How to Determine Your Average Credit Card Processing Fees

Business owners have been relying on traditional merchant accounts to process credit and debit card transactions for years. But with the industry expanding and evolving more rapidly over the past few years, including the introduction of the industry has expanded and evolved over the years, it’s even more important to know the processing fees your business is being charged.

As a business owner, you may be wondering, “what’s the average credit card processing charge for my type of business?” There is not one simple answer. Many different variables impact the fees a merchant pays. The more you know, the more likely you are to save on your credit card processing fees. Below you will find our guide to calculate your credit card processing cost.

The Average Credit Card Processing Cost

If you’re looking for the short answer: the average credit card processing cost for a business where cards are swiped is typically 2.3%-2.4%. For ecommerce and other card-not-present businesses, the average cost is usually between 2.3%-2.5%. Of course, these costs can fluctuate depending on a variety of factors.

While these numbers can give you an idea, it’s best to fully understand what goes into credit card processing costs so you can come up with a more personalized estimate. Underestimating your fees can hurt your new businesses when it is most vulnerable.

What is an Effective Rate and How Does it Help with Payment Processing?

An effective rate is the amount that your business pays in processing fees relative to your gross volume. It is especially useful when you are looking to determine your average processing expenses.

How to Calculate an Accurate Effective Rate

There are a few different factors that go into determining your business’ effective rate. They include:

1. Processing Method

Your processing method affects how many and which types of fees apply. A business can process a credit card in two ways: card-present and card-not-present.

As the names imply, card-present refers to a business that physically swipes cards, while card-not-present refers to e-commerce and other businesses that process transactions remotely. Your processing method affects your interchange fees, processing markup, along with other third-party charges. Card-Present businesses have better cost benefits compared to card-not-present businesses, including:

Card-Present Business

  • Lower interchange fees (roughly 1.60% plus $0.10 transaction fee)
  • Lower monthly fees (around $5-$15) and transaction fees ($0.08-$0.10)
  • Low risk and lower interchange plus rates
  • Lower occurrences of chargebacks and fraud

Card-Not-Present Business:

  • Higher interchange fees (roughly 1.90% plus $0.10 transaction fee)
  • Higher software costs associated with online gateways (generally $10-$15/month plus a $0.01-$0.08 transaction fee)
  • Higher risk and higher interchange plus markups from processors
  • Higher occurrences of chargebacks and fraud


2.    Average Ticket Size

Ticket size refers to the amount of a typical credit/debit sale. It has a large impact on your business’ processing fees. The greater your average ticket size, the more expensive your average processing costs will be. On the other hand, as the ticket size decreases, the number of transaction fees incurred increases. Because transaction fees have a larger impact on smaller transactions, they have a greater impact on overall cost. One way to save on processing fees is to set a minimum for credit cards. This will help decrease the number of smaller transactions.

How to Calculate Average Ticket Size for Determining Average Processing Fees

Divide your business’ expected/actual monthly processing volume by its average ticket. Then, multiply by the total transaction fee (roughly $0.18-$0.20 for card-present businesses, $0.25-$0.30 for card-not-present businesses). Divide by the processing volume before multiplying by 100. Your result will be the percentage of total volume that goes towards paying transaction fees.

How to Calculate Average Credit Card Processing Costs

  1. Calculate your average monthly processing volume and average ticket amount. As an example, we will use $10,000 and $50.
  2. Find the average interchange cost for your processing method (1.60% for card-present and 1.90% for card-not-present). We’ll be using card-not-present for our example.
  3. Add the processor’s interchange markup to the average interchange cost. For this example, we use 0.25% as the markup. Adding it to 1.90%, the total now is 2.15%.
  4. Next, determine the impact your average ticket will have on transaction fees by following the steps in the “How to Calculate Average Ticket Size” section, and add that number to your running total. In our example, we’re using the $0.25 transaction fee. Here’s how it works out:

$10,000 / $50 * $0.25 = $50
$50 / $10,000 * 100 = 0.50%
0. 50% + 2.15% = 2.65%

  1. Finally, figure the impact monthly fees will have by using the average monthly charges from the “Processing Method” section and the formula for determining average ticket impact. As a card-not-present business, we used monthly fees of $15:

$15 / $10,000 * 100 = 0.15%
0.15% + 2.65% = 2.80%

For our example, an online business that processes $10,000 a month with an average ticket of $50 will pay about 2.80% of volume or $280/month in credit card processing charges.