Why a $9.99 Subscription Really Pays 5.9% in Card Fees

On a low-price subscription, the fixed cents on each renewal can outweigh the percentage.

A credit card transaction fee is what a business pays each time a customer's card is charged, and on a low-price subscription the real rate is rarely the one on the pricing page. The cause is arithmetic. Most flat-rate plans pair a percentage with a fixed number of cents, and those cents never shrink when the ticket does.

The scale of what is at stake is hard to overstate. In its 2024 report on swipe fees, the Congressional Research Service cited Federal Reserve data showing that credit cards carried $4.88 trillion across 51.1 billion transactions in 2021, more dollar value than debit despite fewer than half as many transactions. The same report noted that debit interchange has been capped since the Dodd-Frank Act of 2010, while recent credit card proposals target routing rules rather than a price cap. CRS also pointed to information asymmetries between merchants and their providers that "may reduce market efficiency."

That asymmetry lands hardest on small, repeating charges. A recurring biller sees one headline rate. Every renewal quietly pays more.

My aim here is to put the effective rate on the table, ticket by ticket, so you can price a plan against what card acceptance really costs. First, the pieces every fee is built from.

What makes up a credit card transaction fee?

Every card fee stacks interchange, network assessments and processor markup, and our underwriting team's view is that processors price the real shape of your business, not its label.

Before you compare any quote, break it into its parts:

1. Find the interchange line, which goes to the bank that issued your customer's card.
2. Find the assessment or network fees charged by the card brands.
3. Find the processor's own markup, the one part you can negotiate.
4. Note whether each part carries a fixed cents amount on top of its percentage.

The Congressional Research Service set out the total in its October 2024 report R48216. The merchant discount rate (MDR) is the per-transaction fee a merchant pays, and in 2024 CRS described it as "typically around 1%-3% per transaction." That fee is paid to the merchant's bank and then split into interchange fees, assessment fees and payment processing fees. CRS also put total swipe fees at around $160 billion in 2022, while cautioning that estimates vary.

The U.S. Chamber of Commerce's CO publication breaks the layers down further:

• Interchange ranges from 1% to 3%, is set by the card brands and is nonnegotiable.
• Assessment fees have base costs of 0.13% to 0.15% per transaction.
• Together, interchange and assessments make up roughly 70% to 90% of total processing cost.
• Processor markup is the only negotiable part of the fee.

Visa alone has over 150 interchange classifications. Mastercard has slightly fewer, with different rates for business and rewards cards. No merchant memorizes that grid, which is why most businesses end up judging processors by one headline number.

Conventional wisdom treats that percentage as the price. On small recurring charges, it isn't. CO describes typical fees as 1.5% to 3.5% "plus a flat rate per transaction," and that flat piece does not shrink when the ticket does. A $10 charge and a $1,000 charge pay the same fixed cents.

Business owners feel the confusion even when they cannot name its source. In public discussion, card fees get described as all over the place and untethered from any obvious cost. The structure explains most of that. Percentages scale with the sale. Fixed fees do not.

In our review of how acquirers board merchants, the same logic shows up on the underwriting side. An underwriter is not pricing a category name on an application. It is pricing how money actually moves: when customers pay, when they receive what they bought, and what balances sit in between. A subscription business that understands its own payment shape negotiates from a stronger position, and it can see its merchant payment processing options for what they really cost.

A review of 4 sources here points the same way. Ask any processor which interchange categories your recurring card-not-present charges will qualify for, because that answer sits upstream of every markup. Those network rates are set centrally: Visa and Mastercard each set swipe fee rates for every bank that issues cards under their brands, the Merchants Payments Coalition noted in 2025.

Why does a $9.99 subscription pay 5.9% on flat-rate pricing?

On 2.9% plus 30 cents, a flat rate NerdWallet was already listing in 2021, a $9.99 charge pays about 59 cents in fees, an effective 5.9%, because the fixed 30 cents outweighs the percentage itself.

Online card rates of 2.9% plus 30 cents recur across flat-rate processors, including Shopify's Basic plan, in a widely used fee table updated in March 2026. Flat-rate pricing bundles interchange, assessments and markup into that one price. Here is what it does to tickets of different sizes:

Look at the first row. The fixed 30 cents equals roughly 3.0% of a $9.99 charge, which is more than the 2.9% percentage. The fixed fee is about half of every dollar you pay in card fees on that plan. On a $100 order, the same 30 cents is a rounding error.

The common assumption is that a business on 2.9% pays about 3% for card acceptance. That holds for a mid-size ticket. It fails badly at the bottom of a pricing page, where a business selling a $9.99 plan pays nearly double the rate of a business selling a $100 one, on the identical processor agreement.

So why not just negotiate the fixed piece away? Federal reviewers have circled that question for years. GAO's November 2009 report, GAO-10-45, mandated by the CARD Act, found that merchants' costs of accepting credit cards had risen over time. Part of the increase, GAO said, may have come from how Visa and MasterCard competed for issuers by adding interchange categories and raising rates. Merchants also told GAO that network rules limited their ability to negotiate.

The picture had not changed much by June 2010. At a Senate subcommittee hearing on federal interchange costs, Sen. Richard Durbin said Visa and MasterCard controlled 80 percent of the credit and debit card markets. GAO testimony at the same hearing reported that merchants had "limited success" reducing their interchange fee costs.

To see your own version of this table, divide last month's total card fees by the number of charges and compare that cost with your cheapest plan's price. I'd put the effort somewhere else: the markup, the fixed cents a processor adds on top, and how many times a year each customer gets charged. Those three move the number.

Before comparing quotes, ask each processor to price a single $9.99 charge in cents, not as a percentage. Ask, too, whether the flat rate changes for card-on-file renewals, and what a dedicated merchant account with high-volume credit card processing terms would charge per renewal instead. Flat pricing still has a place. It just gets expensive fast once the average ticket drops below the fixed fee's reach, and the next question is where that line actually sits.

When does interchange-plus pricing pay off for a subscription business?

Interchange-plus pays off once volume is steady and the markup is thin, and it helps the smallest tickets most, even though the fixed cents never fully disappear.

Interchange-plus pricing passes the card networks' wholesale cost through at actual rates and adds a disclosed processor markup on top. A 2025 Merchant Maverick explainer gave a worked example: wholesale of 1.5% plus 10 cents, plus a processor markup of 0.25% plus 10 cents, "for a grand total of 1.75% plus 20 cents per transaction." Applied to the same tickets as the flat-rate table above, that example looks like this:

The savings are widest at the bottom. That is the core of the argument: low-price subscriptions gain more from interchange-plus than high-ticket sellers do, because the fixed cents are where flat pricing overcharges them. A 2024 restaurant-industry thread put the same logic plainly: 10 cents is 1% of a $10 bill and only 0.1% of a $100 one.

Still, 3.75% is not 1.5%. Even on interchange-plus, the $9.99 plan pays roughly double the rate of the annual plan, so billing frequency is the second lever. On flat pricing, twelve monthly $9.99 charges cost about $7.08 a year in fees, while one $119.88 annual charge costs about $3.78.

Card mix decides the rest. In that 2024 discussion, practitioners noted that rewards and corporate cards carry higher interchange, so a customer base heavy in premium cards erodes the interchange-plus advantage. A US payments-industry commenter in a separate 2024 r/restaurateur thread had seen merchants promised 1.5% end up near 3% once add-on fees landed. The same commenter's test was simple: effective rate equals total fees divided by total volume.

If I were pricing a $9.99 plan today, I would ask three things before signing:

1. What is the markup, in both percentage and cents, on card-not-present charges?
2. Will the processor commit in writing to no rate hikes?
3. What monthly and annual fees sit outside the quoted rate?

Waiting has a price, too. Casey's General Stores reported in its September 2026 8-K that same-store credit card fees added about 1.5 points of an 8.0% operating expense increase, with card fees up about 19.5% year over year to roughly $85.7 million. Fees are rising faster than sales.

Card stays the primary rail for almost every subscription business. Some also offer bank-account billing as a secondary option through Seamless ACH payments for customers who prefer it, which leaves the next question: why online charges cost more in the first place.

What should a subscription business do about card fees next?

Price the fixed cents, not the headline rate: model every plan's effective rate by ticket size, then negotiate interchange-plus or longer billing terms where small charges dominate.

The fixed fee will keep doing its quiet damage. Budget for that damage to grow: Visa and Mastercard credit swipe fees reached $111.2 billion in 2024, nearly triple the 2014 figure of $39.1 billion, the Merchants Payments Coalition reported in 2025.

None of this is new. Testimony at the June 2010 Senate hearing on interchange named card network rules as a major factor limiting card accepters' ability to negotiate lower interchange fees. Sen. Durbin framed the trade-off plainly: "There are benefits to being able to use plastic for transactions, but there are also some consequences."

I would not plan around the Credit Card Competition Act, which the same coalition backs: it would require banks with at least $100 billion in assets to let cards run over a second unaffiliated network, and in 2025 its sponsors were still preparing to reintroduce it. The levers a subscription business actually controls are the markup, the billing interval and the processor pricing the account. The evidence here holds no statement-level data on sub-$15 recurring tickets, so the most useful comparison is one you run yourself.

Pull three months of statements. Divide fees by volume, plan by plan. The questions below cover what merchants ask once they see that number.