Card fees cost merchants a record $198 billion, and your share is worth auditing

U.S. merchants paid a record $198.25 billion in credit and debit card processing fees in 2025, according to Motley Fool’s 2026 analysis of industry data. In 2009 the figure was $62.1 billion. The volume of card payments grew, and so did the price of accepting them. For a small business, that shows up as a line on the statement that most owners pay on autopilot.

It is one of the few overhead costs that grows with your revenue and never sends you an invoice. You only see it as a slightly smaller deposit.

Where the fee actually comes from

Most of a card fee is not your processor’s. It is interchange, set by the card networks and paid to the bank that issued the customer’s card. The St. Louis Fed reported in April 2026 that U.S. banks collected nearly $66 billion in swipe fees in 2025, up from $64 billion in 2024 and $52 billion in 2021. Interchange now makes up about 11% of banks’ noninterest income.

Economists at the National Bureau of Economic Research put the average at roughly 1.9% of transaction value in a July 2026 working paper. Their finding on who pays is blunt: merchants raise prices for everyone to cover it, so customers paying cash or debit end up subsidizing customers with rewards cards.

You can’t negotiate interchange. That is the honest answer, and it is where most “reduce your fees” advice stops. But interchange is only part of what you pay. The rest is your processor’s markup and the way your sales reach the terminal, and both are yours to change.

The gap between tapped and keyed

Motley Fool’s June 2026 benchmark puts the effective cost of an in-person Visa, Mastercard or Discover sale at 1.79% plus 8 cents. A keyed or online sale runs 2.31% plus 25 cents. American Express in person comes in at 2.59% plus 8 cents.

Run that on an illustrative $500,000 in annual card sales across 5,000 tickets of $100:

• Tapped or dipped: $8,950 in percentage fees plus $400 in flat fees, or $9,350.
• Keyed or online: $11,550 plus $1,250, or $12,800.

The difference is $3,450 on the same revenue. It is not an argument to avoid online payments, which you probably need. It is an argument to notice when staff are typing in card numbers over the phone because the terminal is in the truck, or because the invoice has no pay link on it. A payment link on the invoice and a mobile reader in the field push sales toward the cheaper path without asking a single customer to behave differently.

Read the statement, then choose the pricing model

Motley Fool recommends interchange-plus pricing as the most transparent model, because it breaks out interchange, network assessments and the processor’s markup as separate lines. A flat-rate plan bundles all three into one number, which is simple and usually costs more as volume grows. The same analysis suggests subscription-style pricing can lower per-transaction costs once monthly volume passes roughly $10,000.

Do the math for your own volume before switching. If you process $3,000 a month, simplicity may be worth more than the savings. If you process $40,000, a half-point of markup is $200 a month, every month.

The check takes twenty minutes. Pull your last three statements. Find the effective rate (total fees divided by total card volume). Compare it against the 1.79% to 2.31% range above, adjusting for how much of your volume is keyed and how much is premium rewards cards, which run 2.50% to 2.65% plus fees. If you are well above that, your markup is the place to push.

Surcharging is a real option with real costs

Thirty-five percent of small businesses now add a credit card surcharge, up from 34% a year earlier, according to J.D. Power’s survey of about 4,400 U.S. small businesses, released in January 2026. The same survey found that 32% of surcharging businesses say customers cancel purchases when they see the fee.

“For merchants, the approach is not without risk,” said John Cabell, managing director of payments intelligence at J.D. Power. Richard Crone of Crone Consulting put the open question plainly: “What the study doesn’t measure … is what was the net return on investment from surcharging?”

The rules are specific. Stripe’s guidance notes that Visa caps surcharges at 3% or your actual cost of acceptance, whichever is lower, requires 30 days’ notice, and excludes debit cards. Ten states, including California, New York, Texas and Florida, restrict or ban surcharging. Check your state before you add a line to a receipt.

A surcharge is easiest to defend on large tickets and business customers. On a $4,000 job, a 2.5% fee is $100 and a customer will notice it. On a $15 sale it is 38 cents and nobody cares. Know which one your business looks like.

Where this meets the work we do

Payment cost is an operations problem disguised as a finance problem. The fee depends on how the sale is captured, and that is decided by your website, your invoices, your booking flow and the tools your crew carries. A site with a clear online payment path, invoices that go out automatically with a pay link, and a follow-up that reaches the customer before anyone has to key in a number: these are the same systems that shorten the time to get paid, and they happen to move sales onto cheaper rails.

That is the practical case. You are not trying to beat the card networks. You are trying to stop paying the keyed rate on sales that could have been tapped, and stop paying a markup you never compared.

What to do this week

Interchange is a fixed cost of taking cards. Everything around it is a choice. Pull three months of statements, work out your effective rate, and count how many sales were keyed. If the number surprises you, call your processor and ask for the interchange-plus quote in writing. Then put a pay link on your next invoice.

Sources

• Average Credit Card Processing Fees and Costs in America, Motley Fool (Jack Caporal), June 2026
• Banking Analytics: Credit and Debit Card Fees Collected by Banks Rose in 2025, Federal Reserve Bank of St. Louis (Julianne Baer), April 2026
• Who Pays for Payments?, National Bureau of Economic Research Working Paper 35067 (Egan, Matvos, Seru, Wang, Yao), July 2026
• Consumers push back on swipe fees, survey finds, Payments Dive, January 2026
• Surcharge fees: mechanics, legality and how to implement surcharging, Stripe, 2026