The three layers of processing cost
Every transaction cost is made up of three parts: interchange (set by card networks), assessments (network fees), and processor markup (the processor's profit). Understanding these layers is the first step to spotting overcharges.
Key sections on your statement
Interchange fees
The base cost that goes to the card-issuing bank. These are non-negotiable and vary by card type, transaction method, and business category. Look for itemized interchange charges by card brand.
Assessments
Network fees charged by Visa, Mastercard, Discover, and American Express. These are also non-negotiable and typically shown as a percentage of volume.
Processor markup
The processor's margin on top of interchange and assessments. This is where you have the most room to negotiate. Compare your markup to industry norms.
Monthly and ancillary fees
Statement fees, PCI fees, monthly minimums, batch fees, gateway fees, and equipment leases. These small fees add up and are often where hidden costs hide.
Red flags to watch for
- Rate increases without notice
- PCI non-compliance fees when you are already compliant
- Monthly minimums that exceed your actual processing
- Terminal lease fees that exceed purchase cost
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