By Kawania H. Wooten CMP

Not too long ago, a fellow entrepreneur asked me about credit card processing fees.  She heard so many different opinions about them and she wanted to know my thoughts.

But, before I share some thoughts about credit card processing fees, let’s talk about what these fees are —

What Are Credit Card Processing Fees? To stay competitive as a business owner you’ll more than likely need to accept credit cards as a form of payment.  For each of those transactions, you (the merchant) will be charged a fee (somewhere between 2.9% and 3.5%) for each of those card sales.

Who Is Charging You (the Merchant) This Fee?  A few companies are involved in the creation of this fee —

  • Credit Card Issuer: The first company is the card issuer (such as Chase, Capital One, Citi, or Bank of America). The card issuer gets paid by taking a percentage of each sale, called the interchange.
  • Networks or An assessment fee: A portion of the credit card processing fee goes to the assessment charged by the credit card association (Visa, MasterCard, etc.).
  • Merchant Bank: Your merchant bank takes a cut by charging a markup fee. The amount varies by industry, amount of sale, monthly processing volume, etc.
  • Payment Processor: The payment processor (who might also be your merchant bank) makes money by charging a fee every time you process a transaction (whether it’s a sale, a decline, or return – no matter). Plus, it can charge fees for setup, monthly usage, and even account cancellation.

What Is the Breakdown of the Fee? Usually, the first three fees (the percentages) are all added together and quoted as a single rate, while the transaction fee is quoted separately (e.g., 2.9% + $0.30).

Is It Legal for Merchants to Charge the Credit Card Processing Fee to the Clients? Yes, you are allowed to charge your customers a credit card processing fee or a surcharge for credit card transaction.  However, these fees are currently prohibited in ten US states—Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. Also, surcharges should not be imposed on debit or pre-paid debit transactions. This rule holds true even if your customer chooses “credit” as an option when using their debit card.

What Are the Requirements for Informing Your Clients of this Fee? You (the merchant/business owner) are still required to follow certain protocols to make sure consumers are not caught off guard. Visa, Mastercard, American Express and Discover require you to display a notice of the credit card processing fee at the point of sale. This applies to both in-store and on-line sales. Additionally, the receipt should clearly indicate that a credit card processing fee was added to the bill.

Here is My Take — As a business owner, I believe that a credit card processing fee translates to my clientele as “nickel and diming.” So, this is not a line item in our fees.  However, I do believe that credit card processing fees are a business expense. So, this expense, like all of the other expenses our business incurs, are taken into account when our team determines our service fees.

What are your thoughts?  Do you charge a credit card processing fee?  Let me know.


Kawania Wooten is the principal consultant at Howerton+Wooten Events, LLC.  Known to her friends and family as Kay, she uses artistic skills, her keen attention to the smallest details and her strong commitment to customer service as the hallmark of her business.  As the founder of the company, Kawania strives for professionalism, creativity and impeccable organization within every function planned by Howerton+Wooten Events.