Credit Card Processing Fees: Rates, Structures & Reducing Costs

Accepting credit cards is no longer optional in B2B. But it does come at a cost. In 2024, U.S. businesses paid over $187 billion in processing fees a number that continues to climb as card usage expands across industries, including B2B.

For finance leaders, these fees are often treated as the cost of doing business. But they don't have to be. Left unmanaged, they quietly erode your margins. Managed well, they can become a controllable lever for cash flow and cost efficiency.

In this guide, we break down the true components of processing fees, demystifying what they actually include beyond the headline rate. We explain why most pricing structures in the payments industry are inherently misleading, making it difficult for businesses to compare providers or understand their real costs. You'll learn what red flags to look for in your statements and how to identify hidden markups or fees. Most importantly, we outline how you can take back control of your payments cost structure, giving you the transparency and leverage needed to optimize your bottom line. Keep reading to know more about:

• What are credit card processing fees?

• Types of credit card processing fee structures

• Why most B2B companies overpay?

• How to save on credit card processing fees (without slowing down cash collection)

• Why it matters

What Are Credit Card Processing Fees?

Every time a customer pays by card, multiple players take a cut:

Interchange Fees: Paid to the cardholder's issuing bank, these fees vary based on card type (debit, credit, rewards), transaction method (online, in-store, keyed), and business category. These are the largest portion of processing costs.

Assessment Fees: Non-negotiable fees charged by card networks like Visa or Mastercard. Typically a small fixed percentage of each transaction (e.g., 0.13% to 0.15%).

Payment Processor Fees: The markup added by platforms like Stripe, PayPal, or Square. This is the only negotiable part of the fee stack and varies by provider and pricing model.

These costs typically add up to anywhere from 3.5% to 5% of the transaction but the real number depends on your pricing model, card mix, transaction types, and negotiation leverage.

Fees may also include chargeback penalties, PCI compliance costs, equipment rentals, monthly service fees, and more. Without visibility, these hidden charges quietly add up.

Types of Credit Card Processing Fee Structures

Flat-Rate (or Blended) Pricing: One simple fee for all transactions. While marketed as predictable, these often exclude specific cards or scenarios, inflating the effective rate.

Tiered Pricing: Transactions are grouped into "qualified," "mid-qualified," or "non-qualified" tiers with different rates. It’s opaque and hard to predict, often leading to overpayment.

Interchange-Plus Pricing: You pay actual interchange + a fixed markup. Transparent in theory, but complex to reconcile and usually found in enterprises with payment analysts and high volume.

Subscription-Based Pricing: You pay a monthly fee for access to wholesale interchange rates + a small markup. Useful at high volume, but risky if your transaction count varies.

Why Most B2B Companies Overpay

Traditional processors often bundle in opaque fees:

• "Flat rate" that excludes high-fee cards

• Monthly service and PCI fees that go unused

• Chargeback fees even on resolved disputes

• Tiered pricing models that change unpredictably

Finance teams rarely have time to audit these in detail and processors know it. The result is silent margin erosion.

How to Save on Credit Card Processing Fees (Without Slowing Down Cash Collection)

Reducing costs doesn’t have to mean sacrificing speed or customer experience. Modern finance teams are optimizing their payment mix to collect cash faster, stay in control, and reduce processing costs intelligently. Here’s how they’re doing it with Payments by Upflow:

1. Pass Convenience Fees to Customers (Legally and Transparently)

Most B2B businesses still absorb credit card fees by default. But with Upflow’s Convenience Fees feature, you can legally and transparently pass those costs on to customers at checkout. It’s a win-win: your customer still gets the ease and speed of paying by card, while you recover the typical 3%–3.5% + $0.30 fee (depending on card type and jurisdiction) fee that would otherwise come out of your revenue.

How to Pass on Credit Card Processing Fees to Customers

Credit card fees can quietly erode your margins especially for high-value B2B transactions. Upflow’s Convenience Fees feature lets you pass the exact card fee to your customer at checkout, keeping your invoice amount intact.

It works like this:

1. Customers see a clear surcharge before completing payment

2. The fee is auto-calculated based on card type and jurisdiction

3. If customers pay by ACH or another low-cost method, no fee is applied

4. All fees are logged and written back to your ERP for clean reconciliation

2. Accept Credit Cards and Absorb the Fee (It Still Pays Off)

Even if you decide to absorb credit card fees, offering card payments remains one of the most effective ways to accelerate cash collection. According to Upflow’s State of B2B Payments, companies with a payment mix where over 40% of payments are made by credit card see a drastic reduction in median payment delay from 15 days down to just 1 day.

Compared to checks or manual ACH transfers, this drastically reduces your DSO, gives you faster access to working capital, and strengthens your customer relationships with a modern, user-friendly experience.

3. Offer ACH Debit for Cost-Effective High-Value Payments

ACH Direct Debit is ideal for large invoices and recurring billing where card fees would significantly impact margins. With Upflow, ACH is automated, secure, and priced between $0.20 and $1.50 per transaction, depending on volume. Customers can authorize payment with a single click, no bank login or friction.

For many businesses, ACH complements card payments perfectly, lowering your total cost of acceptance without adding friction for customers.

4. Orchestrate the Right Payment Mix with FRM

The real unlock comes not from offering more payment methods alone, but from managing them strategically. With Upflow’s Financial Relationship Management (FRM) approach, you can segment customers and intelligently steer them towards the most cost-effective option without slowing down collections. Examples include:

• Encouraging habitual check payers to shift online through reminders and tailored nudges

• Promoting card-based Autopay to customers who benefit from speed and convenience

• Restricting expensive card payments for very large invoices while keeping them available for smaller, time-sensitive invoices

This FRM layer turns payments from a cost center into a controllable layer. Case in point: Veryable, a fast-scaling on-demand labor marketplace, used Upflow to shift 15% of payments online in just a few months reducing their DSO from 35 to 22 days. This wasn’t just about adding payment methods it was about orchestrating the right mix to improve speed, reduce costs, and streamline cash flow.

5. Enable AutoPay to Eliminate Collections Conversations

Upflow’s AutoPay feature lets customers securely store a payment method and automatically pay invoices on the due date. It’s the most foolproof way to get paid on time every time.

AutoPay eliminates the need for collections outreach, reduces AR overhead, and creates the perfect customer experience: no awkward reminders, no delays, no friction. It also strengthens your position in commercial negotiations once a card mandate is in place, customers are less able (or inclined) to withhold payment due to unrelated disputes.

Payments by Upflow is purpose-built for B2B finance teams that want to reduce processing fees, accelerate collections, and modernize the way they get paid. From surcharging and smart routing to AutoPay and ERP integrations, we help you turn payments into a growth lever not a cost centre.

Why It Matters

Payment processing is often overlooked in B2B but it’s one of the few levers finance and revenue teams can pull to reduce cost without cutting headcount or budget.

The compounding effect is substantial. A company processing $10 million annually at 4% fees pays $400,000 in processing costs. Optimizing that rate to 2.5% through strategic payment mix saves $150,000 annually. That’s real money that flows directly to your bottom line.

By switching to a modern payments stack like Upflow, businesses:

• Save 30–50% on fees via payment mix optimization and cost recovery

• Get paid faster through AutoPay and digitization

• Improve forecasting accuracy and control

In a margin-conscious environment, that can be the difference between growth and stagnation. Payment optimization gives finance teams one of the few opportunities to reduce costs while simultaneously improving customer experience and operational efficiency.

Ready To Take Control of Your Payment Costs?

Stop letting processing fees eat into your margins. Upflow's Payment platform helps B2B companies reduce processing costs by up to 50% while accelerating collections and improving customer experience. Join hundreds of finance teams who've already optimized their payment operations and recovered thousands in hidden fees.

Schedule a demo today to see how much you could save.

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