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  5. Merchant Account Fees: How They Work and How To Cut Them

Merchant Account Fees: How They Work and How To Cut Them

Stephen Wright Stephen WrightFinance Specialist May 23, 2024
May 23, 2024
Navigating the labyrinth of merchant account fees can be exhausting, especially with most payment processors being less than transparent.

Selecting the wrong credit card processor or negotiating unfavorable account terms can significantly eat into your profits, most likely through hidden fees and additional charges.

To help you cut your merchant account fees, I’ve listed all the fees you may encounter and reviewed the best credit card processors for different business types and industries. Leaders Merchant Services (LMS) stood out of all the processors I analyzed due to its industry-low rates, negotiable pricing, flexible contracts, and complimentary POS hardware.

Continue reading to discover the various types of merchant account fees, strategies for reducing them, and the top payment processors for minimizing these costs.

What Are Merchant Account Fees?

Merchant account fees are the charges you must pay to accept credit and debit cards. These charges can vary depending on the card, bank, and payment processor used, meaning no two businesses pay the same amount.

Although most merchant account fees are non-negotiable, you can purchase additional services and products from your payment processor. Examples include POS equipment, PCI compliance, fraud monitoring, and chargeback protection.

Here are a few things that can affect your fees:
  • Business model: How you reach your customers directly impacts how much you’ll pay in merchant account fees. For example, if you own a brick-and-mortar business and your customers pay in cash, you may pay nothing in transaction fees. However, you’ll pay higher fees for credit card and e-commerce transactions.
  • Sales volume: Payment processors will likely offer reduced rates and reasonable discounts if you own a high-volume business. As a low-volume business, you may get access to low-interest loans and free equipment.
  • Fraud: High-risk businesses are more susceptible to chargebacks, in which you incur fees every time a customer disputes a transaction. Understanding how much you pay in chargeback fees can help determine whether risk and fraud management add-ons are cost-effective for your business.

Most Common Pricing Models for Merchant Accounts

There are four pricing models that you’re most likely to run into when dealing with credit card processors, including:

Flat-Rate Pricing

With flat-rate pricing models, you’ll pay a flat fee on top of a percentage of each transaction. Most merchants pay anywhere from 2.6% – 2.99% with a flat fee of 10¢ – 49¢. However, the percentage markup you’ll pay is susceptible to change, often increasing for online and card-not-present transactions.

Flat-rate plans are well-suited to small or recently established businesses due to their transparency and simplicity. Flat-rate pricing may be a good option if you need to know exactly how much you’re paying and don’t want to pay monthly fees.

Tiered Pricing

On a tiered pricing plan, the amount you pay per transaction is determined by the type of card your customers use or how you accept each payment. Examples of tiers offered by payment processors include debit cards, credit cards, specialty cards, international cards, or keyed-in, swiped, and card-not-present transactions.

Unfortunately, tiered pricing structures are the least transparent and the most difficult to understand. However, if you keep a close eye on the details and are willing to negotiate, tiered pricing can be pretty cost-effective.


Interchange-plus pricing plans incorporate card network assessment, variable wholesale interchange fees, and markup. Depending on the card used, your business can save a lot of money – especially for high-volume businesses.

Interchange-plus fees start as low as 0.30% + ¢10, considerably lower than tiered and flat-rate pricing plans. You also see what you’ll pay per transaction before opening a merchant account, allowing you to manage your costs more effectively.


Zero-cost processing is an excellent choice for brick-and-mortar businesses that accept a large number of cash transactions. By choosing a zero-cost pricing plan, you can cut up to 100% of your processing fees by surcharging your cash-paying customers (from 1% – 4%).

While you may avoid monthly fees on other pricing plans, zero-cost pricing plans will always charge a monthly fee. The payment processor determines how much you pay, but it can be a cost-effective solution for SMEs, especially restaurants and food trucks.

Universal Types of Account Fees

Regardless of the pricing plan you choose, you should expect to see the following fees on your monthly statement:
  • Authorization fees. When a transaction is processed, an authorization token is sent back and forth between the issuing and acquiring banks to check your customer’s balance. Once completed, the payment will either be accepted or declined. Unfortunately, you’ll pay this fee even if your customer’s card is declined.
  • Assessment fees. Usually combined with your interchange fees on your monthly statement, assessment fees are a fee you pay directly to a card issuer. For card issuers like Visa and MasterCard, expect to pay 0.13% – 0.15% per transaction.
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Hidden Fees To Be Aware Of

Unfortunately, transparency isn’t typical among credit card processors, meaning you’ll probably run into hidden merchant account fees. Here are several you should be on the lookout for when choosing a payment processor:
  • Chargeback fees. Expect to pay $20 – $100 every time a customer disputes a transaction, whether due to fraud or a merchant refusing to issue a refund. If you operate in a high-risk industry or generate revenue through subscriptions, you’re more likely to run into chargebacks – meaning they can quickly add up.
  • PCI compliance fees. You may run into PCI compliance or non-compliance fees (PCI compliance is essentially a security requirement). You can expect to pay up to $120/year for PCI compliance and anywhere from $20 – $44/month for non-compliance. However, many processors offer services to help ensure your business satisfies PCI requirements.
  • Monthly minimum fees. Some payment processors charge a monthly fee if your business doesn’t process a minimum number of transactions.
  • Cancellation fees. Also called an “early termination fee,” some payment processors will charge you if you close your account before your contract ends.
  • Administrative fees. If your payment processor charges you for everything, check your statements for admin fees. These fees include batch processing, creating and printing statements, or offering specialized customer support.

How To Reduce Merchant Account Fees

Although low-risk businesses and brick-and-mortar stores accepting cash will usually get the lowest rates, you can reduce your merchant account fees by carefully choosing a credit card processor. As a starting point, you should look for:
  • Negotiable rates. Many payment processors allow you to negotiate your transaction fees, allowing you to save a considerable amount.
  • Several plans. While searching for a payment processor, only consider those that offer at least interchange plus and zero-cost pricing structures. Most credit card processors offer a variety of plans – but if you aren’t sure, contact a sales team.
  • Fraud detection and monitoring. If you’re a high-risk business and don’t want chargebacks to eat into your profits, look for processors that offer free services like a dedicated risk management team or chargeback protection.
  • Month-to-month contracts. If you’ve had bad experiences with payment processors, you should look for short-term contracts. You won’t have to pay cancellation fees like you would on a long-term contract.
  • Compliance. Failure to comply with the PCI security standard can result in non-compliance fees or fines, but becoming compliant usually also requires a fee. Some processors incorporate PCI compliance or help you obtain it.

6 Best Credit Card Processors for Reduced Merchant Account Fees

Leaders Merchant Services (LMS) is an excellent processor for small businesses due to its low monthly, transaction, and markup fees. You can expect to pay ~0.15% + $0 and $9.00/month for swiped card transactions or ~2.9% + 30¢ and $9.00/month for virtual terminal transactions. Better yet, LMS allows you to negotiate lower rates and will give you $200 if its offer can’t meet or beat your current rates.

If you sign up for a long-term contract, you can get free POS hardware. The First Data FD150 and Magtek Mini-MICR are excellent devices for brick-and-mortar businesses that process in-person payments and accept checks. Alternatively, you can negotiate a monthly contract and purchase Clover equipment outright rather than leasing it and giving it back.

LMS integrates with the Authorize.Net payment gateway and CartManager shopping cart, letting you take online payments securely. You can also access Authorize.Net’s fraud detection suite, which offers over 10 transaction filters. Once you’ve chosen your filter criteria, you can choose to block, review, or authorize filtered transactions – which helps reduce chargebacks.

Features and Benefits

  • 98% approval rating. If you’re a high-risk business with a low credit score, you still have a strong chance of being accepted and reducing your merchant account fees with LMS.
  • Dedicated account manager. LMS offers every new merchant an account manager, so you don’t have to speak to a new representative whenever you need support.
  • Numerous payment methods. LMS accepts ACH transfers, Google Pay, Apple Pay, Samsung Pay, and more. Because of this, you don’t have to worry about losing customers due to inadequate processing capabilities.
  • Merchant cash advances. If you need extra capital, LMS offers cash advances you can pay back through a small commission on future sales. This means you don’t have the pressure associated with strict deadlines and collateral.
Read our expert LMS review for more details.

Accepts in-person & online payments
Fraud detection & monitoring technology
Fast payouts
Transaction fees on cheapest plan ~0.15% + $0
Monthly fee on cheapest plan $9.00

Paysafe’s pricing plans make it a great choice for low-volume businesses selling highly-priced items. It offers a tiered plan with transaction fees as low as 0.99% + 25¢ (debit cards), an interchange plus plan with transaction fees as low as 0.50% + $0.10, and a zero-cost processing plan for $16.00/month. In addition, with no long-term contracts or cancellation fees, Paysafe ensures you can keep your merchant account fees to a minimum.

Paysafe’s dedicated risk management team and advanced security allow you to reduce the chances of fraud and chargebacks. Its risk team flags and blocks suspicious payments, while its security features protect card-not-present transactions using address verification, tokenization, and end-to-end encryption.

With over 250 payment solutions, including foreign currencies, Paysafe allows you to accept more payment methods than most payment processors. You can accept credit and debit cards, digital wallets, bank transfers, crypto, and many more, ensuring you can sell to anyone, anywhere.

Features and Benefits

  • Free equipment. Every merchant gets a free mobile card reader and access to the Paysafe Mobile Pay app, allowing you to turn your iPhone or Android device into a POS terminal.
  • All-in-one dashboard. Paysafe allows you to track and monitor your transactions, take orders through a virtual terminal, generate reports, and process refunds.
  • Payment gateway. Paysafe provides access to Authorize.Net, which lets you accept payments online. Its advanced API allows you to integrate your checkout page directly onto your website without compromising your gateway’s security protocols.
  • Fast payouts. You’ll get your funds in 1-2 business days, completely free of charge, which isn’t common among credit card processors. If you require your funds even faster, you can pay extra for guaranteed next-day funding.
To find out more, read our comprehensive Paysafe review.

Accepts in-person & online payments
Fraud detection & monitoring technology
Fast payouts
Transaction fees on cheapest plan $0 (1%-4% surcharge to customers)
Monthly fee on cheapest plan $16.00

3. Stax: Up to 40% Savings for High-Volume Businesses1

Stax can save you up to 40% on your merchant account fees if you process at least $8,000 a month, primarily due to its subscription-based pricing model. Each pricing plan has a monthly fee and a small transaction fee, allowing you to avoid markups altogether. On its Growth ($99.00/month), Pro ($159.00/month), and Ultimate ($199.00/month) tiers, you’ll pay 0% + 10¢ (in-person) or 0% + 10¢ (online) per transaction.

Notably, Stax’s surcharging program allows you to pass on up to 100% of your credit card fees to customers. Better yet, it lets your customers to choose debit as a no-fee option and ensures your business only applies surcharges as permitted by state and federal law.

If you open a merchant account with Stax, you have 60 days to become PCI-compliant before incurring non-compliance fees. However, Stax helps merchants achieve PCI compliance within 30 days of sign-up at no additional cost, allowing you to save up to $50/month in merchant account fees.

Features and Benefits

  • Top-tier support. With live chat, email, web form/ticket, and phone support, Stax can help you understand and cut your merchant fees – even outside standard business hours.
  • Built-in e-commerce protection. In addition to integrating with the most popular e-commerce platforms, Stax prevents chargebacks by instantly validating customer information and offering fraud protection.
  • Hardware compatibility.When switching to Stax, there’s no need to purchase new hardware, as it integrates with over 90% of third-party POS systems.
  • QuickBooks. Thanks to Stax’s integration with QuickBooks, you can sync your data in real time and keep track of your payments, customers, invoices, and products.
Read our in-depth Stax review to learn more.

Accepts in-person & online payments
Fraud detection & monitoring technology
Fast payouts
Transaction fees on cheapest plan 0% + 10¢ (online)
Monthly fee on cheapest plan $99.00

4. Payment Depot: Reduced Fees for Startups and SMEs1

A subsidiary of Stax, Payment Depot offers many of the same benefits, including no markups, cancellation fees, and transaction fees as low as 0% + 10¢ (online). Nonetheless, you get an interchange plus plan with competitive rates ranging from 0.2%-1.95% and no monthly fees. Compared to Stax, Payment Depot targets small businesses processing up to $150,000 annually, aiming to save them up to 40% in processing fees.

Payment Depot’s 24/7 risk monitoring team helps you reduce chargebacks and fraud. Plus, they keep an eye on new fraud methods and bank policy changes, updating you when required. You can also dispute chargebacks from within your Payment Depot account, allowing you to collate all the information and evidence you need to win a dispute.

Particularly beneficial for recently established businesses with limited funding, Payment Depot offers every merchant a free Dejavoo terminal or mobile card reader. If you’re open to negotiation, you may be able to acquire multiple terminals at no extra cost. Unfortunately, Dejavoo terminals are basic, though they can handle most payments.

Features and Benefits

  • Payer verification. Payment Depot automatically verifies your customers’ information every time they purchase through your online store, significantly reducing the chances of merchant account fees like chargebacks.
  • 24/7 support. If you need technical support, you can contact Payment Depot’s support team 24/7. For sales and general inquiries, you can contact them from 8:30 a.m. to 7:30 p.m. EST & PST.
  • Next-day payouts. You’ll receive your funds within a business day at no additional cost, a not-so-common practice among credit card processors.
  • Fast onboarding. As long as you have the required information, you can receive online and in-person payments in as little as 24 hours without any setup fees.
Take a look at our detailed Payment Depot review to find out more.

Accepts in-person & online payments
Fraud detection & monitoring technology
Fast payouts
Transaction fees on cheapest plan 0.2%-1.95%
Monthly fee on cheapest plan $0

5. Chase Payment Solutions: Simplified Flat-Rate Pricing With No Hidden Fees1

Chase Payment Solutions offers a simple flat-rate pricing model with no monthly or hidden merchant account fees. You’ll pay 2.6% + 10¢ for card-present transactions, 3.5% + 10¢ for keyed-in transactions, and 2.9% + 25¢ for e-commerce transactions, making Chase a great option for in-person and online businesses alike. You’ll pay nothing for cancellation fees unless you negotiate a fixed-term contract with reduced rates.

If you open a Chase Business Complete Banking, you can access same-day funding. It costs $15/month, but qualifying businesses can waive this fee by achieving a minimum daily balance of $2,000. Notably, Chase allows all its tiered business account holders to waive their fees, saving you up to $95/month.

Unfortunately, Chase only offers 5 POS systems – and none for free. The best hardware for modern businesses would be the Chase Card Terminal, a lightweight, Wi-Fi, and 4G-enabled device that can accept tap, swipe, and keyed-in payments for $499. Just note you won’t be able to reprogram it if you switch processors.

Features and Benefits

  • Zero liability protection. As long as you’re compliant with data security standards and report unauthorized transactions quickly, you won’t have to worry about losing money, as Chase will reimburse you.
  • Authorize.net. Chase integrates seamlessly with Authorize.net. You can take advantage of Authorize.net’s security plus the ease of use and speed that comes with Chase.
  • Specialized software. For an added fee, Chase offers 10+ industry-specific software tools that you can use to manage your business more efficiently. Examples include Fiskl (finance management), Eventzilla (events and marketing platform), and PayRent.
  • Payment options. Chase allows you to reach more customers by accepting debit cards, credit cards, ACH transfers, digital wallets, and more.
To learn more, read our extensive Chase Payment Solutions review.

Accepts in-person & online payments
Fraud detection & monitoring technology
Fast payouts
Transaction fees on cheapest plan 2.6% + 10¢
Monthly fee on cheapest plan N/A

6. Sekure Payment Experts: Pay Nothing for POS Equipment and Same-Day Funding1

Sekure Payment Experts isn’t itself a credit card processor, but it uses its enormous partner network to provide custom merchant solutions. It’s great for cost-cutting SMEs, offering free access to POS equipment, a virtual terminal, and same or next-day funding. Examples of the top-tier POS systems available include Chargezoom, Cluster POS, and GiveHub.

Sekure also offers a free PCI Plus program for qualified merchants, allowing you to skip the self-assessment questionnaires, scans, and PCI compliance and non-compliance fees. What’s more, businesses classified as PCI Level-3 or PCI Level-4 get data breach forgiveness of up to $100,000, meaning you won’t have to pay breach-related expenses up to that amount.

Sekure’s Edge Program, or zero-cost plan, is the best for cutting up to 100% of your merchant account fees. You’ll eliminate all your transaction fees by paying $39.95/month and surcharging your customers 4%. That said, Sekure does seem to come with long-term contracts and a few hidden fees, so make sure you carefully review your contract before signing.

Features and Benefits

  • Fraud prevention. All of Sekure’s partner POS systems and e-commerce providers verify your customers’ information and decline suspicious transactions, protecting your business from fraudulent activity and potential chargebacks.
  • Dedicated chargeback team. Sekure’s team is there to assist you in fighting chargebacks, making it much more likely for you to win disputes.
  • Personal payment experts. Free up time with the help of experts with specialized, industry-specific expertise who can show you how to navigate credit card processing.
  • Personalized savings analysis. If you’re using a different payment processor, you can share your monthly statement with Sekure. They will then assess your fees and search for a better deal through their partner network.
Read our exhaustive Sekure Payment Experts review for more details.

Accepts in-person & online payments
Fraud detection & monitoring technology
Fast payouts
Transaction fees on cheapest plan 0% (4% passed to customer)
Monthly fee on cheapest plan $39.95

These Are the Best Credit Card Processors for Transparent Account Fees

Having a less-than-thorough understanding of merchant account fees can eat into your profits. To help reduce the burden, you need a transparent payment processor offering competitive interchange rates, zero-cost plans, free equipment, negotiable contracts, and more.

If you’re a startup or SME, I recommend Leaders Merchant Services1. It offers industry-low and negotiable rates, free POS hardware for in-person payments, and fraud detection technology for online payments through Auhorize.net.

If you’re a low-volume business selling highly-priced items, Paysafe is an excellent choice1. In addition, Paysafe has a zero-cost processing plan, a dedicated risk management team, and support for over 250 local and international payment methods.

Pick Stax if you’re a high-volume business1. Stax can save you up to 40% on merchant account fees with its subscription-based pricing model.

To help you make an informed decision, I created a comparison table:

Best Feature Best For Monthly fee
on cheapest
fees on
rates and
pricing to cut
account fees
businesses and
$9.00 ~0.15% + $0
Paysafe Save on
account fees
with no long-term
plans or cancellation
selling high-value
products and
$16.00 $0 (1%-4% surcharge to customers)
Stax Save up to 40%
on your merchant
account fees
especially in e-commerce
$99.00 0% + 10¢ (in-person)
No markups or
processing less
than $150,000
per year
$0 0.2%-1.95%
flat-rate pricing
and same-day
Online and
businesses that
can maintain a
$2,000 daily
N/A 2.6% + 10¢
merchant account solution
plus free POS
New businesses
looking for a
tailored payment
$39.95 0% (4% passed to customer)


Are there any hidden merchant account fees?

Yes, there are several hidden merchant account fees that your payment processor may not disclose before you open a merchant account. Examples of hidden fees include chargeback fees, PCI compliance and PCI non-compliance fees, monthly minimum fees, cancellation fees, and even admin fees.

How do I reduce my merchant account fees?

To reduce your merchant account fees, you should look for the following things: Negotiable rates, interchange-plus and zero-cost processing plans, fraud detection services, and month-to-month contracts. An excellent example is Leaders Merchant Services, which offers industry-low rates, a dedicated account manager, and free hardware.

What factors determine how much I’ll pay in merchant account fees?

Your payment processor’s pricing model, monthly sales volume, and how your customers choose to pay can affect the amount you’ll pay in merchant account fees. Your business’s risk level also matters, meaning that higher-risk businesses may benefit from a chargeback team such as the one Paysafe offers.

How do I choose the best payment processor for my business’s needs?

The best way to choose a payment processor for your business’s needs is to consider how you accept payments and your monthly sales volume. Leaders Merchant Services is a great choice for low-volume businesses due to its industry-low rates. As a high-volume business, Stax can save you up to 40% of your merchant account fees.

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