How Credit Card Fees Work: Complete 2025 Guide
How Credit Card Fees Work: Complete 2025 Guide
Credit card payments are convenient for customers, but every transaction comes with fees that can add up for businesses and freelancers. Understanding these fees is essential for managing costs and maximizing your profits.
Why Credit Card Fees Matter
- Fees can take 2–5% (or more) of every sale
- Small businesses and freelancers are especially impacted
- Knowing your fees helps you price your services and choose the right payment processor
Types of Credit Card Fees
1. Interchange Fees
- Set by card networks (Visa, Mastercard, Amex)
- Paid to the cardholder's bank
- Vary by card type (debit, credit, rewards), transaction type, and merchant category
2. Assessment Fees
- Charged by the card network (Visa, Mastercard, etc.)
- Usually a small percentage (0.13–0.15%)
3. Processor Fees
- Charged by your payment processor (Stripe, PayPal, Square, etc.)
- Usually a percentage plus a fixed fee per transaction
4. Fixed Fees
- Flat fee per transaction (e.g., $0.30 for Stripe, $0.49 for PayPal, $0.10 for Square)
5. International and Currency Conversion Fees
- Extra fees for cross-border or currency conversion transactions
- Stripe: +1% for international cards
- PayPal: 4.4% + fixed fee for international
6. Chargeback and Refund Fees
- Chargeback: $15–$20 per dispute (may be refunded if you win)
- Refunds: You may not get the original processing fee back
How Credit Card Fees Are Calculated
The standard formula:
Total Fee = (Transaction Amount × Percentage Rate) + Fixed Fee
Example Calculations
| Transaction | Stripe (US) | PayPal (US) | Square (US) | |-------------|-------------|-------------|-------------| | $10 | $0.59 | $0.79 | $0.36 | | $100 | $3.20 | $3.48 | $2.70 | | $1,000 | $29.30 | $30.39 | $26.10 |
- Stripe: 2.9% + $0.30 per transaction
- PayPal: 2.99% + $0.49 per transaction
- Square: 2.6% + $0.10 per transaction
Try your own numbers with our Credit Card Validator, Stripe Fee Calculator, PayPal Fee Calculator, or Square Fee Calculator.
Step-by-Step: How to Understand and Calculate Your Fees
- Check your processor's published rates (see links below)
- Use our calculators to estimate your real costs
- Review your merchant statement for actual fees charged
- Look for extra fees: international, chargebacks, refunds
Actionable Tips to Minimize Credit Card Fees
- Encourage debit card use (lower interchange)
- Batch transactions to reduce per-transaction fees
- Negotiate rates if you have high volume
- Avoid unnecessary international/currency conversions
- Monitor for chargebacks and respond quickly
In-Depth FAQ
Why do credit card processors charge fees?
To cover fraud protection, technology, network costs, and to pay banks and card networks.
How can I lower my credit card processing costs?
Shop around, negotiate rates, use the right processor for your business, and encourage debit card use.
What is the Luhn algorithm and how does it relate to card validation?
The Luhn algorithm is a checksum formula used to validate credit card numbers. Use our Credit Card Validator to check cards instantly.
Are there hidden or monthly fees?
Some processors charge monthly or statement fees—always read the terms and check your statement.
How do refunds and chargebacks affect fees?
You may not get the original processing fee back on refunds. Chargebacks usually incur a $15–$20 fee.
References & Further Reading
- Visa Interchange Rates
- Mastercard Interchange Rates
- Stripe Pricing
- PayPal Merchant Fees
- Square Pricing
- Cebofo Credit Card Validator
- Cebofo Stripe Fee Calculator
- Cebofo PayPal Fee Calculator
- Cebofo Square Fee Calculator
See your real costs now: Credit Card Validator | Stripe Fee Calculator | PayPal Fee Calculator | Square Fee Calculator