Accepting credit card payments as a business-to-business (B2B) merchant makes doing business easier, yet it comes with various processing fees from credit card companies. While these B2B credit card processing fees serve to offset operating costs for credit card companies, they can quickly add up for merchants, eating away at their profit margins.
Whether you’re looking to offset payment costs or for alternatives to credit card payments, this article has everything you need to know about business credit card transaction fees, including strategies to keep your credit card processing fees low, like Invoiced’s Vendor Pay feature.
What are credit card processing fees?
Credit card processing fees reflect the associated charges merchants must pay to card issuers, card networks, and payment processors for each credit card transaction. In particular, these fees cover the underlying data processing, financial management, verification, and anti-fraud measures the participants took to manage the actual exchange of funds securely and consistently.
Each transaction comes with a predetermined cost by your merchant services provider. We will detail these charges later in the article, but generally, fees for B2B credit card processing include:
- Assessment fees: Processing costs are paid directly to the credit card network.
- Authorization fees: Supports the verification efforts confirming that a buyer account has sufficient credit or funds available to make the purchase.
- Credit card processor fees: These include the cost that a merchant pays a vendor to access their credit card processing services, particularly for moving money from the issuing bank to the acquiring bank.
- Interchange fees: Processing costs paid directly to the issuing bank that helps cover some of the risk associated with the transaction.
How are B2B credit card processing fees determined?
Payment processors consider multiple factors when determining custom fees associated with B2B payments. These factors include your industry, your customer’s credit history, the time you’ve been in business, and your sales totals. In terms of transaction volume, older and more successful businesses are typically considered less risky, translating to proportionally lower processing fees. Conversely, new or low-volume companies — or those that operate in a volatile industry — routinely face higher costs.
Similarly, in-person transactions where the card is physically presented to the seller routinely bear lower processing costs due to the reduced risk associated with in-person transactions.
For more information, check out our article on how B2B payments differ from consumer payments.
Types of credit card processing fees and their average fees
Interchange fees
Interchange fees typically comprise the bulk (around 80%) of the processing costs for each transaction. These charges compensate the card issuer — and, to a lesser extent, the seller’s payment processing company — for their operating costs and the risk of fraud.
According to data compiled by Forbes Advisor, the early 2024 per-transaction interchange fees for the major credit card carriers are:
Credit Card | Average Interchange Fees |
American Express | 1.43% + $.10 to 3.3% + $.10 |
Discover | 1.35% + $.05 to 2.4% + $.10 |
Mastercard | 1.15% + $.05 to 2.5% + $.10 |
Visa | 1.15% + $.05 to 2.4% + $.10 |
Assessment fees
These fees — roughly 10% of all processing costs — are service charges paid by merchants and vendors to accept card payments to individual credit card networks. Rather than being assessed on a per-transaction basis like interchange fees, these costs are determined as a percentage of the monthly sales processed for the card.
Forbes Advisor also reported the costs for assessment fees in early 2024:
Credit Card | Assessment Fees |
American Express | 0.15% |
Discover | 0.13% |
Mastercard | 0.1375% for transactions under $1,000 and 0.01% for transactions $1,000 or more |
Visa | 0.14% |
Credit card processor fees
Credit card processor fees make up roughly 7% of processing costs. These funds are paid by the seller to the payment processor, which oversees moving funds from the issuing bank to the acquiring bank. In some cases, this cost will be bundled with a payment gateway fee if the processor also offers gateway-related services, meaning they facilitate payment acceptance, send payment data to the relevant card network or bank, and pay out the appropriate funds to the seller.
Based on its research, Forbes Advisor learned that the makeup for these fees can vary widely between service providers, and in early 2024, the more popular card processors are charging:
Payment Processor | Swiped Transaction | Online Transaction | Monthly fee |
PayPal* | 2.99% + $.49 | 3.49% + $.49 | N/A |
Square* | 2.6% + $.10 | 2.9% + $.10 | N/A |
Helcim | .4% + $.08 | .5% + $.25 | N/A |
National Processing | .29% + $.07 | .29% + $.15 | $9.95 |
Payline | .2% + $.10 | .4% + $.20 | $10 for retail, $20 for online |
*Includes interchange fees bundled into a simple, flat rate.
Authorization fees
Typically, authorization fees are negotiable and cover the payment processor’s pre-authorization efforts to verify whether a buyer has sufficient funds or credit for the transaction with the card issuer. The card issuer can apply these charges to the processor, who ultimately passes the cost to the seller.
Unlike most other processing costs, authorization fees still must be paid even if the charge fails.
Other fees
In addition to the fees explained above, there are other potential fees you could be paying:
- Address verification system (AVS) fees: Apply only to manually entered transactions and cover the validation process of matching customer billing data with the card on file.
- Chargeback fees: Reflects an additional cost the merchant pays for each refund or dispute that requires a reversal of earlier payments.
- Markup fees: This relates to the additional cost for international transactions.
- Minimum fees: This applies only when you need to process a sufficient dollar amount to cover an established minimum threshold.
- Payment gateway fees: Covers the associated costs of passing funds from your merchant account to your payment processor.
- Swipe fees: Refers to the combined cost of assessment and interchange fees.
Equipment leasing fees: Covers the costs of point-of-sales terminals (e.g., card readers), software, or services used in processing transactions.
Who pays credit card processing fees?
For the most part, the B2B merchant or vendor bears these expenses. While the card issuer and card network don’t pay any fees, some costs are attributed to the processor. However, these charges are almost always passed to the merchant or vendor trying to accept the funds.
The merchant selling can, if they so choose, pass along some of these fees to the buyer using a process known as surcharging. In these cases, when a customer decides to pay via credit card, the overall cost of the transaction will increase—commonly labeled as a checkout fee—depending on what costs are being surcharged.
How to offset credit card processing fees for your business
1. Optimize your interchange fees
As previously mentioned, interchange fees vary depending on the underlying risk of the transaction. So, by delivering more than the minimum level of data required for the payment, you can provide the card issuer with increased assurance that the charge is, in fact, valid. Typically, this means including Level 2 or Level 3 transaction data, such as:
- Buyer industry
- Invoice numbers
- Shipping details
- Product descriptions
- Unit prices for each line item
- Ordered quantities
2. Implement a credit card surcharge
Rather than cover all the costs, consider adding a surcharge to pass along some of your processing fees to the buyer. Please note that surcharging is illegal in some locations throughout the United States and its territories or may face certain restrictions. Similarly, according to the Durbin amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, surcharging is not permitted for any debit card transactions.
So, if you are considering this approach, research any applicable laws first.
3. Negotiate whenever possible
While processing fees set by card issuers and card networks are typically applied universally to all businesses, many of the smaller or less common fees (e.g., chargeback, markup, payment gateway) that are paid out to processors can be negotiated down to a lower value, mainly if you deal with high transaction volumes. With processors, there’s a wide range of options in the market, so exploring and finding one with minimal additional fees is advisable.
4. Offer alternatives
Another method to reduce your B2B credit card charges is to direct buyers to other forms of payment. Checks and cash require little to no support costs, but they are also less convenient, dragging out transaction timelines or requiring in-person payment. Alternatively, automated clearing houses (ACH) and other direct debit transactions deliver flexibility and timeliness similar to credit cards at a lower price point.
Our new Vendor Pay feature helps streamline the management and submission of ACH transactions for users of our Accounts Receivable and Accounts Payable solutions. At a $1 flat fee, Vendor Pay keeps transaction costs low for sellers and offers greater control to buyers as they plan and execute their spending.
5. Limit chargebacks
Chargebacks occur when transactions must be canceled or reversed, typically due to an invoicing error or fraud. The associated fees are often punitive to encourage sellers to avoid these reversals.
Fortunately, you can reduce the likelihood of chargebacks by automating your invoice processes against errors. Consider using card readers with chip detection for in-person transactions. Similarly, you can limit card-not-present payments or require additional verification from the buyer to vet these types of exchanges.
6. Focus on security
According to a 2022 report from the Association of Certified Fraud Examiners (ACFE), among the 2,000+ real-world fraud cases that were evaluated, 10% involved some form of payment tampering. Similar research by the Association for Financial Professionals (AFP) identified checks, credit card payments, and wire transfers as the most common attack vectors for payment fraud, affecting 63%, 36%, and 31% of respondents, respectively.
Investing in anti-fraud strategies — such as integrated validation efforts like 2-way or 3-way matching for your invoices within your process workflows — can empower your A/P and A/R staff to more easily identify suspicious invoices. You might also consider investing in an address verification service to confirm the buyer’s billing address provided to the card issuer. Some card networks will offer lower interchange rates when sellers include an AVS check in their transactions.
7. Settle transactions quickly
As a best practice, you should complete your credit card captures at least once every 24 hours. Most card networks offer lower interchange rates for this promptness. However, if chargebacks are more common for your organization or industry — such as businesses that provide services or ship physical goods — it might make more fiscal sense to delay capture until the delivery is realized.
8. Automate your accounts
By choosing an automated B2B payment platform, you can reap several cost-saving and time-saving benefits connected with your accounts receivable (A/R) and accounts payable (A/P) efforts. Automated workflows help to accelerate payment timelines by cutting out unnecessary processing delays. These workflows include integrated verification processes that vet invoices against original purchase orders and other financial records.
Automation also removes much of the manual effort required throughout the procure-to-pay cycle, limiting the potential for human error or transcription mistakes to undermine the accuracy of both invoices and their payments.
Reduce fees and get paid faster with Invoiced
Whether your business centers around credit card charges, ACH transactions, or other exchange mediums, Invoiced can help you send and receive payments more quickly and efficiently. Our Accounts Receivable Automation software makes the entire invoice cycle much more painless by reducing the potential for errors, offloading processing efforts to an integrated self-service payment portal, and empowering you to close out more invoices thanks to our Smart Chasing dunning technology.
At the same time, our Accounts Payable Automation software delivers a secure financial network coupled with automated approval workflows that reduce the risk of duplicate payments, errors, and fraud from inflating your operating costs.
Even better, both tools extend access to our new Vendor Pay feature. Cut ACH processing costs to just $1 per transaction, leverage nuanced controls to choose when and how you pay your outstanding invoices, and protect your sensitive banking and account information behind a financial firewall.
Schedule a demo today to see how Invoiced can help your business reduce fees and get paid faster.
