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Understanding Processing Fees and How to Eliminate Them with Zero Cost Credit Card Processing

If you own or manage a business, you know how vital it is to keep costs down. One of the impactful costs that entrepreneurs face is the various processing fees associated with credit card payments. Fortunately, there are ways to avoid these fees altogether and ensure your business can maximize its profits.

In this blog from ModPay Solutions, we’ll discuss processing fees, why they exist, and how you can help eliminate them with zero cost credit card processing.

Understanding Processing Fees and How to Eliminate Them with Zero Cost Credit Card Processing

Table of Contents:

  1. What are Credit Card Processing and Processing Fees?

  2. Why Do They Exist?

  3. Credit Card Processing Fees: Averages and Details

  4. Processing Fees: Who Receives Them?

  5. Understanding Why Processing Fees are So High

  6. How to Eliminate Them with Zero Cost Credit Card Processing

  7. Conclusion

People Also Ask:

How do you explain a processing fee?

In a nutshell, businesses pay a pre-calculated cost every time their customers use either debit or credit cards to purchase products and services. Processing fees make this possible.

The processing fee can be broken down into two components: the interchange fee charged by the issuer to the acquirer and the assessment fee.

Why are payment processing fees so high?

Banks strive to draw in customers by providing attractive incentives and rewards due to the endless amount of credit card options available.

Higher interchange rates are necessary to compensate for these rewards, incentivizing banks to issue cards from card networks. As a result, the card networks offer higher interchange rates as an inducement.

What are Credit Card Processing and Processing Fees?

Credit card processing is the process of accepting payments with credit cards and debit cards. Accepting card payments is essential for any business in today’s digital age while also putting measures in place to keep customers’ card information secure and safe. When a business accepts credit cards, customers can pay online or in-store with a preferred card.

Processing fees are charges banks impose on merchants (businesses) for processing credit card payments. These fees often include interchange fees, assessment fees (fraud protection), and flat-rate transaction fees. The amount of these fees can vary based on the merchant services provider, the type of card being used, and the size of the transaction. Generally speaking, businesses with high volume sales have higher processing fees than those with lower sales.

Why Do They Exist?

Processing fees exist for banks to cover administrative costs associated with businesses accepting customer credit card payments. Card processing fees also exist for banks to recoup their losses from potential chargebacks, fraud incidents, and fraud prevention measures.

Credit Card Processing Fees: Averages and Details

The “averages” for credit card processing fees vary. However, there is an upper and lower range for processing fees that you can expect to pay if your business plans on accepting card payments.

These include:

  • Around 3.9% for upper range processing fees

  • About 1.5% for lower range processing fees

Banks and card networks, such as Mastercard, Visa, Discover, and American Express, mostly set these percentages. However, other involved parties can determine these fees as well.

Processing Fees: Who Receives Them?

Multiple parties have communicated with each other to ensure the card transactions took place safely and securely within seconds of a customer swiping their card. Each one of these parties takes part in credit card processing fees.

They are:

The card network - These include the large card brands like AMEX, Mastercard, Visa, and Discover. These card networks take a small assessment fee every time a business uses its network. This fee can range from .13% - .14% and is non-negotiable.

The card issuer - These are traditional banks (Wells Fargo, Chase, Capital One, etc.) that issue the card to the customer. They charge an interchange fee to cover their operating costs and fraud protection services ranging from 1.7% - 2% and are non-negotiable.

The payment processor - These companies are responsible for processing each credit card. They charge fees ranging from 1% - 2% to cover their operating costs.

Understanding Why Processing Fees are So High

Credit card processing fees can be expensive due to factors including interchange rates set by card issuers (Visa, MasterCard, etc.) and additional charges levied by merchant service providers.

There is also competition in the market which drives up costs as processors compete for customers with lower prices and fees, which reduces their overall profit margins resulting in higher costs for customers. Additionally, some businesses may be charged higher processing rates due to being classified as “high risk.”

Often, if your company is considered “high-risk,” additional costs associated with increased fraud protection measures are taken to process payments from these businesses safely and securely.

How to Eliminate Them with Zero Cost Credit Card Processing

Businesses can eliminate processing fees by opting for a zero cost credit card processing solution from a trusted merchant provider like ModPay Solutions. Zero cost credit card processing, or no fee card processing, allows businesses to accept credit cards without paying the fees associated with every transaction.

This makes it easier for new ventures, small businesses, or high risk companies that may not qualify for traditional merchant accounts to accept card payments and generate profit. These services also offer robust analytics tools for businesses to track customer spending habits and optimize their pricing strategies accordingly.


Zero cost credit card processing offers numerous benefits for businesses of all sizes and industries, making it an attractive option for entrepreneurs looking to save money while accepting card payments.

So if you’re tired of paying high transaction fees or dealing with complicated pricing structures, consider switching to zero cost payment processing today! With streamlined processes and convenient features, it’s never been easier for business owners to eliminate high credit card processing fees once and for all!

Would you like to know more about zero cost credit card processing?

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