Payment processing fees are rarely just one number, even when a rate sheet makes it look that way. A single transaction can carry four or five separate fees stacked on top of each other, and most of them are set by the card networks and banks, not by whichever company is processing the transaction.
The fees that make up a typical transaction
- Interchange fees, set by Visa, Mastercard, and the other networks and paid to the customer’s issuing bank. These are the largest piece of most transactions and are the same no matter which processor a business uses.
- Assessment fees, a smaller fee paid to the card network itself.
- Processor markup, the fee the processing company adds on top of interchange and assessments, which is the one part of the fee stack that is actually negotiable.
- Monthly and account fees, things like statement fees, PCI compliance fees, and gateway fees that apply regardless of sales volume.
- Chargeback fees, charged when a customer disputes a transaction with their bank, whether or not the business wins the dispute.
Interchange plus, flat rate, or surcharge
Most businesses are priced one of three ways. Interchange plus pricing passes through the actual interchange cost and adds a fixed markup, which tends to be the most transparent option. Flat or blended rate pricing charges one rate regardless of card type, which is simpler but usually costs more overall. A surcharge or cash discount program passes the card fee to the paying customer at checkout, so the business is not deducting a percentage of its own sales at all.
How to actually read a processing statement
The fastest way to know if fees are reasonable is to add up total fees for a month and divide by total card sales for that month, which gives the true effective rate, a more honest number than any single published rate.
If you want your last statement reviewed line by line, send it our way and we will show you exactly what is being charged and why.