Payment gateway fees usually fall between 2.2% and 3.5% of the transaction amount, plus a flat fee of 20 to 30 cents per transaction
The exact amount depends on which gateway you use, what type of card the customer swipes, and whether you process the payment in person or online. A $100 credit card sale might cost you $2.50 to $3.50 in fees. A $10 sale might cost you 50 cents to $1.00. The percentage stays roughly the same, but the flat fee becomes a bigger bite on smaller transactions.
Payment gateways are the services that connect your cash register or website to the bank that actually moves the money. Stripe, Square, PayPal, and Authorize.net are common examples. They charge you for handling the transaction, managing fraud checks, and taking on the risk that a customer disputes the charge later.
Key Takeaways
- Most payment gateways charge between 2.2% and 3.5% of the sale amount plus a flat per-transaction fee of 20 to 30 cents.
- Credit card fees are higher than debit card fees, and online transactions usually cost more than in-person card swipes.
- The type of card matters: American Express and Discover typically cost more than Visa or Mastercard.
- Monthly subscription gateways (like Square Pro) have lower per-transaction rates but charge a fixed monthly cost instead.
How the percentage and flat fee work together
Payment gateways charge you in two pieces: a percentage of the sale and a fixed amount per transaction. The percentage covers the risk and processing work. The flat fee covers the gateway's cost to handle the transaction itself.
On a $50 sale at 2.9% plus 30 cents, you pay $1.45 plus $0.30 = $1.75 total. On a $500 sale at the same rate, you pay $14.50 plus $0.30 = $14.80. The percentage scales with the sale size, but the flat fee stays the same. This is why small-ticket businesses (coffee shops, farmers markets) feel the flat fee more sharply than large-ticket ones (furniture stores, contractors).
Why credit cards cost more than debit cards
Credit card transactions carry more risk for the payment processor. A customer can dispute a credit card charge months later and the processor has to investigate and potentially refund the money. Debit cards have fewer dispute protections, so the processor's risk is lower. Debit card fees are typically 1.5% to 2.2% plus a flat fee, while credit cards run 2.2% to 3.5% plus the same flat fee.
American Express and Discover cards cost more than Visa or Mastercard because they operate their own networks and pass higher costs to the processor. You might see Amex at 3.5% or higher, while Visa and Mastercard sit at 2.2% to 2.9%.
In-person versus online transaction costs
When a customer swipes or inserts their card in front of you, the processor can see the physical card and verify the cardholder is present. This is called a "card-present" transaction and it costs less because fraud risk is lower. Card-present transactions typically run 1.9% to 2.6% plus a flat fee.
Online transactions (card-not-present) are riskier because the processor cannot see the card or the person. Someone could use a stolen card number. Online rates are usually 2.9% to 3.5% plus a flat fee. Phone orders and mail orders also fall into the higher card-not-present category.
Monthly subscription plans versus pay-as-you-go
Some gateways offer a monthly subscription tier where you pay a fixed fee each month (often $20 to $100) and get a lower per-transaction rate in return. This works well if you process hundreds of transactions per month. Square Pro, for example, charges a monthly fee but reduces the per-transaction percentage.
Pay-as-you-go gateways charge nothing upfront and take their cut from each transaction. This works better if you process transactions sporadically or in low volume. The break-even point depends on your monthly transaction volume and the specific gateway's pricing.
What you actually see on your statement
Payment processors list fees in different ways. Some show the percentage and flat fee separately. Others bundle them into a single "discount rate" or "processing fee" line item. Some gateways also charge monthly statement fees (usually $5 to $10) or batch fees (a few cents per batch of transactions you settle).
Read your gateway's pricing page carefully and ask for a sample statement before you sign up. The advertised rate of 2.9% plus 30 cents might not be the full story if there are hidden monthly or batch fees. Some gateways also charge higher rates for certain card types or transaction types, so the actual cost varies from transaction to transaction.
How to compare gateways by total cost
To compare two gateways fairly, estimate your monthly transaction volume and mix. If you process 500 transactions per month averaging $50 each, calculate the total fees at each gateway. A gateway charging 2.9% plus 30 cents costs $7.25 per transaction on average ($2.90 + $0.30 + rounding), or $3,625 per month. A gateway charging 2.2% plus 20 cents costs $1.30 per transaction, or $650 per month. The difference matters.
Also factor in the features you need. Some gateways offer built-in invoicing, subscription billing, or fraud tools. Others charge extra for these. The cheapest gateway is not always the best choice if you have to buy add-ons elsewhere.
Frequently Asked Questions
Do I have to pay the gateway fee, or can I pass it to the customer?
You can pass the fee to the customer, but most payment networks prohibit charging different prices based on payment method. You can add a flat surcharge to all credit card purchases, or you can raise your prices across the board and absorb the fees yourself. Check your gateway's terms and your state's laws before adding a surcharge.
Why does my gateway charge different rates for different card types?
Card networks (Visa, Mastercard, American Express, Discover) set their own interchange rates, which are the fees the card issuer charges the processor. The processor passes these costs to you. Amex and Discover set higher rates than Visa and Mastercard, so your gateway charges you more for those cards.
Can I negotiate lower rates with my payment gateway?
If you process high volume (thousands of dollars per month), some gateways will negotiate custom rates. Most small businesses cannot negotiate because the gateway's margins are already thin. Switching to a cheaper gateway is usually faster than asking for a rate cut.
What is the difference between a payment gateway and a payment processor?
A payment gateway is the software that handles the transaction. A payment processor is the company that moves the money between banks. Some companies do both; others specialize in one. For your purposes, they charge the same fees and you deal with them the same way.
Do I pay fees on refunds?
Most gateways refund the percentage and flat fee when you refund a transaction. Some charge a small refund fee (usually 50 cents to $1). Check your gateway's refund policy before you sign up, especially if you expect high refund volume.