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Five mistakes that drive up credit card processing fees for your business

For many businesses, payment processing is just an expense they accept, not examine. Business owners have more pressing priorities than reading their monthly merchant statement line by line. They don't always have the time or expertise to understand how processing fees are calculated, or explore ways to influence their card mix.

As a result, thousands of dollars in unnecessary processing costs can add up each year. The bigger the volume, the greater the gap.

In this article, we cover five common mistakes our payment experts have seen businesses make. We will show you how each one affects your bottom line, and give you practical solutions you can implement this month.

Key takeaways

  • Your processor's markup is negotiable
  • Every business should know the effective rate it’s paying
  • How you accept a card, and which card is used, both matter
  • You can eliminate costly processing fees while giving your customers a choice
https://youtu.be/skiz6TPZYSI

Payment processing fees don’t have to eat into your profits. This video breaks down five proven ways to reduce what you pay, including negotiating your processor markup, catching hidden fees on your statement, and choosing smarter ways to accept payments.

Mistake #1: Assuming all credit card processing fees are non-negotiable

⚠️ Warning signs

  • Fees keep increasing
  • You don't know your pricing model
  • Your processor can't clearly explain your rates
  • Your pricing hasn't been reviewed in over a year

Many business owners believe that card brands set every fee they pay and that all of those fees are non-negotiable. Here's what those costs actually consist of.

Every card transaction includes two types of fees:

  • Card brand costs: Set by Visa, Mastercard, American Express, and Discover. These include interchange and network fees and generally aren't negotiable.
  • Processor markup: Set by your payment processor. This is the part you can negotiate.

Your pricing model determines how transparent that markup is. In some cases, it's listed separately. In others, it's built into the rate you pay. Either way, there are often opportunities to reduce this cost. If you're not sure what your markup is, a statement analysis can help you find out where you stand.

Interchange-plus pricing typically provides the most transparency, while bundled and flat-rate models may make it harder to see what portion of your rate goes to the processor.

Negotiating processor markup: Which businesses benefit the most?

✅ Good fit if you:

  • Process $10K+ per month in card sales
  • Accept credit and debit card payments
  • Haven't reviewed your processing fees in 12+ months
  • Want more visibility into what you're paying and why
Biggest opportunity:
You're on tiered or flat-rate pricing, or you don't know which pricing model you're currently using.

Rate Sekurity Guarantee®: We review your rates so you don't have to

Most processors only offer better rates when you’re ready to leave. With Rate Sekurity Guarantee®, we proactively review your account and adjust your rates when savings are available.

My business switched to Sekure over a year ago. Recently I received an email that my account had been reviewed, and my rates adjusted to save me over $650 a month. This was done without me asking, I’ve never had that from a processor before. Typically, you have to shop processors before you start receiving discount offers. This is why I’m recommending Sekure.

Constantine Tzortzis Giorgio's Family Kitchen

✅ This business saved $650+/month

🤝 No rate negotiation required

🔍 We analyze your statement for you

See how much you could save

Mistake #2: Never reviewing your merchant statement

⚠️ Warning signs

  • You only check the total amount deducted
  • You don't know your effective rate
  • Your fees change from month to month without explanation
  • You've never asked for a line-by-line breakdown

A surprising number of businesses never look past the total amount deducted. That's how rate increases, new fees, and service charges can go unnoticed for months or even years. A few dollars here and there quickly becomes a real expense.

Start with your effective rate

Your effective rate is the simplest way to see what processing actually costs you:

Total processing fees ÷ Total card sales = Effective rate

For example, $1,350 in fees on $45,000 in card sales means an effective rate of 3.0%.

What to look for

  • New line-item fees you didn't agree to
  • Monthly minimum fees
  • Annual fees
  • Statement fees
  • PCI compliance or PCI non-compliance fees
  • Tiered pricing you don’t understand
  • Increases to processor markup
  • Equipment lease or rental charges adding up
Compare at least three months of statements side by side. New fees and rate changes are much easier to spot over time than in a single statement.

Statement analysis: Which businesses benefit the most?

✅ Good fit if you:

  • Have switched processors or signed a new contract in the past few years
  • Have multiple locations or payment channels
  • Rarely look past the total amount deducted
  • Pay for equipment through a lease or monthly rental
  • Have seen your fees rise without a clear explanation

🏢 Common industries: Multi-location retail, franchises, healthcare offices, property management companies, auto dealerships

Biggest opportunity: You’ve never had your statement reviewed line by line.

Not sure what you’re paying for?

Get a free, line-by-line statement analysis from a Sekure payment expert.

Get a free statement analysis

Mistake #3: Ignoring which payment methods cost you the most

⚠️ Warning signs

  • Many of your customers pay with rewards or corporate cards
  • You accept business cards but don't send Level 3 data
  • You only accept cards for large invoices
  • Your effective rate stays high even after negotiating your markup

Not all cards cost the same to accept. Premium rewards cards, travel cards, and corporate cards carry higher interchange rates than standard credit cards. Debit cards are generally much cheaper, especially those issued by large banks, whose debit interchange is capped under federal regulation.

This doesn't mean turning customers away or limiting their choices. It means knowing which payment types drive your costs, so you can make smarter decisions.

Cost Drivers

  • Premium rewards and travel cards: The highest interchange rates for consumer cards
  • Corporate and commercial cards: Higher rates, unless you pass complete transaction data (see below)
  • Signature debit vs. PIN debit: PIN debit often costs less
  • Keyed or card-not-present transactions: Priced higher because of fraud risk

For B2B Businesses: Level 3 Data

If you accept corporate, purchasing, or business cards, sending complete Level 3 transaction data with each sale can qualify you for lower interchange rates. That includes line-item details like product codes, quantities, and unit costs. Card network requirements for these programs were updated recently, so if your setup hasn't been reviewed lately, you could be paying higher rates than necessary.

For large invoices, offer ACH payments alongside cards. ACH usually costs far less, and many business customers prefer it.

Rethinking your payment mix: Which businesses benefit the most?

✅ Good fit if you:

  • Have high average ticket sizes
  • Accept corporate, purchasing, or business cards
  • Invoice other businesses
Biggest opportunity: A large share of your sales comes from corporate or business cards, and you're not sending Level 3 data.

Mistake #4: Using high-cost ways to take payments

⚠️ Warning signs

  • You manually type in card numbers at the counter
  • You take card details over the phone
  • You haven't enabled PIN debit
  • You don't batch transactions daily

Processors and card networks price based on risk. Card-present transactions (tap, insert, or swipe) are considered lower risk than keyed-in or card-not-present payments, and they're priced accordingly. Small habits at checkout can raise costs on every sale, without you noticing.

Simple fixes that can help

  • Have customers tap, swipe, or insert whenever possible
  • Store cards securely on file for repeat clients, instead of re-keying them
  • Use address verification (AVS) and CVV on every remote transaction
  • Settle your batch daily to avoid downgraded rates
  • Enable PIN debit on your terminals
Contactless payments count as card-present, so they qualify for the same lower rates as inserting or swiping a card.

Rethinking payment methods: Which businesses benefit the most?

✅ Good fit if you:

  • Take payments by phone, email, or in the field
  • Use terminals that are more than a few years old
  • Bill repeat clients on a regular basis
Biggest opportunity: You regularly key in cards or take payments by phone.

Mistake #5: Automatically absorbing every processing fee

  • You treat processing fees as a fixed cost
  • You've raised prices to keep up with rising costs
  • Most of your sales are paid by card
  • Processing is one of your largest monthly expenses

⚠️ Warning signs

Many businesses treat processing fees as an unavoidable cost of doing business. Today, you have options.

Dual pricing shows customers two prices: a cash price and a card price. Customers choose how to pay, and the difference helps cover your processing costs. Dual pricing is legal across the US when clear signage is displayed at the point of sale and on receipts.

When implemented correctly, dual pricing can eliminate most of your processing costs. For many businesses, this is where the largest savings are.

Questions to ask

  • Am I able to put up clear and compliant signage?
  • How would my customers react?
  • What is my annual processing spend?
  • What would fee recovery mean for my profitability?
Customers are generally used to seeing cash and card prices, provided both are displayed clearly before they pay. Transparent signage is key to a smooth rollout and a very important aspect of compliance.

Dual pricing: Which businesses benefit the most?

✅ Good fit if you:

  • Process $10K+ per month in card sales (savings grow with volume)
  • Take mostly in-person payments
  • Want to give customers a choice in how they pay
  • Want the largest possible reduction in processing costs
Biggest opportunity: Processing fees are one of your biggest expenses, and you want to cut them without raising prices.

Keep more of every sale

See how dual pricing can reduce or even eliminate your processing fees.

See how dual pricing works

You can lower or eliminate your processing fees

Processing fees aren't a fixed cost of doing business. Most savings come from understanding what you're paying and making a few practical changes.

Start by calculating your effective rate and reviewing your last few statements line by line. Then look at how you accept payments and which cards your customers use most. Finally, consider whether dual pricing is the right fit for your business.

You don't have to tackle all improvements at once. Even one change can make a noticeable difference, and the higher your card volume, the more you stand to gain.

Frequently Asked Questions

How much do credit card companies charge merchants?

There’s no single rate. Industry sources commonly cite a range of about 1.5% to 3.5% of each transaction, but your effective rate depends on your business. Your total cost combines interchange (paid to the card-issuing bank), card network fees, and your processor’s markup. Your industry, the cards your customers use, how you accept payments (in-person or keyed), and your pricing model all affect where you land. To find your own rate, divide your total monthly processing fees by your total card sales.

Who pays credit card transaction fees?

By default, the merchant pays. Businesses can shift some or all of that cost through compliant programs. With dual pricing, customers see both a cash price and a card price. With surcharging, a fee is added to credit card transactions. Surcharging is restricted in some states. It is capped by card network rules (see Visa, for example) and cannot be applied to debit cards. Both approaches require clear disclosure to customers.

How much does Visa charge merchants?

Visa doesn’t bill merchants directly for most of what you pay. Visa sets interchange rates, which go to the bank that issued your customer’s card, and charges small network fees for using its system. Your processor then adds its own markup on top. Visa publishes its US interchange rates, which vary by card type, transaction method, and industry, and usually updates them twice a year. Your processor’s markup is the only part of the total you can negotiate.

Is it legal to charge a credit card fee?

In the U.S., yes, depending on how it’s done. Dual pricing is legal nationwide when customers can clearly see both the cash and card price before they pay.

Surcharging is a different story. It comes with specific compliance requirements, including disclosure and fee limits, so it’s important to understand the rules before implementing a surcharge program.

What is the best way to reduce credit card processing fees?

The biggest savings usually come from four areas:

  • Reviewing your statement regularly to catch new fees and rate increases
  • Switching to transparent interchange-plus pricing and/or negotiating your processor markup
  • Optimizing how you take payments by favoring tap and insert over keyed entry, enabling PIN debit, and sending complete Level 3 data on B2B transactions
  • Implementing dual pricing, which can eliminate your credit card processing costs