Transaction Fee

A transaction fee is any charge that a financial institution or service provider levies upon a merchant or customer in connection with a payment or exchange of funds.

Merchants are commonly charged transaction fees in the form of payment processing fees, merchant account fees, assessment fees, and interchange fees. Some merchants pass the transaction costs of accepting credit cards onto consumers by imposing credit card surcharges.

Transaction fees vary widely between acquirers, payment providers, and card networks. In the context of credit card processing, transaction fees are most commonly structured as a percentage of the transaction amount, plus a fixed amount. These transaction fees can either be deducted from the transaction amount, presented separately in an invoice, or charged to a card. Transaction fees affect product pricing, a cardholder’s choice of payment methods, and a merchant’s profit margins.