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How to Read the Fine Print of Your Credit Card Processing Agreement
How to Read the Fine Print of Your Credit Card Processing Agreement
March 11, 2020 / Nadav Shemer
How to Read the Fine Print of Your Credit Card Processing Agreement
March 11, 2020 / Nadav Shemer

Credit card processing contracts can be complex and confusing, with potentially dozens of different fees buried in the fine print. The best way to protect your business from uncertainty is to learn about merchant service provider (MSP) fees and charges. That way, you know what to look for when reading your contract – and what to expect when your bill arrives.

On this page you’ll find a comprehensive guide to credit card processing fees and charges, including:

  • Transaction fees
  • Maintenance fee
  • Monthly minimum fee
  • PCI compliance fee
  • Equipment rental/purchase
  • Setup fee
  • Termination fee
  • Gateway fee
  • ACH fee
  • International payment fees
  • Statement fee
  • 1099-K fee
  • PCI non-compliance penalty
  • Chargebacks

Transaction fees

The one constant among all MSPs is the transaction fee. Whether you’re a small business taking in a few-thousand bucks a month or a large corporation collecting millions, your MSP will charge a fee for each transaction. However, the way each MSP structures their transaction fees can vary.

Transaction fees are made up of two components: the interchange fee (a percentage of the total transaction amount) and a small flat fee. The interchange fee consists of the credit card provider fee (e.g. Mastercard, Visa), plus the MSP’s own mark-up. Each credit card provider sets different interchange fees for different types of transactions (e.g. swipe, key-in, credit vs debit card), making the interchange fees unpredictable.

Some MSPs like Square, solve this unpredictability by charging the same transaction fee and absorbing any fluctuations themselves. For example, Square’s standard processing fee is 2.6% + 10c for contactless and swiped payments. Other MSPs, like Leaders and Payment Cloud, charge according to the credit card provider’s fees, meaning fees vary from transaction to transaction.

Our Top 3 Credit Card Processors

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  • Caters to all types of industries
  • Specializes in serving high-risk merchants
  • Wide selection of third-party hardware
  • high cancellation fees
Leaders Merchant Services is a credit card processor specializing in serving high-risk merchants (i.e. merchants at high risk of chargeback). It caters to companies of all sizes, from all types of industries, in all 50 states. It offers a wide selection of terminals and POS systems from third-party suppliers like Clover, Verifone, and more.
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  • High approval rates
  • Lowest-price guarantee
  • No long contract
  • Pricing isn’t very transparent
  • Unpredictable per-transaction fees
  • Lack of information about terminals
Flagship Merchant Services offers a solid credit card processing service, doing some things better and some things worse than its competitors. Like other authorized resellers of processing and POS solutions, it specializes in high-risk accounts. In Flagship’s case, it appears to have particular expertise in handling high-risk merchants with high volumes of online, phone, and mail-order transactions.
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  • Transparent pricing
  • 90-day risk-free tria
  • High level of customer satisfaction
  • High-risk businesses excluded
  • Requires a terminal from Payment Depot
Payment Depot aims to bring greater transparency to the credit card processing market. For just a small monthly membership fee, you get a large volume of transactions at wholesale interchange rates with no markups. Payment Depot has been around since 2013 and maintains one of the best customer satisfaction ratings in the industry.

Other Fees

Maintenance fees. Also known as a subscription fee, this is a monthly or annual fee for using the MSP’s credit card processing services.

Monthly minimum fee. Some MSPs make you commit to making a minimum amount of transactions every month. This can be beneficial for high-volume businesses because it can mean lower transaction fees. However, if you commit to a certain number of transactions – and then fail to meet your commitment – your MSP will probably charge a penalty fee.

PCI compliance fee. The Payment Card Industry (PCI) Data Security Standard is a standard mandated by the major credit card issuers requiring merchants and other businesses to handle credit card information in a secure manner. This naturally carries some costs, which many MSPs pass on to merchants through an annual PCI compliance fee. The fee is usually around $100 to $200.

Equipment rental/purchase. In order to process credit card payments, you need equipment. Processors and point-of-sale (POS) systems come in various shapes and sizes, from desktop to mobile card readers. Some MSPs give out card readers for free, but all other equipment carries a charge – whether a monthly rental charge or one-off purchase. Note that some MSPs charge a cancellation fee for not using equipment for the full lease period. Always read the fine print!

Setup fee. Whenever a service involves software/hardware installation, providers tend to charge a setup fee. MSPs are no different in this regard, often charging hundreds of dollars for helping you set up your payment processing. The good news is an increasing number of MSPs are waiving this fee – and the setup fee is negotiable when you sign.

Termination fee. Some (but not all) MSPs lock customers into contracts ranging from 1-5 years. Signing a long-term contract can get you a good deal, but it comes with downsides – namely a termination fee. If you don’t see your contract through to the end, you can expect to be charged a termination/cancellation fee amounting to $300 to $1,000.

Gateway fee. If your business has a website, then your MSP can set up an online checkout using what’s known as a payment gateway. The gateway used by most MSPs is In most cases, MSPs will charge a monthly fee for using the gateway. Some also charge a gateway setup fee, although it’s easy to have this waived. Online transactions are charged a separate transaction fee to regular transactions. As always, speak to your MSP and check the fine print for details.

ACH fee. Automated Clearing House (ACH) is an electronic network for financial transactions that processes large volumes of credit and debit transactions in batches. If your provider offers you ACH or batch payments, then it will charge a separate fee for this.

International payment fees. Credit card providers charge an additional fee for converting money from one currency to another, so naturally the MSPs pass on this fee to you as the merchant. If you accept foreign credit/debit cards, you can expect to be charged a higher interchange fee for each such transaction. Every MSP passes on the cost for international payments, even ones that charge a fixed transaction fee for all regular payments.

Statement fee. Like mobile, cable and internet companies, many MSPs charge a monthly fee (usually in the range of $5 to $10) for sending you invoices and statements. One way to get around this with some MSPs is to request e-statements.

1099-K fee. Form 1099-K is a form used to report payments received through payment card transactions and settlements from third-party payment services. The form is a requirement for businesses with more than 200 credit card transactions or $20,000 gross payments per year. Some MSPs charge for sending you this form.

PCI non-compliance penalty. The catch to PCI compliance is if you don’t roll with it, you’ll get fined. Penalties for not complying with payment industry standards can reach into the hundreds of dollars.

Chargebacks. A chargeback occurs when a credit-card provider instructs a business to refund a customer for a disputed or fraudulent transaction. If Mastercard, Visa or any other credit card provider awards a customer a chargeback on one of your transactions, your payments processor will pass the cost on to you and possibly add an additional fee. Chargebacks cost around $25-40 each (not including the loss of money you earning in the sale).


Look through reviews for merchant service providers and you’ll see that the thing people complain most about is hidden fees. It’s easy to feel ripped off by these fees, but the truth is you can avoid hidden fees in the majority of cases by familiarizing yourself with your fees and your contract. Before signing a contract, always go over the fine print with a fine-tooth comb. Also, don’t be afraid to negotiate with your provider if you think certain fees and charges in your contract aren’t justified.

By Nadav Shemer
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. Nadav writes for He enjoys writing about the latest innovations in financial services and products.
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