What actually makes up a processing fee
Every card transaction carries three layers of cost. Interchange is set by the card networks and paid to the issuing bank. Network assessments go to Visa, Mastercard, Discover, or American Express. The processor markup is the only part your provider controls.
When you compare merchant services, isolate the markup. That is where real differences between providers live.
Common pricing models, explained
Each model can be a good fit depending on your volume, ticket size, and card mix.
- Interchange-plus: pass-through network costs plus a disclosed markup. Usually the most transparent for growing businesses.
- Flat-rate: one percentage for most cards. Simple to budget, but can cost more as volume rises.
- Tiered: transactions sorted into qualified, mid-qualified, and non-qualified buckets. Harder to audit.
- Subscription or membership: a monthly fee with low per-transaction markup. Works best at steady, higher volume.
Fees that often get missed
Look past the rate and ask for a written list of every recurring and event-based fee.
- Monthly account, statement, or minimum-processing fees
- PCI compliance or non-compliance fees
- Chargeback and retrieval fees
- Equipment leases versus purchase pricing
- Early termination or liquidated damages clauses
- Batch, gateway, and next-day funding fees
How to run an apples-to-apples comparison
Start with two or three recent processing statements. Calculate your effective rate by dividing total fees by total volume processed. Then ask each provider to price the same statement so you are comparing real numbers against your actual card mix.
This guide is general education, not financial or legal advice. Pricing, approval, and terms depend on provider review.