How high of a fee do businesses pay to accept cards?

Your Business Credit columnist Elaine Pofeldt
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for

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Question Dear Your Business Credit,
I used my Visa to make a payment to my air conditioning company. I was told that my $29 payment was going to cost them $14 so they didn’t want to accept it. Is that true? A charge of $14 on a $29 charge? – Patricia

Answer Dear Patricia,
When I saw your note, my first instinct was that the air-conditioning company was probably exaggerating what it is paying and just wanted you to pay in cash. As Mary Beth Stenzel, owner of credit card payment service Merchant Savers, pointed out in an email, the basic processing fee for a $29 charge would have been about .65 on a basic Visa card. (That would be just under 2.25 percent).

To my surprise, when I consulted with several experts, I found out that a $14 fee – while unlikely – is in the realm of possibility.

"It may be that the air-conditioning company just has the wrong credit card processor,” Jeff White, a financial analyst with, said in an email. “Most are very reasonable on rates these days because they're competing against online processing companies with affordable rates. However, there are still some that exist which convince businesses that are not as familiar running credit cards on a consistent basis to sign up with them, and they charge them enormous markup fees.”

As White explained, the processing costs on a credit card are made up of two main fees: (1) The base cost, which is set by Visa or MasterCard, or whoever originated the card being processed, and (2) “markup fees” set by the processor.

“The markup fees have no limit, and are just basically subject to the agreement between the merchant and the processor,” White said.

As a result, the fees the air-conditioning company cited to you could be correct. “If they are, then your air-conditioning company needs to find a new credit card processor,” he said. (Merchants who believe they are overpaying their merchant services provider can find tips on how to shop around for one in “Is it time to negotiate a new merchant account?”)

Then again, White noted, the air-conditioning company might be using high fees as an excuse because it doesn’t want to pay any fees at all.

It’s not clear if the air-conditioning company accepts Visa cards in certain situations or just doesn’t accept them at all. If the company does accept Visa cards but discouraged you in this instance because the purchase was small and the fees would have been disproportionate to the total bill, then it may have been violating Visa’s rules for merchants. “If they accept credit cards, they can only decline payment with credit cards if the transaction is less than $10,” noted Tony DeSanctis, senior director of payments at Cornerstone Advisors, a consulting and research firm.

If you do business with this air-conditioning company on an ongoing basis and know that they do accept Visa in general, you could point this out and conceivably call the Visa phone number on your card to complain. However, it isn’t always easy to find good contractors, and this would probably hurt the merchant, so you may want to keep that in mind.

If you like working with the air-conditioning company for the most part, then you might be better off by offering to pay by check. If you would rather pay electronically, you could point out that if the company sends you an invoice using common accounting software such as QuickBooks or FreshBooks, you can pay them with a free ACH payment directly from your bank account. It’s not easy for small businesses to keep up with all of the options available to them, so they may be happy to know there’s another way to accept electronic payments.

See related: Should a business add a surcharge for card transactions?, What is a service charge and when is it too high?  

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Updated: 03-23-2019