Key takeaways
Credit card processing fees are a charge that merchants pay for accepting credit cards from their customers.
The credit card fees businesses pay may include assessment, interchange, and payment processor fees.
The amount a law firm may pay in credit card processing fees will vary based on several key factors.
According to our 2025 Legal Industry Report, 59% of respondents reported that accepting credit or debit cards increased their collection rate every month. In exchange for this benefit, law firms are required to pay credit card processing fees whenever they accept a credit card payment.
These fees can become a source of compliance and operational issues if you can’t stay on top of the charges. Credit card processors can add some transparency, but not all processors are equipped for all of the requirements that lawyers face. To get ahead of issues, read our guide to learn about processing fees and how they work before choosing a processor.
What is a credit card processing fee?
A credit card processing fee, also known as a credit card transaction fee, is a charge merchants pay whenever they accept a credit card payment.
The technical infrastructure that Visa, Mastercard, and other credit card networks use to process credit card transactions has to be built, maintained, and upgraded. All of this costs money, so credit card networks charge processing fees to make this infrastructure available to merchants while covering other operating costs.
What are the three components of a credit card processing fee?
There are three types of credit card processing fees: assessment fees, interchange fees, and payment processor fees. The sum of these is collectively called the discount rate.
Read on to learn what these three processing fees are, who charges the fees, and how much you should expect to pay when accepting a credit card payment.
Assessment fees
The assessment fee is a fee paid directly to Visa, Discover, MasterCard, or whichever credit card network you are using. This charge is a relatively small part of the discount rate.
Networks vary in how they calculate assessment fees. For example, they may charge higher rates for high-volume transactions or offer lower assessment fees for debit cards versus credit cards.
Fee details | Description |
Set by | Card company |
Paid to | Card company |
Purpose | Fees cover the costs of maintaining the credit card processing infrastructure |
Typical rates | 0.13% to 0.165% |
Interchange fees
Interchange fees are the most significant part of the discount rate and go toward credit card issuers, such as banks and other financial entities. In many cases, interchange fees are calculated as a percentage of the total transaction, with a fixed amount added.
As with assessment fees, interchange fees differ between issuers. Important factors can include:
Whether somebody completed a transaction with a debit or credit card
The merchant’s category code (MCC), categorizes businesses based on their industry, with riskier industries paying higher interchange fee rates
The credit network being used (i.e., it might be different when using Discover versus American Express)
Interchange fees fluctuate regularly. Credit card companies update their interchange fee rates twice a year, in April and October, to reflect changing costs, risks, and market conditions.
Fee details | Description |
Set by | Card company |
Paid to | Customer’s issuing bank |
Purpose | Fees that merchants pay to banks to cover the costs of issuing cards and processing credit card transactions |
Typical rates | 1.10% to 3.15% |
Payment processor fees
Payment processor fees go to the company that manages the logistics of processing credit card payments on behalf of your company. If you use Square, Helcim, Stax, or a similar service, an additional surcharge will be added to your discount rate.
Fee details | Description |
Set by | Credit card processor |
Paid to | Processor |
Purpose | Fees go toward processing companies that provide businesses with the infrastructure needed to accept customers’ credit card payments |
Typical rates | 2.29% to 4.99% |
How do credit card processing fees work?
While credit card processing for small businesses procedures can vary, it generally contains the following fundamental steps:
A cardholder presents their credit card to a merchant for payment.
The payment processor processes the payment.
The three credit card merchant fees businesses pay are allocated to the respective parties.
After paying the fees, the processor pays the net proceeds to the business.
Whenever a customer pays their bill with a credit card, it kicks off a process that flows through several parties:
The card issuer: These are usually large financial institutions, such as Chase or Citi, that issue credit cards to customers.
The card network: Companies that build infrastructures and networks, including Visa and Mastercard, allow banks and businesses to communicate.
The payment processor: Payment processors, including Stripe and PayPal, work with merchants to process transactions and receive payments.
Each of these three parties receives a payment for every credit card transaction. Once a merchant pays the credit card fees, they keep the remainder of the transaction proceeds.
How much are credit card processing fees?
Credit card processing fees vary greatly based on the factors that affect the assessment, interchange, and payment processor fees. They are a relatively straightforward calculation: You multiply the total value of your monthly credit card payments by the discount rate.
For example, if you have $1,000,000 in credit card transaction fees per month, a discount rate of 2% means you will owe $20,000 in credit card fees.
There are, of course, many factors to consider. Because discount rates are made up of different fees that vary between credit card networks, pinning down an exact discount rate is not easy.
Law firms that partner with 8am™ LawPay for their credit card processing have access to transparent processing fee pricing. Below are the current credit card processing rates charged by the major credit card processing companies:
Payment method | Processing fee |
Visa, Mastercard, or Discover | 2.99% processing + $0.30 per transaction |
American Express | 3.90% processing + $0.30 per transaction |
eCheck | 1% processing |
Pay Later | A legal fee lending solution: 4.95% |
Card brand pass-through fees | May apply |
What are the primary types of credit card processing pricing structures?
The three most common credit card processing pricing structures are tiered pricing, flat-rate pricing, and interchange-plus pricing. Understanding each pricing structure can help you decide which is right for your firm.
Tiered pricing
Tiered pricing is a structure where transactions are organized into three levels:
Qualified transactions
Mid-qualified transactions
Non-qualified transactions
Each tier has a different fee rate based on the type of card that the customer uses for payment. The table below illustrates the types of credit cards that fall into each category and how the fees compare.
Category | Qualified | Mid-Qualified | Non-Qualified |
Card types | Debit cards Credit cards without rewards programs | Credit cards with select types of rewards programs | Corporate credit cards Credit cards with especially large rewards programs |
Fee levels | Lowest fees | More expensive | Most expensive |
Pros | Cons |
Tends to be cheaper than flat-rate pricing | Tends to be more expensive than interchange-plus pricing |
Relatively simple structure | Pricing is often not transparent |
Flat-rate pricing
In an attorney flat-rate pricing structure, the processor charges you a consistent rate for handling credit card transactions.
The benefit of this arrangement, of course, is its predictability. You’ll typically have a pretty clear idea of what fees you’ll pay monthly.
The downside is that you can do nothing to lower your fee. If you’re operating on a tiered pricing structure, you could cut back on costs by refusing to accept cards in a certain tier, for example. With flat-rate pricing, this isn’t possible.
Pros | Cons |
Predictable payment that makes it easier to budget for processing fees | No flexibility to reduce fees as your law firm grows |
Payment structure is transparent and easy to understand | It may be more expensive for high-volume merchants |
Interchange-plus pricing
With interchange-plus pricing, the payment processor charges you the lowest interchange fee plus an additional fixed fee.
Savings will result from always getting the lowest interchange fee, and you’ll also know what fixed fee will be added to your bill. Interchange-plus pricing can make understanding your monthly credit card processing fees relatively straightforward.
However, multiple factors still impact your fees, including transaction volume and merchant categorization. Take this into account when shopping around for credit card processors.
Pros | Cons |
Scales well as transaction volumes increase over time | Pricing can be difficult to understand |
May have lower costs than flat-rate and tiered pricing structures | Fees will fluctuate, making it hard for merchants to budget for processing fees |
How can credit card processing fees negatively impact your law firm?
Credit card processing fees create additional financial and administrative burdens that reduce profits and increase compliance risks, including the following:
Reduced revenue
The most direct negative impact of processing fees is the reduction in your firm’s revenue. Since processing fees are often a fixed percentage of the transaction value, these costs continue to scale with your firm and will grow over time.
Complications with trust accounts
Unlike most merchants, credit card processing for law firms can create legal and ethical complications. Law firms generally have requirements that dictate how they handle clients’ assets. Bar associations in many jurisdictions typically require credit card processing fees to be withdrawn from the firm’s operating account.
When assets are commingled between the firm’s operating account and the client’s trust account, ethical violations occur, which can put the firm at risk with its state bar association.
Chargebacks and administrative burdens
A chargeback occurs when a customer disputes a charge and requests a refund from the bank that issued the credit card. For service companies, like law firms, chargebacks create additional risks. If the customer is successful with their chargeback, your firm may lose the revenue and have nothing to show for the time invested in that client.
Increased administrative and accounting complexity
To meet compliance requirements, law firms need to properly track all transaction fees, chargebacks, and other reporting around credit card processing fees. These financial records, coupled with more complicated accounting processes, require additional time and oversight among your administrative staff.
Choice of payment processor
Law firms have many unique legal, regulatory, and ethical standards that do not apply to most other retail and service providers. The processor you choose will need to understand the specific constraints law firms face in billing, like the rules surrounding IOLTA accounts.
Greater investment in IT solutions
To accept credit cards, law firms will want to comply with all security protocols of the Payment Card Industry Data Security Standard (PCI DSS). Your firm may need to invest in greater IT and network security solutions to fully comply with these requirements.
How can law firms decrease credit card processing fees?
Law firms may decrease credit card processing fees by considering flat-fee pricing structures, negotiating processing fees, and fully understanding how processing fees are calculated.
Here are some in-depth strategies and planning opportunities that may decrease credit card processing fees:
Pricing structure: Review the different pricing structures to see which type will offer the lowest expected fees.
Get quotes from processors: Shop around among different processors to see which will offer the most competitive rate.
Negotiate processing fees: Processing fees are the one negotiable charge. Ask whether the processor would remove or lower some of their fees, such as service and chargeback fees.
Surcharging: Passing some portion of the processing fees to clients can avoid these expenses. However, law firms cannot charge clients more than the total amount of the processing fee. Furthermore, some local jurisdictions may have more stringent surcharge rules. Before setting up a surcharge, check with your state bar association first.
Minimize chargebacks: Implement best practices to help prevent chargebacks with your firm. These include establishing clear expectations in writing, outlining your firm’s payment dispute process, and providing excellent customer service.
Manage credit card processing fees with LawPay
Credit card processing fees are an unavoidable part of accepting credit card payments. Understanding all of the fees, complexities, and administrative costs will help you and your firm better judge the pros and cons of accepting credit card payments.
If you’re considering credit card payments for your law firm, LawPay makes it easy. With a wide variety of customizable payment options, a user-friendly interface to manage payments, and no special card-reader equipment required, LawPay can make integrating credit cards a breeze.
Check out our features and sign up today to get started.
Schedule a demo to see what LawPay can offer your firm.
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About the author
Trent Fowler