Transaction Fees Explained: 4 Types of Online Transaction Fees

Transaction fees are ubiquitous in modern ecommerce. They are required for nearly every online purchase, covering the costs of services that allow businesses to process payments.

Surveys by the Worldpay Global Payments Report estimate that in 2025, credit cards were used for 32% of total ecommerce transactions, debit cards for 16%, and digital wallets—online payment services like Shop Pay and Apple Pay—were used for 40% of all sales. Each purchase requires the services of payment processors, banks, and card networks, and each service requires its own transaction fees.

This article will explore how transaction fees work, their key components, and how to reduce these business expenses.

What are transaction fees?

Transaction fees are the charges a business pays to receive and process customer payments. These fees exist because the process of accepting online payments requires multiple different services—such as payment processors, credit card networks, and banking services. Each service plays a key role in processing different types of payments, and each collects a fee.

For example, let’s say a customer makes a $100 purchase from your online store using a Visa credit card. After the customer enters their card details in the payment gateway, the payment processor sends the transaction through the Visa network to the customer’s issuing bank. The issuing bank checks the account and authorizes or declines the charge. If approved, the transaction is later settled through the card network and acquiring bank, and the funds are deposited into your merchant account, minus any fees incurred.

Each of these services plays a different role in a transaction’s journey, and many calculate their transaction fees differently. While some services charge a flat fee for each transaction, others charge a percentage of the total payment, offer monthly subscription plans, or use a hybrid pricing model with some combination of fee structures.

Types of transaction fees

• Payment processor and gateway fees
• Interchange fees
• Card network fees
• International and cross-border fees

Here are the different fees that are essential for processing ecommerce payments.

Payment processor and gateway fees

When someone orders a product, a payment gateway securely collects the customer’s payment details and delivers them to a payment processor, which routes them through the card network.

Payment processors and gateways are frequently bundled together, with one platform offering both services. The provider you choose impacts more than just the cost per transaction—payment processors can impact payout timing and your ability to track cash flow in real time. 

Shopify Payments, for example, charges fees ranging from 2.5% to 2.9%, plus 30¢ per transaction, depending on your plan. 

Interchange fees

Interchange fees make up the bulk of transaction fees for all card-based purchases, ranging from 70% to 90% of total transaction costs, according to the US Chamber of Commerce. These fees go to the cardholder’s bank, which authorizes transactions, supplies customer funds, and takes on the resultant financial risk. For merchants, these fees are often folded into broader payment processing fees and are non-negotiable.

Interchange fees vary depending on the payment method used, and they’re usually calculated as a percentage of each sale in addition to a fixed fee. For most debit card payments, US law limits interchange fees to 0.05%, plus a 21¢ per-transaction fee. Credit cards charge higher fees, often ranging from 1% to 3%. For card-not-present payments (when the purchase is not made in-person), the risk and fraud prevention expenses are higher and usually include higher interchange fees.

Card network fees

Card network fees, also known as assessment fees, are what the credit card company charges for routing transactions through their card network infrastructure. Credit card networks also help set rules and standards for transactions, including security standards, and dispute and settlement processes. Card network fees are typically much lower than interchange fees, and are set at similar rates across the major card companies, usually between 0.13% and 0.15%.

International and cross-border fees

International and cross-border fees can apply when a customer, credit card issuer, payment method, or currency falls outside of your business’s home country or market. A customer may use an international credit card that charges extra fees, or use a different currency for a purchase. Each of these additional transaction fees can eat into margins.

Shopify Payments, for example, charges currency conversion fees for international sellers ranging from 1.5% for US-based stores to 2% for stores in other regions.

How to reduce transaction fees

While you typically can’t negotiate costs such as interchange and card network fees, payment service providers are susceptible to market competition and may consider changes to your fee structure. Before negotiating, gather data about your business, such as your monthly transaction volume, growth rate, chargeback rate—the number of disputed or refunded purchases—and competitive quotes from other competing services.

On an episode of the Shopify Masters podcast, Wild cofounder Charlie Bowes-Lyon describes his approach to negotiating down fees. “Every time you’ve grown, go back and ask for more,” he says. “For example, with PayPal or any of our payment services, we would say, ‘OK, we’ve grown by X amount. Are you able to reduce your fees, and are you able to give us longer payment terms?’ And often the answer is no, but often the answer is yes. Certainly on the fees side."

You can also switch to a more affordable payment service provider or service tier to minimize debit and credit card processing fees. Plans are often tailored to accommodate businesses of diverse sizes, with fee structures that benefit different transaction needs.

For example, businesses using Shopify can choose from multiple pricing plans. While smaller businesses may opt for lower-tiered plans, Shopify’s higher tiers benefit from lower per-transaction fees. While Shopify merchants have the option of using third-party payment providers, the Shopify ecosystem is designed to manage multiple transaction services on one platform and avoid transaction fees associated with outside services.