Top 11 Hidden Fees in Payment Processing

Credit card processing fees are simply part of doing business in the modern era. If you want to provide your customers with a smooth and convenient way to pay for goods or services, then you’re going to pay processing fees to accept card payments—there’s just no way around it.

With that said, you do have control over what types of fees you pay and your total costs associated with processing. 

While some charges, like interchange fees imposed at the card network level, are unavoidable, costs imposed by your payment processor are completely negotiable. 

Unfortunately, so many payment processors are intentionally deceptive with merchants. They like to advertise low rates and have sales reps promise that you’ll be paying the lowest possible fees, but then they bury hidden fees in your statements that ultimately inflate your average costs.

Trust me, with nearly a decade of experience in the payments space—advocating for merchants—this is something that I see on a daily basis. 

Below you’ll find the top 11 most common hidden fees in credit card processing. Be sure to check your most recent statement to see if you can spot any of these.

1. Authorization and Transaction Fees

Authorization fees and transaction fees are a normal part of doing business. You’ll pay a small per-transaction fee or per-authorization fee each time a card gets processed through your business.

So if you see one of these on your statements, don’t panic—you’re not being ripped off.

However, if you see both of these on your statements, then your processor is double-dipping and charging you twice for something they should only be charging once. 

While card authorization is a necessary part of processing payments (which will incur a cost), it doesn’t mean that you should also be paying per transaction. 

We find it extremely unethical that processors use this tactic, and it’s something that should be addressed immediately. You may even be entitled to recoup fees that you’ve already paid. 

2. Statement Fees

This one is actually quite crazy when you think about it. Some processors will actually charge you a fee every month for generating your statement.

I understand that lots of companies are going green and want to reduce the amount of paper they’re printing and mailing, which is totally understandable.

But I constantly see merchants being charged for a statement fee, even if they’re getting digital delivery. 

Nobody should be paying to receive statements. You have the full right to see a breakdown of your service charges without being forced to pay an additional fee, and this is definitely something that can be negotiated and removed from your bill each month. 

3. PCI Compliance Fees

PCI compliance fees can range anywhere from $20 to $125+ per month. The charge itself is tied to PCI DSS, short for “Payment Card Industry Data Security Standard.”

In simple terms, PCI compliance standards ensure that merchants keep card data and customer information safe when processing payments. To do this, businesses need to ensure they’re using updated hardware, software, and follow best practices for security. 

Here’s the real kicker. Most merchants are already PCI compliant. They just haven’t filled out a form to get the right certificate—and many processors offer a free PCI validation service for clients.

But those same processors will continue to charge PCI compliance fees as if something they’re doing is keeping you compliant. Or they’ll charge you PCI non-compliance fees until you’ve verified compliance. 

If you’re currently paying a PCI non-compliance fee, you can get it removed immediately upon filling out your PCI Self-Assessment Questionnaire. If you’ve already filled this out, obtained your certificate, and you’re fully compliant, but your processor is still charging you for PCI compliance, then you’re being taken advantage of. 

4. Early Termination Fees

Early termination fees come in all shapes and sizes. But the basic concept is the same across the board—if you try to cancel your merchant agreement prior to the term expiration, your processor charges a fee. 

These fees are designed to lock merchants into a long-term relationship with a processor and discourage them from switching to another provider. 

If you’re forced to pay a flat fee of $100, $200, or maybe $500 for canceling your contract early, it’s really not the end of the world. 

We generally advise our clients not to switch credit card processors unless there’s something terribly wrong happening. Otherwise, it’s much easier to save money on card processing by negotiating with your existing provider compared to switching to another one. 

So, where’s the hidden fee? Liquidated damages. 

Many processors sneak a liquidated damages clause into their contracts. So when a merchant tries to cancel early, they’re shocked to learn that they owe tens of thousands of dollars to their processor. 

Some processors don’t actually use the term “liquidated damages” in their terms and conditions, making it much more challenging to spot. 

Our team here at MCC is happy to review your merchant agreement to see if you have this clause in your contract. 

5. Monthly Minimum Fees

I’m sure you have at least one bank account that charges you a fee if you don’t maintain a certain balance each month. I know I do. 

Some processors apply this same concept, adding extra fees to your statement for failing to reach minimums.

For example, a processor may impose a $10,000 or $20,000 monthly minimum in total processing volume. If you don’t reach those numbers, they’ll still charge you as if you did. 

Let’s say you’re paying 2.5% to process payments—which is $500 on $20,000 in gross receipts. But if you only process $12,000 one month, your processor may still charge you a $500 monthly minimum. This would mean your processing rate just jumped to 4.16%, which is nearly double what you should be paying. 

This is the definition of kicking a merchant while they’re down. Not only did you have a slow month, but your processor is charging you even more for doing less. 

6. Monthly Settlement Fees

Batch fees are a common and legitimate cost of processing payments. Batches are typically submitted once per day and usually cost about $0.10 per batch—which is nothing to be alarmed about.

However, some processors like to try and squeeze some more juice from batches by charging an additional fee, commonly known as a monthly settlement charge. 

Monthly settlement fees tend to be much larger than batch fees and can even be $100 or more each month. 

But here’s the thing—you’ve already paid for your settlements with your daily batch fee. Even if your batch fee was $0.25 and you’re paying it daily for 30 days in a month. That’s less than $8. 

Now your processor wants to add on an additional monthly settlement fee of $95? This is just a sneaky way for them to take advantage of unsuspecting merchants with another hidden fee. 

7. Refund Fees

There’s a good chance you’re going to process refunds at some point—totally normal. 

When you processed the initial payment, you paid an interchange fee imposed by the card network. Merchants on an interchange-plus pricing plan are entitled to get that interchange fee back if it’s refunded by the card network. 

But many processors don’t return the funds and just pocket the money. 

It’s unethical, and most merchants don’t realize that it’s even happening to them. Check out our guide on how refunds impact processing fees to learn more about this concept in greater detail. 

8. Annual Fees

Annual fees are completely bogus. 

Depending on your processing volume, you’re likely paying upwards of $25,000 to $50,000 or more in processing fees. There’s no reason why you should have to pay an annual fee on top of this, just for the right to accept card payments.

This is a junk fee that should be immediately removed from your processing statement. 

9. “Padded” Assessment Fees

Similar to interchange fees, assessments are non-negotiable fees imposed by the credit card brands. But some processors add a few cents to the assessment fee on each transaction before passing it along to the merchant. 

For example, Visa recently implemented a new assessment fee of $0.0025 for certain transactions. Other Visa assessments are $0.0195 per transaction. 

Your processor might just round this up to $0.025 or $0.03—for every Visa transaction. 

An extra $0.02 may not seem like much. But it adds up quickly. Even if you’re only processing 100 transactions daily, that’s over $700 in just one year. For high-volume merchants, padded assessments can result in tens of thousands of additional fees every year. 

To the untrained eye, it can be really difficult to spot padded assessments because they’re positioned in a way that looks totally reasonable and non-negotiable. That’s why it’s a good idea to let our team here at MCC review your statements for free so we can spot any hidden charges. 

10. Terminal Fees

Terminal fees are commonly charged to brick-and-mortar businesses for accepting in-person payments through a credit card terminal or POS machine. 

So first things first, if you’re not processing payments in person, then you definitely shouldn’t be paying a terminal fee. But even if you do process payments through a brick-and-mortar establishment, you still shouldn’t have to pay for a terminal fee. 

Think about it. Your processor is already charging you markups and other fees to process payments. The terminal fee is just an extra charge for something that they’re already doing. 

11. Gateway Fees

Payment gateways are used to process transactions online. Ecommerce businesses need payment gateways to accept credit and debit card payments. 

But similar to terminals, you shouldn’t have to pay an extra fee just for the ability to process payments online—you’re already paying a fee each time a card gets processed. So you’re essentially being charged twice for your processor doing something once. 

Here’s an analogy to show how ridiculous a gateway fee is.

Imagine if every time you went to the grocery store, you had a miscellaneous “grocery fee” added to your bill at checkout. This is in addition to everything you purchased, and it’s there just because you’re at the grocery store. Doesn’t make any sense, does it? Same goes for the gateway fee. 

Final Thoughts

Don’t take your processing fees at face value and assume that your merchant account provider is being honest with you. 

If you haven’t had your statements reviewed by a professional merchant consultant, there’s a good chance you’ve got at least a few of these hidden fees baked into your statement—which could be costing you thousands of dollars or even tens of thousands every year. 

Check out our in-depth guide on how to avoid merchant fees as an additional resource. 

We’re also happy to offer a free audit analysis of your monthly statements. Our team will review what you’re paying, identify overages that you don’t need to pay, and then help negotiate those rates directly with your processor. So you can save money without having to switch.