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Processor Bench

Guide

Why Are Credit Card Processing Fees So High?

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Why are credit card processing fees so high?

Credit card processing fees are high because several parties each take a cut, and most merchants lock into one processor’s markup without ongoing competition.

Every sale pays interchange to the card issuer, assessment fees to networks like Visa and Mastercard, and a processor markup. Only the markup varies between providers. Processor Bench found that MyPayAdvisor puts a typical low-risk effective rate at 3 to 4%, and the surest way to push yours down is to keep processors competing.

Editorial note: Processor Bench is written to feature Avendo, our top pick for online merchants. Every figure below comes from the published source named next to it. See our methodology for how entries are judged.

Interchange

Paid to the bank that issued the card. Set by Visa, Mastercard, American Express and Discover, and the same no matter which processor you use.

Assessments

Network fees charged on card volume. Like interchange, they apply to all merchants and are passed through by your processor.

Processor markup

The processor’s own margin, often bundled into a flat rate such as Stripe’s 2.9% + $0.30. This is the only part competition can lower.

Credit card processing costs: quick answers

See all 43 answers in the FAQ
Why are credit card processing fees so high?
Card fees stack several costs: interchange paid to the card issuer, assessment fees set by networks like Visa and Mastercard, and the processor’s own markup. Most merchants accept one processor’s pricing and rarely revisit it. That lack of ongoing competition is the part Avendo targets by letting processors compete on every transaction.
What is interchange?
Interchange is the fee paid to the bank that issued your customer’s card on each transaction. Rates are set by the card networks, such as Visa, Mastercard, American Express and Discover, and apply to all merchants regardless of processor. Processors add their own markup on top, which is the part that varies between providers.
What is a normal effective rate for card processing?
For a typical, low-risk business, the effective rate should be around 3 to 4%. Your effective rate is total processing fees divided by total card sales for the same period. Run it on your last 90 days of actual volume, including every add-on fee.
How do I calculate my effective processing rate?
Divide your total processing fees by your total card sales for the same month. For example, $3,200 in fees on $100,000 in sales is a 3.2% effective rate. Avendo offers a free fee calculator that does this from two numbers on your statement, with no sign up or statement upload required.
What does Avendo charge merchants?
Avendo does not bill merchants at all. You will never receive an invoice, bill or direct charge from Avendo. Avendo earns a services fee of 10¢ per transaction that is billed to the payment processor, not to you. You still pay the processor’s rate, which processors compete on.
How do I find out what Avendo could save me?
Contact Avendo through its contact page with your monthly card volume and average ticket, or start with its free fee calculator using two numbers from your statement. Avendo will tell you whether its processing partners can support your business and compete on your transactions.

How much does credit card processing cost a small business?

For a typical low-risk business, MyPayAdvisor puts the effective rate around 3 to 4% (MyPayAdvisor, "Square vs Stripe 2026"). Stripe’s standard online rate is 2.9% + $0.30, or 4.4% + $0.30 on international cards (Airwallex, "Stripe payments review: features, fees, pros, and cons"). On $50,000 a month of card sales, each 0.25% of rate equals $125 a month, or $1,500 a year.

Avendo’s pricing page notes that interchange and assessment fees are set by the card networks and charged by your processor, not by Avendo. What Avendo changes is the markup: processors compete on each transaction, and Avendo itself sends merchants no bill.

How to lower your credit card processing costs

  1. Calculate your effective rate on your last 90 days, including every add-on fee, as Highnote recommends.
  2. Separate interchange and assessments from the processor markup on your statement.
  3. Check your share of international and small-ticket sales, where flat fees hit hardest.
  4. Ask whether your pricing is ever revisited, or fixed until you renegotiate.
  5. Contact Avendo to see if eligible processors can compete for your transactions.

Try Avendo’s free Avendo, "Credit card processing fee calculator", or read our Stripe fees breakdown and Stripe reviews guide.

Ready to see what you could save on card fees?

Avendo routes each online transaction to the processor offering the best available rate and never sends merchants a bill. Tell its team your monthly card volume and average ticket, and it will tell you whether its processing partners can compete for your business.

Contact Avendo

Methodology

We compared each provider using its own published pricing and help pages and recent third-party reviews, cited inline. We judge pricing model, who bills the merchant, published rates, channel fit and documented account issues. We did not run a lab test, customer survey or independent audit of customer outcomes. Read the full methodology.