Credit card processing fees, explained
Every card fee splits three ways, and your processor sets only one part. Here is where the money goes, how pricing models package it, and how to compare two offers on the same footing.
Short answer: every card fee has three parts. Interchange goes to the bank that issued the card. Network fees go to the card networks. The markup goes to your processor, and it is the only part your processor sets. To compare offers, add up every fee for a month and divide by your card volume. That is your effective rate.
The three parts of a card fee
- Interchange. Paid to the bank that issued your customer’s card. It varies with the card and how the transaction is processed, so a debit card and a premium rewards card cost different amounts to accept. No business chooses which card walks in.
- Network fees. Set and published by the card networks, and sometimes called assessments. They pass through to the networks.
- The markup. The percentage and per-transaction amount your processor adds. This is the part your processor controls, and the part worth comparing.
Interchange and network fees are the same no matter who processes your cards. We don’t set them, and neither does any other processor. What changes between offers is the markup and how it is packaged.
The pricing models
The same three parts reach your bill in different packages. Knowing which one you are on tells you what to look for.
| Model | How it works | What to watch |
|---|---|---|
| Flat rate | One percentage plus a per-transaction fee, the same on every card. | You pay the same rate on lower-cost debit as on premium rewards cards. |
| Interchange-plus | Interchange and network fees pass through. The processor’s markup is shown on its own line. | Your total moves with the cards your customers use. The markup is the number to compare. |
| Tiered | The processor sorts transactions into tiers, often labeled qualified, mid-qualified, and non-qualified, each with its own rate. | The processor decides which tier a card lands in, and the underlying card cost isn’t shown. |
| Dual pricing | Eligible credit-card purchases carry a disclosed fee. You keep paying processing on everything else. | Strict rules apply. See below. |
We quote three models: a flat rate we call the Simple Rate, interchange-plus, and dual pricing. You may still see tiered pricing on a statement from another processor, which is why it is in this table.
Simple Rate. Card-present processing starts at 2.19% + 9¢ per transaction, with no monthly platform fee. Higher-volume businesses can qualify for a lower rate.
Interchange-plus. Your monthly volume sets our percentage band, and a per-transaction fee is quoted from your statement. See the interchange-plus bands.
Dual pricing. It applies to eligible credit cards only. There is no fee on PIN debit, signature debit, prepaid, or business debit cards, and you still pay processing on those. The fee can never exceed your cost of acceptance, and it has to be disclosed at the door, at the register, and on the receipt. It is not available in Connecticut, Maine, Massachusetts, New York, Oklahoma, or Puerto Rico. A low average ticket with a heavy debit mix is usually a poor fit. How dual pricing works.
Statement line items to look for
Names vary by processor, but most statements carry some version of these lines.
| Line item | What it is | What to check |
|---|---|---|
| Processing or discount fees | The percentage and per-transaction charges on your sales | Which pricing model you are on, and how debit is charged |
| Qualified, mid-qualified, non-qualified | Tier labels on a tiered statement | How many transactions land in the higher-priced tiers |
| Interchange and network fees | Pass-through card costs, itemized on interchange-plus statements | Whether they are listed separately from the markup |
| Monthly, statement, or minimum fees | Recurring charges that apply whatever you sell | What each one is for, and whether you agreed to it |
| PCI fees | Compliance program or non-compliance charges | Whether a non-compliance fee is charged because the account isn’t validated |
| Batch or settlement fees | Charges when your sales are submitted for payment | How often you batch, and the cost each time |
| Equipment rental or lease | A monthly charge for your terminal or POS | How long it runs, and whether you still use the device |
| Chargeback fees | Charged when a customer disputes a sale | The amount per dispute |
How to compare two offers
A lower advertised percentage doesn’t guarantee a lower bill. The per-transaction fee and any monthly fees can outweigh it. Compare offers by effective rate:
Effective rate = total fees ÷ total card volume × 100
Here is a worked example. The numbers are made up and rounded to show the method. They are not anyone’s real pricing.
- Take one month. Example: $20,000 in card sales across 500 transactions.
- Price Offer A on it. Example: 2.6% + 10¢, with no monthly fee. $20,000 × 2.6% = $520, plus 500 × 10¢ = $50, for $570 in fees. $570 ÷ $20,000 = an effective rate of 2.85%.
- Price Offer B on the same month. Example: 2.4% + 20¢, plus a $20 monthly fee. $20,000 × 2.4% = $480, plus 500 × 20¢ = $100, plus $20, for $600 in fees. $600 ÷ $20,000 = an effective rate of 3.00%.
- Compare the totals. Offer B advertises the smaller percentage and still costs $30 more on this month.
Example only. Your own result depends on your volume, card mix, transaction count, and current processor.
Want a quick number without a statement? Estimate your monthly card costs.
When to send your statement for a free review
- You can’t tell which pricing model you are on.
- Your statement shows tier labels, or fees you don’t recognize.
- Your effective rate is higher than the rate you remember being quoted.
- Your volume has grown since you signed up. Higher-volume businesses can qualify for a lower rate.
- You have an offer from another processor and want it compared on your real numbers.
The statement review is free, and there is no obligation to switch. Start with page one, and we’ll ask for fee-detail pages if we need them. We reply within one business day, and the review shows your effective rate, every fee with its monthly impact, and the options you qualify for, including staying with your current provider.