If you are an ecommerce business and you are paying more than 2.00% + 0.20 per transaction (so $2.20 for a $100 transaction or $0.40 for a $10 transaction) you likely could get a better deal – more info below.

There are lots of costs involved in credit card processing.  But the largest is Interchange, which is the amount that the credit card processor (also called a merchant account provider) collects from the business accepting credit cards and passes along to Visa and Mastercard, who then in turn pass most of interchange along to the banks that issue credit cards.

If you accept credit cards, your interchange rate will vary depending on your transaction mix.  But we recently did analysis of all our e-commerce customers to determine their average interchange rate.  The result:

average per-item fee = $0.1226

average % fee = 1.844%

Credit card processors deserve a reasonable markup over the price of interchange.  They provide all the customer service, maintain the computer networks that send the transactions around, handle all the billing, etc.  In our opinion, a reasonable markup over interchange, depending on the size of your business, is 0.10% to 0.50% of volume, plus 0.05 to 0.20 per transaction.  If you are paying more than that, you might want to consider finding a new credit card processor.

If you don’t want to spend a lot of time and effort shopping, and you want to ensure that you get the best deal possible, use FeeFighters.com to get a fast, accurate, unbiased and apples-to-apples credit card processing comparison.

If you are not an ecommerce merchant, some additional data on average interchange rates is available in these articles: Average Interchange Rate and Average Credit Card Processing Costs.