Understanding Credit Card Processing Fees

25953098 - hands holding bank cards in flat design style.

25953098 - hands holding bank cards in flat design style.

Credit card processing fees can be extremely complex and overwhelming for merchants to understand. Unfortunately, they are a reality of doing business if you wish to accept credit card payments from your customers. If you are looking to choose a payment processing company or are interested in making a switch, it’s essential that you understand the different types of fees and how they work. With a clear picture of what these fees mean, you can get a better idea of just what you’ll be paying on a monthly basis.

Who is Involved?

First, we’ll take a look at the different parties involved in credit card processing who may charge fees:

Card associations like MasterCard and Visa and issuing banks who have issued the credit card to your customer.

  • These parties will set interchange rates and “pass through” fees for transactions on each type of card they offer. All merchant account providers pay the same wholesale price to the card association.

Payment processors or merchant account providers who route transactions to the card association’s network and provide funds to your bank account.

  • Payment processing companies may charge fixed fees for routing transactions such as an authorization fee.

Payment gateways who route transactions through your online payment system to your credit card processing company.

  • Gateways may charge you a number of fees including a monthly fee and per-transaction fees for routing your transactions.

Fixed & Variable Credit Card Processing Fees

The bulk of your credit card processing fees will be made up of base charges that do not change. These fixed fees, such as interchange rates and assessments will be the same, no matter which credit card processing company you choose. Interchange rates are set by the credit card companies, and payment processors cannot give you a better deal on these fees.

Markup fees are the only area in which you as a merchant can control your payment processing costs. When it comes to terminal fees, payment gateway fees, minimum fees, reporting fees and early termination fees, you may be able to negotiate a lower rate. These costs may vary from month to month depending on the types and volume of transactions you are processing.

Choosing a Payment Processing Company

When it comes to credit card processing fees, simpler is often better. It’s difficult for merchants to navigate the complicated world of fee structures and rates. If you are searching for the right payment processing company for your needs, look for a provider who offers interchange + pricing. This method of pricing is highly transparent, allowing merchants to better understand exactly which credit card processing fees they are paying, and experience true cost savings.

For more information on credit card processing fees and how they work, contact Swift Payments today. We’d be happy to explain our fee structure and help you understand why the interchange + model is right for your business.



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