Credit Card Processing

MasterCard’s Merchant Location Fee

by Ben Dwyer

In keeping with the steady flow of fee increases from the card brands, MasterCard has (very) quietly announced it will begin charging businesses an annual “merchant location fee.”

Stay Informed

We’ve updated this article several times and will continue to do so.

Follow us on Twitter or Facebook for the latest news. Please let us know in the comments how you’ve been charged this fee.

What is a Merchant Location Fee?

Mastercard imposes a Merchant Location Fee for each business location that accepts its cards. Mastercard charges processors, who may in turn charge your business.

As is typical with card brand assessment fees, the merchant location fee will be lower for payment facilitators (such as Square and PayPal Here) than for traditional acquiring institutions. MasterCard is charging payment facilitators $3 annually per merchant location while traditional acquirers have to fork over $15 per location. The actual cost your processor charges you could vary.

  • Mastercard assesses the fee. Payment providers don’t control the fee, although it’s likely that some payment providers will pass along the fee and charge businesses more than the actual amount of the fee.
  • As the name implies, MasterCard calculates the merchant location fee based on the number of locations a business (merchant) has.

Early information about the location fee indicated that Mastercard would assess based on the number of locations a business has at the end of the fourth quarter in 2016. However, this doesn’t seem quite accurate because some processors have already begun charging the fee as early as the August 2016 statement cycle.

Example of the Fee

For example, the statement snippet below comes from an August 2016 statement:

Mastercard merchant location fee

It’s unclear if or how payment providers that have already charged the location fee will correct any discrepancy in the number of merchant locations between August and December 31st. It’s also unclear if these processors are charging already because MasterCard has rolled out the fee sooner than anticipated, or if they’re doing it on their own.

Unlike interchange charges, the card brands post very little information about assessments. So it’s no surprise that MasterCard has been very covert with its new merchant location fee. We contacted MasterCard for clarification, but Mastercard told us to “contact our acquiring bank” for details.

When will I be charged the Merchant Location Fee?

Some businesses already saw the merchant location fee in 2016, while other payment providers have stated they will begin charging businesses for the MasterCard location fee in early 2017 – Presumably, after the actual number of business locations is calculated.

As with all processing fees, the payment provider decides how or if it will pass the cost of the merchant location fee on to businesses. The processor can also manipulate the charge on a per-businesses basis. Processors could choose to impose higher costs than the actual merchant location fee. Businesses that don’t have the security of a company like CardFellow to monitor their charges and ensure that processors charge correctly should keep a close eye on statements.

What does the Merchant Location Fee Cost?

At wholesale, the fee is $15 per location annually for traditional processors and $3 per location annually for payment faciliators like Square. However, what your processing company charges you will vary.

Shortly after this article was published we received a statement from a larger payment provider showing MasterCard’s merchant location fee as a $2.50 monthly charge. This merchant had one location, so the $2.50 monthly charge amounts to a $30 annual fee — $15 more than the actual cost of $15. It appears it hasn’t taken payment providers very long to inflate the cost of the merchant location fee.

How are Processors Charging the Merchant Location Fee?

We’ve seen enough statements from different merchant service providers at this point to know there’s little consistency. Different processors pass the cost of the fee differently.

As I’ve outlined below, we’ve seen it passed several ways. It was a bi-annual fee of $7.50 by one processor and a monthly charge of $2.50 by another. The processing company determines how to pass the fee to businesses.

The varying scope of the expense associated with the merchant location fee is another prime example that you must consider all aspects of cost in order to secure the most competitive credit card processing fees. Fortunately, that’s a task CardFellow’s instant quotes tool makes very easy.

Below are a few examples along with statement snippets of how the merchant location fee is showing up on processing statements.

First Data

We’ve seen many First Data statements where the processor passes the fee as $7.50, which we assume is a bi-annual charge. For example, this processor assessed the fee in November 2016.

First Data statement showing location fee


The following Vantiv statements shows the location fee as a monthly charge of $2.50.

Vantiv statement showing location fee

Sage Payment Processing

The following Sage Payments statements shows the location fee as a monthly charge of $1.25.

Sage statement showing location fee

Mastercard Throws Processors a Curve Ball

As it turns out, there’s a very good reason for payment providers to charge varying amounts for the merchant location, and it’s a bit self-serving on the part of MasterCard.

Mastercard does not pro-rate the fee. Meaning, if a business has an active account with a payment provider for only one month out of the year, that payment provider must still pay Mastercard the full $15 location fee.

If the payment provider charges the location fee annually it’s unlikely to have collected $15 from the business, even though it had to fork over $15 to MasterCard. This situation leaves the payment provider at a $15 loss.

On the other hand, Mastercard double-dips on businesses that change payment providers during the course of a year.

For this reason, many payment providers have opted to charge the merchant location fee on a monthly basis and to charge more than the actual amount of the fee to protect from losses.


For example, a payment provider may choose to charge $3/month for the location fee. This equals an annual charge of $36, which is $21 more than the actual cost of the fee if the business stays with the provider the entire year.

However, if the business leaves the provider only 2 months into the year, the payment provider will have charged $6 while it owes MasterCard $15. This scenario results in a $9 loss.

It’s not ideal, but Mastercard’s poor handling of the location fee has left payment providers in a tough spot. As a result, businesses are the ones that end up paying the price.

MasterCard Updates Billing Scheme and Clarifies Terms for the Location Fee

MasterCard seems to have realized the issue with assessing its location fee to payment providers annually, so it has made some updates that should help to alleviate the issue, for now. It has also provided clarification on some key terms and points relating to the location fee.

The issue outlined above remains with payment providers shouldering a loss from a merchant that switches to another provider, but the impact has been lessened to a certain degree now that MasterCard has apparently switching billing to quarterly, as described below.

  • Billing will be completed quarterly for the first quarter of 2017.
  • A “Merchant Location” is defined as each separate business site (physical or virtual) that accepts MasterCard payments. Payments can include goods, services, products, or charitable giving.
  • Mastercard only assesses the fee on active locations. An active Location is defined as one that has accepted a MasterCard transaction of at least $0.01 between the 1st and the last day of the month.
  • The location fee is not applicable to Puerto Rico or Virgin Islands.

15 thoughts on “MasterCard’s Merchant Location Fee”

  1. Yes, we just got the notice about this upcoming charge with MasterCard. Our provider is going to charge us $2.00 a month on every statement. We are a very tiny jewelry shop here in Texas – Just my wife and I. We only have one location. (A Merchant Location Fee!) What is that? We think this is outrageous! What else will they think of next!

  2. I am a massage therapist and rarely take credit cards, but I have a phone swiper just in case I do. My merchant provider charged me $4!! I am canceling as it is not right. I shouldn’t have any fee unless I swipe a card.

  3. Just got this today on my October 31 Elavon merchant statement…….

    STATEMENT DATE: 2016-10-31

  4. What a bunch of crap. I was charged $7.50 for December, 2016 statement received today with the announcement that I will be charged an additional $7.50 on the February 2017 statement to be received in March. What used to be a few lines of ‘additional charges’ is now a laundry list of fees. It’s sickening how the CC companies have their hands in my small merchant account….greedy, grasping, cronies. How can we screw the small merchant today? What new fee can we add to cut into the little bit of profit they make?

  5. Yep, our small family online business got stung by Flagship / Ipayment for $3.00 per month as of August 2016! When will be enough enough.
    Thank you Mastercard.

  6. Corporate pigs! No protection from the feds, ever. So sick of this crap. $15 first hit on Jan 31 statement. I HAVE MY PITCHFORKS AND I AM READY. I am so done. This brings my effective processing rate up to 8.6%. DONE DONE DONE. Moving to Square at 3%.

  7. Just going over my January statement and I was charged $7.50 for MC 2016 Annual Location Fee and MC took another $1.25 for MC Monthly Location Fee. MC seems like it is double dipping. It seems unfair that MC is slapping on $7.50 for an Annual Fee then charging a monthly fee on top of that which will end up being a total of $15 by the end of 2017! Will I be billed another $7.50 for the MC 2017 Annual Location Fee come next January?

    1. If you’re being charged the fee both monthly and annually, it may be your processor double-dipping, not Mastercard. It’s hard to know exactly what’s going on without seeing your statement. As for whether you’ll be billed again next January, I can’t say – that would be processor specific as well. Who is your current processor?

        1. Hi Heather,
          If you only have one location, that’s over the cost set by Mastercard. ($15 for traditional processors, $3 for aggregators like Square.) However, the fee is per location so if you have more locations, it could be closer to the cost.

          That said, there are reasons that the fee would be higher – processors are essentially trying to cover themselves against losses. Mastercard doesn’t pro-rate the annual location fee, meaning that if you’re only with a processor for 1 month out of the year, the processor still has to pay the location fee for your business. If you’re no longer with them, they can’t collect it from you for that year. So a higher fee helps them cover the costs for businesses that are no longer processing with the company.

          Which processor is charging you the $49.99?

  8. David Tokarowski

    At $1.25 per month, times 30 million locations accepting MasterCard, that’s a profit of $37,500,000. per month! New fees, which you never agree upon when you sign up, should not be legal.

  9. I stopped taking Mastercard at my store. I also let my processor know the location fee was the reason. If all merchants stopped taking Mastercard they would be out of business. Spread the word to everyone you know who takes cards.

  10. We just got hit by First Data, $2 dollars a month!! Which is around $24 a year.
    I will start reviewing my prices here, and add that to every customer, I don’t care if they pay cash or credit card. Sorry!

Leave a Comment

Your email address will not be published. Required fields are marked *

Credit Card Processing exposed

Use the secrets that credit card processors don't want
you to know to drastically lower your credit card
processing fees.

Read Now!

You might also like…

View all articles..