Credit card processing fees for small business, compared

Credit card processing fees for small business, by provider

The credit card processing fees that payment processors and store builders publish for small businesses are flat rates: a percentage of each sale plus a fixed amount per transaction. Payment processors such as Stripe, PayPal and Square publish a standard rate for US cards. Store builders such as Shopify, Wix, Squarespace and BigCommerce offer their own payment services at similar rates, on top of a monthly plan.

Rates are for standard US cards paid online. International cards, some card types and disputes cost extra; those charges are covered further down.

How card processing fees work

Each card payment involves the bank that issued your customer's card and the bank that accepts the payment for you, which Visa calls the acquiring bank. Visa describes interchange as transfer fees between acquiring banks and issuing banks for each Visa card transaction. What merchants pay, Visa says, is a merchant discount paid to their financial institution, typically calculated as a percentage per transaction.

Debit cards from large banks have a legal limit on interchange. Under the Federal Reserve's Regulation II, a covered issuer can receive no more than 21 cents plus 5 basis points of the transaction value on a debit transaction, plus no more than 1 cent per transaction if it meets the Fed's fraud-prevention standards. Issuers that, together with their affiliates, have reported assets of less than $10 billion are exempt from that limit.

Flat-rate pricing sets one published rate for most cards, so you know the fee before the sale. Some providers still charge more for premium cards or American Express; those rates are listed under fees on top of the standard rate below.

Interchange-plus pricing passes the card bank's fee through and adds the processor's own markup on top. Stripe offers custom pricing for businesses with large processing volumes, with structures such as IC+ pricing. PayPal's optional Interchange Plus Plus structure for advanced card payments is Interchange Pass-through Costs + 0.49% + fixed fee.

Card fees on one $50 online sale

Example: one $50 online card sale at each provider's standard US rate. Store builders also charge a monthly plan, noted next to each amount, so a lower rate per sale does not always mean a lower total.

In-person and manually entered card rates

Card-present payments, where the card is tapped, dipped or swiped in front of you, cost less than online payments at each provider in the table. At Stripe and Square, a card number typed in by hand costs more than a card-present payment.

If you also sell at markets or fairs, compare in-person rates too: a processor that is cheaper online is not always cheaper at a stall.

Fees on top of the standard rate

The headline rate covers a standard US card on a normal sale. These charges are added when something else happens.

• International cards: Stripe adds +1.5%, PayPal adds 1.50%, Shopify adds + 1%, WooPayments adds +1.50% and Wix Payments adds 1.5% of the transaction amount on top of the standard processing fee.
• Currency conversion: Stripe adds +1% when a payment has to be converted, and Wix adds 1% of the transaction amount on payments in a currency other than the site's main one.
• Premium cards and American Express: Shopify Basic charges 3.5% + 30¢ for premium cards online. Wix Payments charges 3.7% of the transaction amount + 0.30 USD for Amex, and BigCommerce lists 3.50% with no fixed fee for Amex through PayPal Braintree.
• Disputes and chargebacks: Stripe charges $15.00 for each dispute, PayPal 15.00 USD (or 20.00 USD for a card chargeback on a payment that went through neither a PayPal account nor PayPal guest checkout), WooPayments $15.00 and GoDaddy Payments $15.
• Fast payouts: Stripe charges 1.5%, minimum fee of 50¢ for instant payouts, and GoDaddy Payments charges 1.75%.
• Another processor on a store builder: Shopify Basic adds 2% on each sale when you use a provider other than Shopify Payments, and BigCommerce Core charges 2.0% of eligible order GMV when you use an open payment provider outside its embedded ones.

Can you pass card fees on to customers?

Adding a fee for paying by card is called surcharging. Card networks set their own rules for it, and state law can ban it. Visa's rules for US merchants set these limits:

• Maximum surcharge: the merchant discount rate for that credit card or 3%, whichever is lowest.
• Which cards: credit cards only; debit cards and prepaid cards cannot be surcharged.
• Notice: tell your acquirer, the bank that accepts card payments for you, at least 30 days before you start surcharging.
• Disclosure: alert customers to the surcharge, in store and online, at the point of entry, the point of sale or transaction, and on every receipt.

State law comes on top of network rules. Massachusetts law says no seller may impose a surcharge on a cardholder who elects to use a credit card. Connecticut law says no person may impose a surcharge on any transaction, and it counts a fee for using any particular payment method as a surcharge.

A discount for paying another way is treated differently. Visa's rules allow a discount or incentive to pay with a method other than a Visa card, as long as prices are displayed the way Visa requires. Rules vary by state and by card network, so check your state's law and your processor's terms before you add a card fee. This section is general information, not legal advice.

How to lower card processing fees

None of these remove the fee on each sale. They cut the parts you control.

1. Use the store builder's own payments

   Shopify charges no transaction fee with Shopify Payments. Use another provider on Shopify Basic and Shopify adds 2% on top of that provider's own rate.

2. Check whether a higher plan pays for itself

   Square Online charges 3.3% + 30¢ online on its free plan and 2.9% + 30¢ on Square Plus, which costs $49 a month per location. Shopify's Grow plan lowers the online rate to 2.7% + 30¢ for $105 a month. The lower rate has to save more than the extra plan cost, so work out your monthly card sales before you upgrade.

3. Avoid typing in card numbers

   Stripe adds +0.5% for manually entered cards, so send the customer a payment link or invoice and let them enter the card themselves. Square differs: on Square Free a typed-in card costs 3.5% + 15¢ and an online or invoice payment 3.3% + 30¢, so compare both at your usual sale amount.

4. Offer bank payments on large invoices

   Stripe's ACH Direct Debit costs 0.8%, $5.00 cap, and Square charges 1%, $1 min for invoices paid by bank transfer on its free plan. On a large invoice, a bank payment can cost less than a card fee charged as a percentage.

5. Prevent disputes

   Each dispute costs a fee on top of the sale you may lose: $15.00 at Stripe. Use a business name customers recognize on their card statement, send tracking numbers and answer messages quickly.

Where Nation fits

Questions about credit card processing fees