Headline rates can hide the real cost. The effective rate on your statement tells the truth, and it is the number worth negotiating and tracking over time.
A payment processing fee has three parts. Interchange goes to the customer's card-issuing bank and depends on the card type and how the payment is taken. Network assessments go to the card brand, such as Visa or Mastercard. The markup is what your processor and acquiring bank charge for their service. Only the markup is set by your provider; interchange and assessments are passed through from the networks.
Providers package these costs differently. Interchange-plus pricing shows interchange and assessments separately with the provider's markup on top. Flat-rate pricing charges one blended rate for every card. Tiered pricing sorts transactions into buckets with different rates. Monthly, per-transaction and incident fees such as chargeback fees can sit on top of any of these, which is why the total on the statement matters more than the headline rate.
Common questions
- What is a processing fee?
- It is what a business pays to accept a card or digital payment. It combines interchange paid to the card-issuing bank, assessments paid to the card network, and the markup charged by the processor and acquiring bank.
- How do I work out my real processing cost?
- Add up every fee on your monthly statement and divide it by your total card volume for the month. That effective rate includes the monthly, per-transaction and incident fees a headline rate leaves out, so it's the fairest way to compare providers.
- Why are high-risk processing fees different?
- Providers price in the extra chargeback and fraud exposure of higher-risk industries, so the markup and account terms can differ from a standard account. Ask for the full fee schedule in writing and compare the effective rate, not just the headline percentage.