What Are Per-Transaction Fees?

Per-Transaction Fees Explained in Less Than 4 Minutes

A woman uses a credit card.

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A per-transaction fee is an expense a business pays every time it processes an electronic payment.

A per-transaction fee is an expense a business pays every time it processes an electronic payment. These transaction fees are usually fairly small, but they can quickly add up for companies that process a high level of transactions.

Per-transaction fees make it possible for businesses to offer a broader range of payment options to their customers. As the customer, you don’t have to worry about paying per-transaction fees—this fee is almost always charged to the merchant.

Definition and Example of Per-Transaction Fees

A per-transaction fee is an expense a business pays wherever it processes an electronic transaction. These fees usually cost between 1.5% and 4% of the total payment amount, and possibly with an additional nominal flat fee, although they can vary depending on the service provider and type of transaction.

  • Alternate name: Merchant transaction fees

Merchants have to partner with banks to facilitate electronic payments, and they’ll often do this by setting up a merchant account. Businesses that process a large number of electronic transactions rely heavily on this merchant agreement.

Each month, merchants will receive a monthly statement that outlines the per-transaction fees paid that month. These fees will typically fall into one of three categories: interchange fees, subscription fees, or tiered fees.

How Per-Transaction Fees Work

It’s important for businesses to offer a wide range of payment options. In addition to accepting cash payments, merchants might also accept credit cards, debit cards, e-wallets, and in some cases, even accept cryptocurrency payments.

Offering a number of different payment options is more convenient for the customer, and it removes many of the barriers to making a sale. However, it costs money to process electronic payments, and this cost is passed on to the merchant as per-transaction fees.

Per-transaction fees are usually small, but if left unchecked, they can eat into a company’s margins. Visa, MasterCard, American Express, and Discover all charge virtually the same fees for debit card transactions, although Visa’s per-transaction fees tend to be the lowest.

Per-transaction fees aren’t passed on to the customers, but merchants often pass these fees on to customers in the form of increased prices to maintain their margins, or sometimes actual direct fees such as charging a 2% additional transaction fee if you pay with credit card. If the transaction amount is too low, it may end up costing the merchant too much to process that transaction.


Customers generally don’t have to pay per-transaction fees directly although they may experience price increases and other fees added on. But international transaction fees are an exception. This cost is usually passed on to the customer.

Types of Per-Transaction Fees

Per-transaction fees typically cost 1.5% to 4% of the payment amount, depending on the type of electronic transaction and provider. Some may include a small flat fee as well. Here are three types of per-transaction fees you can expect to encounter.

Interchange Fees

Interchange fees are a fee merchants have to pay for every credit card or debit card transaction. Interchange rates are set by credit card companies and updated periodically. This fee can vary based on the credit card company and the type of transaction being processed.

Interchange fees tend to be the largest expense businesses incur for processing credit card transactions. These fees usually include a percentage of each transaction and a flat fee. For example, you might see an interchange fee of 1.65% + 10 cents.


Per-transaction fees can vary depending on the credit card issuer, the transaction, and the level of risk.

Terminal Fees

Increasingly, retailers and service providers use portable point-of-service (POS) terminals to accept payments from customers. The companies that issue these devices will often charge a terminal fee for the convenience of using their equipment.

Tiered Fees

Banks will often charge tiered fees based on the type of transaction and the level of risk involved. For instance, card-not-present transactions often come with higher fees than card-present transactions because the likelihood of fraud is higher.

Tiered fees are often broken down into three different tiers: qualified, mid-qualified, and non-qualified. From there, the merchant is charged a fixed amount for any transactions that fall within a certain tier.

Key Takeaways

  • Per-transaction fees are an expense that businesses pay for processing electronic transactions for customers.
  • These fees usually cost 1.5% to 4% of the payment amount, with an additional flat fee in some cases.
  • Per-transaction fees can vary depending on the type of electronic payment and the credit card company you’re using.
  • Per-transaction fees are charged to the merchant and are typically not directly passed on to the customer.
  • There are four main types of per-transaction fees: interchange fees, terminal fees, tiered fees, and subscription fees.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. BNG Payments. "Average Credit Card Processing Fees in 2022."

  2. Board of Governors of the Federal Reserve System. "Average Debit Card Interchange Fee by Payment Card Network."

  3. Optimized Payments Consulting. "Understanding the Cost of Processing Card Payments," Page 3.

  4. Paypal. "Payment Processing 101: Learn How Your Money Gets to You."

  5. Optimized Payments Consulting. "Understanding the Cost of Processing Card Payments," Page 5.

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