools with you!


Here are the basics of all the fees described, gathered into a small table for your convenience.

Interchange fees Assessment fees Processing fees
Charged on Each transaction Total monthly transaction volume One-time, monthly, per transaction basis, etc.
Set by The card association The card association Payment processor
Paid to The issuing bank The card association Payment processor
Size range 1,4-3,3% 0,01-0,15% See provider’s pricing
Revisable Yes, twice a year Yes, twice a year Yes, upon processor’s decision
Negotiable No No Yes

And don’t let those fees scare you! Better ask Corefy, we’ll help you lower the cost of online payment processing.

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