Free Credit Card Processing for Small Business (2026 Guide)

Type "free credit card processing for small business" into Google, and you’ll find thousands of results, but in reality, there’s no such thing. Whether it’s you or a customer, someone always ends up paying the cost of processing a transaction over the intricate web of infrastructure that safely gets money from one account to another. 

We know those fees add up quickly.

Whether you’re already processing credit cards and trying to lower your fees, or if you're just looking for a simple and low-cost way for your business to accept card payments, you’re in the right place. 

In this article, we’ll explain three common pricing models for credit card processing and offer some tips for how to lower your costs on credit card fees if you’re a retailer, restaurant or other consumer-facing business. Whether you’re looking to pass credit card fees on to a customer, eager to start making $0 ACH payments with Nickel, or hoping to learn about other tricks that can help you eliminate unnecessary transaction costs, this article has you covered.

How "Free Credit Card Processing" Actually Works

Every credit card transaction includes interchange fees. These fees vary by card type and the type of purchase, but they typically run between 1.5% and 2.5% of the payment total. They cover the cost of accepting and authorizing credit card payments, but they also generate money for the card companies.

Visa and Mastercard set these costs, which go to the card-issuing bank (Chase, Capital One, etc.). They're baked into the card network system that undergirds every payment and there’s no way around them.

On top of interchange fees, most payment processors add a small markup that enables them to also make some money on transactions.

In total, these fees usually mean that someone will have to pay an additional 2.5%-3.5% of the transaction cost to cover the interchange and processing fees.

Payment systems are set up so that you, the merchant, will cover those costs. But you don’t have to pay those fees.

Can I Pass Through Fees?

This is where the “zero fee” processing comes into play. When a payment platform claims to offer no fee processing, they’re not actually getting rid of the costs associated with a transaction.

As we noted above, there's always an interchange fee associated with credit card processing. But the businesses offering free processing let you pass the cost to your customer as a surcharge, so that they cover the associated transaction costs.

Credit card surcharging is pretty straightforward. All major credit cards, Visa, Mastercard, American Express, and Discover, allow surcharging under their network rules. But you have to make sure you’re following local regulations. 

Surcharging Laws You Need to Follow

In recent years, businesses have been asking customers to pay for transaction costs a lot more.  More than a third of small companies use credit card surcharges, up from just 5 percent in 2021, according to J.D. Power. As this trend continues, some states that previously restricted the practice are loosening up laws around it and allowing surcharging.

Even so, the practice is not legal everywhere, and there are some restrictions in place about what you can and can’t do when passing fees along to customers.

Here’s some common regulations you should be considering to ensure you’re compliant with restrictions:

• Maximum surcharge: Capped at 4% across the country, but Visa limits it to 3%
• Debit cards: Cannot be surcharged (prohibited under the Durbin Amendment)
• Disclosure required: In many states, you must post signage at point of sale and show the surcharge on receipts
• State restrictions: Some states prohibit or limit surcharging
• Registration: Some card networks require you to register before surcharging

States Where Credit Card Surcharging Is Prohibited

Regulations on signage requirements, registration, and allowed charges vary widely by state. Colorado, for example, prohibits surcharges above 2%, which is below the rate permitted by many other states. Charges in Georgia cannot exceed the cost a merchant actually pays for card transactions. Some states, like Florida, have attempted to ban surcharges but been blocked by courts.

There are other ways to pass the cost of credit card transactions onto customers, though. For example, business owners can apply “convenience fees” and charge customers a flat rate to pay with a particular method. 

For the complete breakdown of what's required in your area, see Nickel’s Credit Card Surcharge Laws by State guide, which covers compliance requirements for all 50 states.

Payment Processors: Understanding Common Fee Structures

Now that we’ve broken down how “zero-fee” credit processing actually works, let’s look a bit more closely at the main credit card payment models used by businesses today and assess how much you’re likely to pay in fees under each system.

Option 1: Flat Rate Processors (Not Free, But Simple)

These processors are predictable and have no monthly fees. You’re probably familiar with the names of companies, like Square, Stripe and PayPal, that use this setup. 

This model is simple to understand, but as a business owner, you're paying 2.5-3% on every transaction. And when credit card companies adjust their interchange rates, which they commonly do, the processor might not alter its own fees. That means you could be paying more than necessary if the interchange fee is lowered, but your payment processor keeps the same transaction cost.

Let’s take a look at how Square structures its fees.

Square

• 2.6% + $0.10 for in person transactions
• 2.9% + $0.30 for online payments
• Free credit card reader for mobile devices
• Free point of sale system software
• Best for: Retail, restaurants, businesses processing small transactions

Option 2: Often The Cheapest Credit Card Processing (Interchange Plus)

If you want to minimize fees without passing them to customers, look for interchange plus pricing. 

This model works by having businesses pay the actual interchange fee set by credit card networks, as well as another fee set by the payment processor. It is considered more transparent, because you’re paying the actual cost of the interchange fee.

With this kind of fee structure, you’ll likely end up paying 1.8-2.5% of each transaction value. 

For comparison to flat rate processors, we’ll look at a popular company that uses the interchange plus model.

Helcim

• Interchange + 0.4% + $0.08 (in person)
• No monthly fees, no long term contract
• Automatic volume discounts
• Best for: Businesses processing $10K+/month who want transparent pricing

Option 3: Have the customer pay

Under this model, your customer pays all transaction fees. But there is a limitation: if your customer doesn't want to pay the fee, you might end up losing the sale. 

Option 4: Free ACH + Surcharge Pass-Through (Customer Choice)

With Nickel, you can give customers a choice between free ACH payments and card payments with fee pass-through. This model helps build trust with your business and ensures you can still get paid quickly. 

Nickel offers unlimited $0 ACH payments of up to $25,000 on the free core tier, and up to $1m with Nickel Pro. Using a simple payment link, customers can easily pay bills by ACH at no cost. If they prefer to pay by credit card, they can do so. They’ll cover the cost of the transaction fee, leaving your business no worse off.

This payment method is particularly well suited for small companies that conduct large transactions, like roofers, carpenters and ironworkers, where percentage based-transaction fees can eat up a lot of money.

Nickel

• Free ACH payments (unlimited, no caps)
• 2.9% flat rate for credit cards (passed to customer)
• Accepts credit card from all major networks
• Can compliantly pass transaction costs to customers in all 50 states
• Best for: B2B businesses, contractors, wholesalers, professional services

What You Get

• QuickBooks Online integration to sync invoices and manage payments
• Payment tracking and reconciliation with custom descriptors
• Virtual terminal for phone orders
• Payment links for email invoices
  

This approach:

• Eliminates your processing costs completely
• Works for both invoiced B2B and B2C transactions
• Improves cash flow by encouraging faster ACH payments

See how Nickel's free ACH works →

There’s no monthly fees. No transaction caps. No hidden fees. No long term contract.

Lowering Costs for High-Volume Point of Sale Businesses

Free ACH payments work well for lots of sectors, particularly those moving large quantities of money in each transaction. But we also know that ACH payments don’t necessarily make sense for other types of businesses. For high-volume point of sale companies, the math works differently than it does for invoice-based companies. 

A $5 latte with a 2.9% processing fee costs you $0.15. That might not sound like much, but multiply it across 200 transactions per day, and you're paying $30 daily—over $10,000 per year—just in processing fees.

You can’t realistically ask customers to pay for their coffee via ACH, and transaction fees are still cutting into your bottom line. So how can you cut costs without frustrating customers?

Option 1: Encourage Cash Payments with Discounts

Some businesses offer a small discount for cash payments—typically 3-5%. These discounts are legal in all states, according to the National Federation of Independent Business.

The psychology matters here. Customers perceive "cash discount" more positively than "credit card surcharge," even though the impact is identical. 

If you’re offering cash discounts, make sure to post clear signage showing both prices: "$5.00 cash / $5.15 card."

This approach works particularly well for businesses with older customer demographics or those in industries where cash payments are still common.

Strategy 2: Set Card Minimums (But Know the Rules)

Card networks allow businesses to set minimums for credit card transactions, but there are limits. You can require a $10 minimum for credit cards, but you cannot set minimums for debit cards.

The $10 minimum is the maximum allowed under Visa and Mastercard rules. Anything higher violates network agreements and could result in fines or losing your ability to accept cards.

For businesses with average transaction sizes under $5—like convenience stores or quick-service restaurants—this can meaningfully reduce the percentage of revenue lost to processing fees by steering small purchases toward cash.

Strategy 3: Consider Flat-Rate Processing for Simplicity

If your average transaction is under $10, flat-rate processors like Square or PayPal may actually be your best option despite slightly higher percentage fees.

Here's why: interchange-plus pricing often includes per-transaction fees (typically $0.10-$0.15) on top of percentage fees. On a $3 transaction, that $0.10 represents 3.3% of the sale. Combined with the percentage fee, you're paying 4-5% effective rate.

Square's 2.6% + $0.10 flat rate is transparent and predictable. On small transactions, it's often competitive with "cheaper" interchange-plus options once you factor in the per-transaction costs.

The Bottom Line for POS Businesses

For high-volume, small-transaction businesses, there's no single "best" solution. Your optimal strategy depends on your average transaction size, monthly volume, and customer base.

Calculate your annual processing costs, test different approaches, and measure the results. Even a 0.5% reduction in effective processing rate can save thousands of dollars annually for high-volume businesses.

Conclusion

For many companies, Nickel offers a simple and effective approach that still gives customers a choice. Customers get to choose whether they want to pay with free, no strings attached $0 ACH payments or cover the fee for a card payment. Either way, you’ve offered them options and don’t have to shell out money for additional costs.