Transaction Fee
A fixed dollar amount charged by payment processors for each transaction processed, typically ranging from $0.10 to $0.30 per transaction, charged in addition to percentage-based processing fees.
Transaction fees (also called per-transaction fees or authorization fees) are flat-rate charges assessed for each payment transaction regardless of the transaction amount. These fees are separate from and additional to percentage-based fees like interchange rates and processor markup. The standard transaction fee structure combines both components: for example, 2.9% + $0.30 means the merchant pays 2.9% of the transaction amount plus a flat $0.30 fee per transaction.
Transaction fees are intended to cover the processor's fixed costs associated with handling each transaction, including authorization requests, data transmission, network connectivity, fraud screening, and settlement processing. Because these operational costs exist regardless of transaction size, the flat fee component ensures processors cover their per-transaction expenses. For merchants, transaction fees have a disproportionate impact on small-ticket sales—a $0.30 transaction fee represents 3% of a $10 sale but only 0.3% of a $100 sale.
The transaction fee amount varies by payment processor, pricing model, and business type. Payment aggregators like Square and Stripe typically charge $0.30 per transaction for card-present and online transactions. Traditional merchant account processors may charge $0.10-$0.25 per authorization, with separate fees for batch settlement. Keyed/card-not-present transactions often carry higher transaction fees ($0.30-$0.50) than card-present transactions due to increased fraud risk. High-volume merchants can often negotiate lower per-transaction fees, while low-volume merchants typically pay standard rates.
For businesses with many small-ticket transactions (coffee shops, quick-service restaurants, convenience stores), transaction fees can significantly impact profitability. A coffee shop selling $4 lattes pays approximately 7.5% in transaction fees alone ($0.30 ÷ $4.00) before accounting for percentage-based fees. Some processors offer tiered transaction fee structures or fee caps for businesses with high transaction counts, and some merchants implement minimum purchase amounts for card payments to offset transaction fee impacts.
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3D Secure
An authentication protocol for online card transactions that adds an additional verification layer between the cardholder and issuing bank, shifting fraud liability from merchants to card issuers when properly implemented.
ACH Payment
Automated Clearing House payment is an electronic bank-to-bank payment method that transfers funds directly between bank accounts through the ACH network, typically used for direct deposits, bill payments, and recurring transactions.
Acquirer
A financial institution that processes credit card payments on behalf of merchants, maintains merchant accounts, and facilitates the settlement of funds from card-issuing banks to merchant bank accounts.
Address Verification Service (AVS)
A fraud prevention tool that compares the numeric portions of a billing address provided during a transaction against the address registered with the card-issuing bank, returning match result codes to help merchants assess transaction risk.
Aggregator
A payment service provider that enables multiple merchants to process card transactions under a single master merchant account rather than each merchant having their own dedicated merchant account, common with services like Square, Stripe, and PayPal.