For merchants, it can be almost impossible to run a business without taking credit cards. However, the fees from these transactions can eat into profits, making it hard for some merchants with a small spread to stay afloat. The average credit card processing fee ranges between 1.08% and 2.90%. Just where do all these fees come from, and what can a merchant do to minimize them?
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Shopify POS
Pricing starts at
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What Are Credit Card Processing Fees?
Credit card processing fees are the fees that a business must pay every time it accepts a credit card payment. There are multiple types of fees associated with each transaction, and fees can vary depending on the type of credit card accepted.
Interchange Fees
The interchange fee is a payment made directly to the card issuer for the swiped transaction. Fees may vary based on the type of card being used, the amount of the transaction and the industry the business is in. For example, credit card companies may charge higher interchange fees for online purchases since fraud is a bigger problem with these types of transactions.
Payment Processor Fees
The merchant services processor, also called a payment processor, can also charge a fee to facilitate the transaction. Merchant services fees include monthly fees, per-transaction fees, equipment lease fees and statement fees. This is how a processor makes its money since it gets none of the interchange fees.
Assessment Fees
Assessment fees are fees paid directly to the credit card network so that the merchant can use certain credit cards. This fee is based on monthly sales, not per transaction. When combined with the interchange fee, merchants refer to the total as a swipe fee.
Typical Costs From Major Credit Card Companies
| Credit Card | Average Interchange Fees | Average Assessment Fees |
|---|---|---|
| Visa | 1.80% – 2.25% | • The Acquirer Service Fee rate is 0.09%, with a minimum quarterly Acquirer Service Fee of $10,000 CAD. |
| Mastercard | 0.15% plus $0.05 CAD to 2.54% plus $0.10 CAD | 0.40% for transactions in Canadian Dollars; 0.80% for transactions in foreign currency |
| American Express | 1.08% to 2.40% | 0.12% |
Typical Costs for Credit Card Processing
The costs for credit card processing will depend on the merchant services provider that you choose. You may have an interchange-plus scenario where the interchange and assessment fees are charged along with a flat monthly and per-transaction fee. The monthly fee may range from $13 CAD to $27 CAD. The per-transaction fee can range from 0.40% plus $0.13 CAD to 2.39% plus $0.25 CAD.
Let’s take a look at some examples from popular payment processors from our list of the best credit card processing companies.
| Payment Processor | Swiped Transaction Fee | Online Transaction Fee | Monthly Fee |
|---|---|---|---|
| Helcim | 1.76% plus $0.08 CAD | 2.39% plus $0.25 CAD | $0 |
| National Processing | Contact Sales | Contact Sales | Contact Sales |
| Payline | 0.40% plus $0.10 USD ($0.13 CAD) | 0.75% plus $0.20 USD ($0.26 CAD) | $10 USD ($13.47 CAD) (retail); $20 USD ($26.94 CAD) (online) |
Some companies prefer to use flat rates that combine all required fees into one simple transaction fee. This is often seen with online processors, such as PayPal and even Stripe. The online fee may be different than a retail transaction because the card is presented to the cashier.
| Payment Processor | Swiped Transaction Fee | Online Transaction Fee | Monthly Fee |
|---|---|---|---|
| PayPal | 2.90% plus $0.30 CAD | 2.70% plus $0.30 CAD | $0 |
| Square | 2.65% | 2.9% plus $0.30 CAD | $0 |
Bottom Line
If your business is similar to most others, being a cash-only enterprise would cost you a lot of business. But don’t overpay for credit card fees. With some shopping around, you can get the best-priced plans that fulfill your merchant services needs.
Canadian specific editing and research (including pricing) conducted by Anna Rey.
Featured Partner Offer
1
Shopify POS
On Shopify’s Website
Pricing starts at
$7 per month for casual sellers $51 per month ($38 per year) for retail sellers
Mobile payments
Yes
Key features
Syncs with Shopify online store, smart inventory management
Frequently Asked Questions (FAQs)
What is the maximum credit card processing fee?
Merchants are not allowed to charge more than 4% of each transaction as a credit card processing fee.
Is there a way to avoid credit card processing fees?
Merchants can pass the cost on to the customer by charging a surcharge on every transaction that covers the cost of the fee. This surcharge is limited to 4%.
How can I lower my payment processing fee?
Talk to a credit card expert to see if your fees are more than what you should be paying. In some case, you can negotiate fees with credit card processors. You may gain more headway if you have policies that reduce the risk of credit card fraud, properly set up terminals and use an address verification system.
Is credit card processing secure?
Because so much sensitive information is being transferred across these networks, credit card processors are PCI-compliant and use advanced encryption methods to secure transactions.
