Who Should Pay Credit Card Processing Fees? A Business Owner’s Perspective

Credit card processing fees are an integral part of modern commerce. When customers whip out their plastic cards to make purchases, a series of financial transactions occur behind the scenes. These transactions involve various players, including banks, credit card associations, and payment processors. But who bears the brunt of these fees? Let’s break it down.

Small Business Processing

The Players Involved

  1. The Customer: The person swiping or inserting their card to buy your products or services.
  2. The Issuing Bank: The bank that issued the customer’s credit card.
  3. The Credit Card Association: Think Visa, Mastercard, or American Express. They set the rules and facilitate transactions.
  4. The Merchant (You): That’s right, the business owner—the one selling goods or services.

Types of Credit Card Processing Fees

frustrating processing fees
  1. Interchange Fees:
    • What: These fees go directly to the issuing bank for each transaction.
    • Variability: Interchange fees vary based on card type (credit, debit, rewards), transaction amount, and industry.
    • Example: Online transactions may have higher interchange fees due to increased fraud risk.
    • Impact on Business Owner: Direct cost to your business.
  2. Payment Processor Fees:
    • What: These fees are charged by the payment processor (the middleman).
    • Components: Monthly fees, per-transaction fees, equipment lease fees, and statement fees.
    • Revenue for Processor: Payment processors don’t get a cut of interchange fees, so these fees keep them afloat.
    • Impact on Business Owner: Indirect cost—essential for smooth transactions.

Assessment Fees:

    • What: Paid to credit card networks (Visa, Mastercard) for card acceptance.
    • Calculation: Based on monthly sales, not per transaction.
    • Combined with Interchange: Merchants often refer to the total as a “swipe fee.”
    • Impact on Business Owner: Part of the overall processing cost.

Should the Business Owner Pay?

  1. Traditionally: Business owners bear the brunt of processing fees.
    • Reasoning: Accepting cards is essential for customer convenience and sales growth.
    • Challenges: Fees eat into profits, especially for small businesses.
    • Mitigation: Pricing strategies, cost-sharing, and efficient operations.
  2. Shifting the Burden to Consumers:
    • Consideration: Some businesses pass on fees to customers.
    • Pros: Offloads cost burden, maintains profit margins.
    • Cons: Potential customer backlash, legal considerations.
    • Transparency: Clearly communicate any surcharges or fees.


In the grand dance of commerce, credit card processing fees are unavoidable. As a business owner, weigh the pros and cons. Whether you absorb the fees or share them with customers, remember that transparency and informed choices are key.

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