Payment processing costs: 5 ways businesses can reduce them

The fees that businesses pay to move money have been rising–and those fees add up fast. In recent years, U.S. merchants have seen total credit card processing rates climb to 3.2–4.0% per transaction. 

Between the increase in card-based digital payments and rising fees, payment processing costs are now a major line item for many companies. 

In this article, we’ll break down exactly what payment processing costs are, why they vary so widely from method to method, and explore how businesses end up overpaying because of hidden fees and complexity. Later, we’ll show you how to estimate and reduce those costs using our free ACH payment cost calculator.

How payment processing costs are incurred

Payment processing costs are the fees a business pays each time it accepts a non-cash payment, whether from a credit card, debit card, ACH transfer, or digital wallet. While these fees might seem straightforward on a monthly statement, the underlying cost structure can be complex and confusing. 

That is because multiple parties are involved in moving money from a customer’s account to a business’s account, and each charges a fee. Payment processing costs for card networks typically include:

• Interchange fees: Set by card networks (Visa, Mastercard, American Express, Discover), interchange fees represent the largest portion of card-processing costs. These fees vary based on card type, transaction type, merchant category, and risk level.

• Processor markup: Payment processors add their own fees on top of interchange. This may be a percentage of the transaction amount, a flat per-transaction fee, or a blended rate. Markups can vary widely between providers. 

• Monthly or per-transaction fees: Many providers charge additional fees for account maintenance, gateway services, PCI DSS (Payment Card Industry Data Security Standard) compliance, or statement generation. For high-volume businesses, additional per-transaction fees can drastically increase the total cost of payment processing. 

• Chargebacks, refunds, and network assessments: Card networks and processors assess additional fees for disputes, retrievals, fraud monitoring, and recurring billing tools.  

It is worth noting that the cost structure for ACH processing differs significantly from that of credit cards. Instead of percentage-based fees tied to transaction amounts, ACH payment processors typically charge low, flat fees, making them cost-effective for large or recurring transactions.

Average costs: Credit cards vs ACH

Payment processing costs vary widely by payment type. Understanding these differences can help organizations benchmark their current costs and identify opportunities for savings.

Credit card processing costs

Credit cards are generally the most expensive payment method for businesses. Processing fees typically range from 1.5% to 3.5% per transaction, though certain premium or corporate cards may charge higher fees. 

Costs fluctuate based on card type, merchant category, fraud risk, and whether the transaction is card-present or card-not-present. Account maintenance or other monthly fees can push these rates even higher. For businesses with large average order values or high volumes, these percentage-based fees can significantly impact margins.

ACH payment processing costs

ACH processing uses a different fee structure. Instead of taking a percentage of the transaction amount, ACH processors generally charge low flat fees—often $0.20 to $1.50 per transfer, with enterprise rates falling even lower. Some features, such as same-day ACH, may have slightly higher rates. 

Additional fees may be added for returns, reversals, or chargebacks, but ACH is still generally the least expensive payment option. ACH is particularly cost-effective for recurring billing, invoicing, tuition payments, loan servicing, subscription services, and B2B transactions where ticket sizes are large and volume is consistent.

Why ACH payments are cost-effective

ACH payments are one of the most efficient and cost-effective ways for businesses to move money—especially compared with card networks and digital wallets. While card processing relies on percentage-based fees that scale with transaction size, ACH operates on a low, flat-fee model, making it far more economical for high-value or recurring transactions.

For example, a $1,000 card payment might cost a merchant $30 to $35 in card processing fees, but a typical ACH transfer costs well under $1, making it dramatically cheaper.

Settlement speed has improved as well. Same-day ACH now enables funds to move more quickly than before, giving businesses earlier access to cash while maintaining low processing costs. While authorization is instant, credit card settlement can take multiple days and can be more complex to reconcile. ACH does carry some risk considerations, such as insufficient-funds returns or authorization disputes, but overall fraud risk is often lower than for card transactions. 

In practice, many businesses see meaningful savings by shifting card volume to ACH or pay-by-bank solutions. Industry data shows that processing bank payments can cost 20% to 70% less than processing card payments, and Plaid’s internal research has found an average 40% reduction in payment processing costs when companies move from cards to pay by bank. 

These savings aren’t theoretical: the digital pharmacy Alto, for example, reports saving more than $20,000 per month after migrating a portion of its transactions to ACH.

5 ways businesses can reduce payment processing costs

Payment processing is often one of the least optimized expenses on a company’s P&L. Fees accumulate from several sources—networks, processors, gateways, and dispute systems—making the true costs difficult to nail down. The good news: most businesses can meaningfully reduce their payment processing costs with a structured approach.

1. Negotiate better processor rates

Many businesses accept their current pricing without question, even though payment processors often have significant flexibility to adjust rates. Review your statement for interchange-plus vs. blended pricing, assess markup levels, and validate any extra fees (gateway costs, PCI charges, statement fees).  

Reach out to your payment processor and ask about custom rates. Businesses processing high volumes or large-ticket transactions should review their pricing annually and renegotiate as volumes change.

2. Optimize routing and batching

Routing and timing strategies can reduce network-level costs. For example:

• Batching transactions can lower per-transaction fees and reduce settlement overhead.

• Using the most efficient payment rail for each payment type decreases network charges and processor markup.

• Reducing unnecessary retries—especially on subscriptions—avoids compounding processing and gateway fees.

Companies with complex payment systems can leverage automated routing logic to ensure each transaction is routed through the lowest-cost, highest-success path.

3. Shift high-volume payments to ACH

As transaction size or monthly volume increases, card processing fees scale quickly. Moving recurring, high-value, or invoice-driven payments to ACH can dramatically reduce transaction costs. 

With U.S. merchants spending an estimated $100 billion on payment processing fees in 2023 alone, converting even a portion of transactions to ACH or pay by bank can create substantial savings. Some merchants pair pay-by-bank acceptance with an incentive, such as a 1% discount for bank payments, and still see a net reduction in total processing costs.

4. Reduce failed payments and chargebacks

Payment failures come with both direct and indirect costs. Card failures often trigger processor fees, gateway retries, manual review time, and, in some cases, chargebacks. By improving bank account verification with real-time balance checks or address and identity validation tools, businesses can reduce operational costs and protect revenue. 

Minimizing disputes and fraudulent charges also lowers a company’s payment network risk score across the card and ACH rails, helping keep future pricing stable.

5. Find tools and consulting that help

Some businesses manage optimization internally, while others benefit from specialized tools or advisory support. Payment optimization platforms can identify fee irregularities, uncover savings opportunities, and streamline routing logic. 

Consultants can audit effective rates, negotiate with processors, and design a payment mix that reduces reliance on higher-cost methods. For companies undergoing rapid growth or digital transformation, external expertise can accelerate cost reduction while minimizing operational friction.

Try Plaid's ACH payment cost calculator

Companies that shift toward bank payments frequently report both lower processing costs and fewer failed transactions. That’s why companies like Alto and Wave have made ACH a core part of their billing strategy. 

Our ACH Payment Cost Calculator provides a fast, transparent way to benchmark what your organization is paying today and quantify what switching part of your volume to ACH could save. 

For companies refining their billing models or expanding subscription services, the calculator provides a straightforward way to evaluate savings. Even a partial move to ACH can lower expenses, boost predictability, and free up budget for growth.

→ Use the ACH Savings Calculator now.