Reducing merchant credit card fees can improve your bottom line. But your strategy depends on your transaction volume, industry, and customer base. Use these tips to lower the costs of processing credit cards.
Which payment processors offer the lowest rates for small businesses?
Compare costs to find the lowest payment processing rates for small businesses in 2025. Interchange fees and total costs vary, based on volumes, average ticket size, and other factors.
Vendors offering the cheapest credit card processing for in-person, online, and mobile payments include:
- Square Payments: In-person 2.6% plus 15 cents; online 2.9% plus 30 cents; manually entered 3.5% plus 15 cents. View Square fees.
- Stripe: In-person 2.7% plus 5 cents; online 2.9% plus 30 cents; keyed 3.4% plus 30 cents. See Stripe pricing.
- PayPal Point of Sale (formerly PayPal Zettle): In-person 2.29% plus 9 cents; online 2.99% to 3.49% plus 49 cents; keyed 3.49% plus 9 cents. Explore PayPal rates.
- Chase: In-person 2.6% plus 10 cents; online 2.9% plus 25 cents; manually entered 3.5% plus 10 cents. View Chase fees.
- Helcim: In-person interchange fee plus 0.40% plus 8 cents; keyed and online interchange fee plus 0.50% plus 25 cents. Estimate your Helcim rates.
*Rates verified on August 31, 2025.
Top vendors: Merchant services worth considering
Along with competitive pricing models, the best credit card processors for small businesses provide tools and support.
Consider how these providers can meet your needs:
- Helcim: Best for transparent pricing that scales as you grow.
- QuickBooks: Timesaving accounting, invoicing, and processing tools.
- Stripe: Excellent for online checkout and payment links.
- Square: Simple point-of-sale (POS) and processing for retail and food service.
- Chase: Fast deposits to Chase accounts.
- Clover: Popular restaurant and retail POS and processing solution.
- PayPal Point of Sale: Quick setup and cheap in-person rates.
How interchange fees actually work (and how to reduce them)
Every credit card transaction incurs processor, network, and interchange fees. Payment channels and card types impact costs. Understanding how flat-rate and interchange fees work helps you form good habits and reduce processing fees.
Consider these tips:
- In-person is cheaper. Chip or Tap to Pay usually costs less than keyed or manual entry.
- Better data lowers costs. Address verification and fraud tools reduce risks.
- Your card mix matters. Debit cards are cheaper to process than rewards cards.
- Good operations prevent downgrades. Fast credit card authorization, daily batching, and chargeback prevention keep businesses in good standing.
[Read more: 16 Common Credit Card Processing Terms and Definitions]
10 ways to reduce credit card processing fees
While it’s impossible to avoid all card fees as a business owner, you can reduce them. Explore strategies to lower your effective rate and keep more money in your account when accepting credit card payments.
1. Examine monthly statements and remove junk fees
Hidden fees increase your effective rates, the total costs of processing credit cards. Perform a credit card processing statement audit to identify and eliminate junk fees. Look for Payment Card Industry (PCI) noncompliance fees, monthly minimums, payment gateway charges, or batch settlement fees.
Sometimes, you can negotiate charges unrelated to processing or switch to a provider who doesn’t tack on additional nonprocessing fees.
2. Negotiate your markup or switch service providers
Be prepared to negotiate processing rates to reduce your costs. Look for transparent merchant services offering interchange-plus pricing or volume discounts and compare written quotes.
Custom pricing is more challenging to compare, considering factors such as monthly volume, average ticket, and card mix. Credit card processors that charge a flat fee, like Square or PayPal, negotiate rates only if your company processes more than $250,000 annually.
Demonstrate your value by showing sales projections. You can also ask them to match rates or lower nonprocessing fees. Don’t be afraid to walk away if you’re overpaying (just watch out for early termination fees). Head back to the drawing board and select a provider with a pricing model suitable for your small business.
Unlike a surcharge program, a cash discount is a marketing and sales technique. Small businesses 'reward' customers who pay with cash by discounting the items at the register.
3. Move big invoices to ACH
Shifting high-dollar tickets and invoices from credit card to automated clearing house (ACH) processing can drop your costs significantly. ACH payments for small businesses are direct bank debit transactions or electronic bank-to-bank transfers. This method is more reliable and faster than physical checks and doesn’t incur interchange fees.
Compare ACH vs. credit card fees to see how you can lower your payment processing rates. For example, a $100 invoice paid with a credit card incurs $3.60 in fees through Square or $3.15 via QuickBooks. The transaction costs $1 through both merchant service providers when moved to ACH.
In addition to lower rates, ACH payments generally have a cap, meaning no matter how large your invoice is, you won’t pay over $5 or $6 in fees. If your clients prefer credit cards, consider setting up recurring payments to improve collection efforts.
4. Enter payments as card-present
In-person payments using an EMV (Europay, Mastercard, and Visa) terminal decrease your costs. Users can swipe, insert, dip, or tap their cards. Even a mobile credit card reader can reduce credit card processing fees. But any time you manually key entries, costs go up.
The bottom line is that interchange rates and processing prices are cheaper for card-present vs. card-not-present (CNP) transactions. When you can’t use a reader, offer QR code payments instead of keying cards. These fees are often lower than CNP.
5. Use verification services and batch daily
To avoid merchant credit card fees and keep rates low, provide quality customer data, and perform a daily batch settlement. First, use an address verification service (AVS) and verify the card verification value (CVV) for e-commerce transactions. An AVS match confirms that the cardholder’s billing address matches the one the customer enters. A CVV check captures the three- or four-digit security code from the physical credit card.
Something simple like forgetting to submit your transactions at the end of the day can increase your interchange rates on those payments. Over time, these extra charges add up. Card associations often provide the lowest interchange fees when merchants settle sales within 24 hours. Batch transactions every day to avoid downgrades.
6. Improve fraud and chargeback prevention
Fraudulent activity and chargebacks cost your business and merchant service providers money. Use secure payment systems and consistent checkout processes to reduce disputes and losses.
Follow these steps:
- Use a clear descriptor. Ask your provider to use your DBA (doing business as) name, so customers recognize it on receipts. List a phone number that reaches a human, not a voicemail box.
- Handle receipts correctly. Document in-person, online, and phone order processes to train staff to record proof of purchase, prevent credit card scams, and spot red flags.
- Turn on your vendor’s risk tools. Enable AVS/CVV checks for online and phone orders, 3D secure for high-risk transactions, and risk filters for suspicious activities. Plus, configure chargeback alerts.
- Optimize shipping and returns. Use the AVS-matched address for shipping and keep tracking numbers, delivery confirmations, and return messages on file. Put your refund and return policy in confirmation emails and package receipts.
- Design a simple dispute workflow. Repeat the same steps every time you get a chargeback alert. Often, a quick call to the customer can resolve a dispute before it goes too far.
7. Send level 2/3 data for B2B transactions
Use enhanced data fields to achieve interchange savings when managing business-to-business (B2B) transactions. Processors require level 1 information for all transactions, like the purchase amount and merchant name. Entering level 2 and 3 data can qualify your company for lower B2B interchange fees.
Level 2 fields include purchase order numbers and tax amounts, whereas level 3 consists of line-item details like product codes, unit costs, or shipping amounts. Since corporate and purchasing cards often incur higher fees than other credit cards, businesses with a higher B2B share of these cards benefit from using enhanced data fields.
[Read more: 10 Best Credit Card Processors for Nonprofits]
8. Increase credit card processing volume (when it lowers net cost)
As the old saying goes, if you can’t beat them, join them. Credit card processors give you better rates when your processing volume increases. Volume pricing and enterprise merchant rates can lower your costs. Ensure it’s worth the effort by estimating your effective rate before pushing more credit volume.
9. Add a service or convenience fee for nonstandard channels
Convenience or service fee programs are different from surcharges or cash discounts. According to Fiserv, businesses can charge customers for the “privilege of paying for a product or service using an alternative payment method that is not standard for a business.” For instance, if your gym typically sells memberships in person, you can give customers the option to pay by phone with a credit card and charge a convenience fee.
Visa, Mastercard, American Express, and Discover set convenience fee rules, so you must read and understand their guidelines before implementing an alternative payment channel fee. In general, brands require merchants to charge a flat dollar amount to all payments for the channel (not just credit cards), and you can’t stack a convenience fee with surcharges on the same transaction.
Small businesses can also add service fees to cover costs unrelated to payment processing. In return, these charges can offset some merchant credit card fees. These may cover delivery, labor, fuel, carryout, packaging, or other business expenses.
10. Consider a credit card surcharge or cash discount program
A payment card surcharge or checkout fee is a percentage fee added only to credit card transactions. Card brands cap fees at the lower end of your acceptance rates or 3%. According to credit card surcharge rules, you must give your processor a 30-day notice and post signage at checkouts. Disclose the surcharge on receipts, and remember that debit surcharges are prohibited. You can't add one even if the POS system displays “credit” while running a debit card.
Unlike a surcharge program, a cash discount is a marketing and sales technique. Small businesses “reward” customers who pay with cash by discounting the items at the register. If desired, you can extend the discount to those paying by check. The posted price, whether on the menu or sales tag, is the actual cost, and customers paying by cash receive a lower price.
This is an important distinction. The Truth in Lending Act defines a discount as "a reduction made from the regular price." In contrast, a surcharge is "any means of increasing the regular price to a cardholder which is not imposed upon customers paying by cash, check, or similar means."
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