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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
November 14, 2022 / Catherine Miller
How to Read the Fine Print of Your Credit Card Processing Agreement
November 14, 2022 / Catherine Miller


When you’re running a business, signing up with a credit card processor can be an essential step in getting ready to receive payments. But credit card processing contracts can be confusing, with lots of different fees hidden in dense agreements. Misunderstanding the fees you owe could give you a nasty shock when you get the bill and even leave your business at risk if you can’t meet the amount. That’s why it’s important to understand merchant service provider (MSP) fees and charges—luckily, we’re on hand to give you a rundown of the most common types.

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

Whenever someone makes a payment to your business, you will need to pay your MSP a transaction fee—the one constant among all providers. This goes for all transaction types, whether you’re selling coffee for a few bucks or running a large corporation. However, the way each MSP structures its transaction fees can vary.

Credit card companies charge a fee to the MSP for processing payments, which is passed onto you in the form of an interchange fee—sometimes with markup. 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 or Payment Depot—make pricing easier to predict by charging the same transaction fee at a flat rate, absorbing fluctuations. For example, Square’s standard processing fee is 2.6% + 10c for contactless and swiped payments. This can be useful for growing businesses where every cent counts. Other MSPs—like Leaders and Payment Cloud—charge according to the credit card provider’s fees, meaning fees vary from transaction to transaction. This can be more cost-effective for some businesses operating at scale.

Compare the best credit card processors using our chart , and select the service that’s best for your business.

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. This may be in addition or separate from transaction fees.

Monthly minimum fee . Some MSPs make you commit to a minimum number 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 complete these—your MSP may charge a penalty fee.

PCI compliance fee . The Payment Card Industry (PCI) Data Security Standard helps ensure businesses are handling customers’ data safely and securely. Major credit card companies require businesses that are using their services to adhere to these standards, and some MSPs offer services to make sure—most of—this is fulfilled. For example, they might offer security scans, specialized support, or insurance against data breaches. The cost is then passed on to you. MSPs charge you an annual PCI compliance fee—typically 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 supply a limited number of card readers for free, but all other equipment carries a charge—either in the form of a monthly rental charge or a one-off purchase. The full price will depend on the type and number of devices you need for your business. Be aware that canceling your rental before the end of your agreed term may incur a penalty fee.

Setup fee . Some providers may charge a setup or onboarding fee for installing software and/or hardware. This can run to hundreds of dollars in some cases. The good news is that an increasing number of MSPs are waiving this fee. You may also be able to negotiate this if you’re going to provide the MSP with a lot of business.

Termination fee . Some MSPs lock customers into contracts ranging from 1-5 years. Signing a long-term contract can get you a good deal, but it can come with a termination fee that you’ll have to pay if you pull out of the contract too soon. From some providers, you can expect to be charged a termination/cancellation fee of $300 to $1,000. So, for small businesses with untested customer bases, you may want to avoid tying yourself into a long-term commitment until you’re more established.

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 payment gateway connects your payment processor/MSP to your merchant—bank—account when an online transaction takes place. It also links up the customer’s account to the MSP, so money can be transferred. In most cases, MSPs will charge a monthly fee for using the gateway. Some also charge a gateway setup fee. Online transactions may therefore be charged at a different rate than in-person ones. As always, speak to your MSP and check the fine print for details.

ACH fee . An 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. The fee tends to be flat, either as a % of each transaction or a fixed amount.

International payment fees . Credit card providers charge an additional fee for converting money from one currency to another, so most MSPs pass on this fee to you. This will be either as part of a fixed transaction fee or as a separate element of a fluctuating charge.

Statement fee . You might be charged a monthly fee—usually in the range of $5 to $10—for receiving invoices and statements on paper. One way to get around this with some MSPs is to request e-statements.

1099-K fee . Form 1099-K is used to report payments received through payment card transactions and settlements from third-party payment services. Your MSP will prepare the form with a report of transactions over the year, and your merchant account will report your sales and file the form with the IRS on your behalf. It’s a requirement if your business deals 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 . Many MSPs help you stay PCI compliant, but if you don’t meet the standards you could be charged a hefty sum. For example, some providers charge a monthly fee—around $30—until you prove you’ve become compliant. You could even get your account closed if you don’t take action. It’s worth paying attention to the standards to make sure you aren’t stung by a large penalty.

Chargebacks . If a fraudulent or illegal transaction takes place, the credit card company may need to refund the customer. This is known as a chargeback. If a credit card provider processes a chargeback on one of your transactions, your MSP will pass the cost on to you and may add a fee. Chargebacks cost around $25-40 each—not including your lost sale.


It’s really important to understand the different fees involved in using a payment processing service. This will allow you to compare providers and find the charging structure that works best for your business. Don’t forget to check the fine print to avoid surprises.

By Catherine Miller
Catherine Miller is a lead member of personal finance and pension innovator Maji, where she’s responsible for content creation and running Maji’s personal finance masterclass, among others. Miller also holds degrees in English and education, and worked as a teacher before moving into finance. Today, she combines aspects of education and personal finance to help readers make better decisions in finance and beyond.