Tariffs and credit card processing– How are these two related? You may have thought tariffs only affected the cost of goods, but the processing fees behind the purchases are also affects? Yes. Let’s take a look.
The recent wave of U.S. tariffs on international imports isn’t just about making goods more expensive (contrary to what mainstream media may try to convince you). Ultimately, these tariffs aim to protect and strengthen the American economy. The Trump Administration is dedicated to boosting domestic manufacturing, reducing dependency on foreign supply chains, and bringing more jobs back to American soil.
While the immediate effect may be higher prices and more complex supply chains for businesses, the long-term goal of increased tariffs is to build a more resilient domestic economy—one where American companies and workers can compete fairly on the global stage.
Understanding this broader perspective enables business owners to make informed strategic decisions as they navigate the ripple effects on everything from pricing models to credit card processing fees.
What Are Tariffs, and What’s Happening with China?
Tariffs are taxes on imported goods. They’re often used in trade agreements to protect local industries or apply pressure on foreign governments. As of early 2025, President Trump has reimposed and expanded tariffs on hundreds of Chinese, Canadian, and Mexican imports, including automotive, electronics, industrial tools, and consumer goods.
These escalating tariffs have significant implications for U.S. businesses, particularly small businesses that may rely on previously cost-effective Chinese imports. The increased costs of goods from tariffs can lead to higher retail prices, which, in turn, may result in higher credit card processing fees, as these fees are often a percentage of the transaction amount.
The Relationship between Tariffs and Credit Card Processing
What do tariffs and credit card processing have to do with each other? Sure, credit cards pay for the goods that have been affected, but how are the costs to process these payments also affected? Tariffs Raise Prices — And That Increases Interchange Fees.
Interchange fees – the fees you pay to card networks like Visa, Mastercard, and American Express – are based on the total transaction amount. For example:
- 1.8% + $0.10 for debit
- 2.9% + $0.30 for rewards credit cards
Interchange fees are not always these above-listed numbers. They change based on various factors, such as the card network and the type of card (rewards, corporate, charge card, etc). Master Card explains how rates are determined here.
There are so many different rates that it takes 13 pages to list them all. These numbers are also continuously updated. However, you can see the current numbers on each network’s website. For example, here are Visa’s interchange rates from October 2024.
When tariffs push up product costs, you often have to raise your retail prices to maintain margins.
Here’s how that connects:
- Higher product costs = higher retail prices
- Higher prices = higher transaction amounts
- Higher transaction amounts = higher absolute interchange fees
Even if your transaction volume stays the same, you’ll end up paying more in credit card processing fees just because the total per transaction has gone up. This is especially painful for small businesses that already run on thin margins.
Inflation from Tariffs May Lead to Fee Structure Changes
Tariffs don’t just make individual goods more expensive — they can contribute to broad inflation, and card fees can be indirectly affected.
If you’re buying tools, electronics, furniture, or POS hardware (like a card reader) affected by tariffs, your costs are going up. Your suppliers’ costs are going up. Your customers’ bank accounts will feel it, too.
Historically, Visa and Mastercard have adjusted interchange tables in response to:
- Inflation
- Risk profile shifts
- New industry categories
- Increased chargebacks or fraud trends
According to the Federal Reserve, persistent inflation can drive up the overall cost of doing business. When that happens, credit card networks may update their fee structure to include higher fees, accounting for increased merchant service costs.
This doesn’t happen overnight. But if tariff-driven inflation persists, expect changes in how credit card processing fees are calculated — especially in sectors where average transaction sizes are rising quickly.
Processors May Pass Tariff-Related Costs to Merchants
Your merchant service provider or payment processor isn’t immune to tariffs either.
Many processors purchase hardware (like terminals, PIN pads, and kiosks) from Chinese suppliers. As those costs rise, providers may:
- Add additional fees for hardware leasing
- Increase monthly subscription rates
- Limit customer support unless on a premium plan
If you’re using a flat fee pricing model (common with PayFac platforms like Square or Stripe), you may be hit harder. These models don’t always adjust efficiently for changes in transaction volume, ticket size, or international activity.
What Can Business Owners Do About Increased Costs?
You can’t change global trade policy, but you can optimize how your business navigates these challenges. Here’s how to mitigate the impact of tariffs on your payment processing:
Audit Your Current Fee Structure
The first thing you can do is review what you’re currently paying for. Many business owners sign up with a certain payment processor when they first start out because it’s the easiest one or because the fees worked at the start.
But, a simple audit may reveal that the processor hasn’t scaled with you, and as your business has grown, there are actually better options out there for you. Ask yourself the following questions. If you answer “yes” to any of these, it may be time to explore your payment processing options.
- Are you on a flat fee or a tiered plan?
- Is your average ticket size increasing?
- Are you paying for things you don’t need?
Ask your provider to review your merchant pricing impact — or let ECS Payments do a no-obligation audit. That’s right, ECS Payments is happy to review your statement from your current processor to show you if there is anywhere you can save or if there are unnecessary hidden fees that you can avoid.
Explore Cost-Effective Payment Methods
Though certain credit card transactions are lower in fees than others, PIN debit will always beat out any credit card fee. Moreover, ACH payments will always be the lowest-cost option. Encourage consumers to use debit and ACH for B2B transactions for the most cost-effective sales.
Consider Surcharging (Where Legal)
Some states allow businesses to add a fee when customers pay with credit cards. This can help offset rising payment processing fees — but it must be done transparently and legally. Keep in mind, though this can save you money on processing fees, it may be unappealing to consumers, and you may sacrifice your customer loyalty – which you don’t want to do. Weigh your options carefully to see what works most in your favor.
Work with U.S.-Based Suppliers to Offset Tariff Pressure
Here’s a long-term strategy your business should highly consider. Shift your sourcing closer to home. Working with U.S.-based suppliers can reduce businesses’ exposure to increased prices from tariffs while supporting domestic economic growth.
Working with U.S.-based suppliers does more than lower your exposure to volatile tariffs. It’s a move that will ultimately shorten your supply chain and appeal to many customers.
More than ever, consumers want transparency and accountability in how and where their products are made. Many consumers now make it a point to prioritize American-made products. Making this change will highlight your commitment to local sourcing, and it can even become a competitive advantage.
Final Thoughts on Global Trade and Payments
Tariffs aren’t just a political tool. They directly affect business owners, small and large. Though these policies are meant to protect Americans, they also have downstream effects on prices and on how businesses accept payments.
Here’s the big takeaway:
Tariffs on Chinese goods don’t directly change interchange fees — but they create a chain reaction that affects the cost of accepting credit card payments. From higher prices and rising inflation to new supply chain realities and shifting payment methods, the cost burden almost always finds its way to merchants like you.
Businesses may need to reassess their payment options and business operations to reduce their financial loss. Whether it’s encouraging less costly payment methods, renegotiating your pricing model, or considering local sourcing, every action helps protect your bottom line.
Want help making sense of your current fee structure? ECS Payments will help you navigate the evolving payment landscape — so you can focus on growing your business, not worrying about your next card swipe.
