The Hidden Truth About Payment Processing Fees (And Why You’re Overpaying)
Introduction
Every time a customer swipes their card, merchants pay a percentage of the transaction in fees. While this is expected, what many business owners don’t realize is that they are overpaying.
In this guide, we’ll break down the different types of fees you pay, why they’re structured the way they are, and how some payment processors increase costs without merchants even noticing.
1. The 3 Main Components of Credit Card Fees
When you process a payment, the fees are divided into three parts:
- Interchange Fees – These are non-negotiable and set by Visa, Mastercard, etc.
- Assessment Fees – Small charges applied by the card networks.
- Processor Markup Fees – The negotiable fee added by your payment provider.
Most merchants only focus on interchange fees, but the real savings come from optimizing processor markups.
2. How Some Processors Overcharge Without You Knowing
- Hidden Markups on Interchange-Plus Pricing
- Tiered Pricing Models That Favor Processors, Not Merchants
- Extra Monthly Fees for “Premium Services” That Add No Value
3. How to Identify If You’re Overpaying
- Look for blended rates instead of true interchange-plus
- Request a detailed statement breakdown from your processor
- Compare your rate to industry averages (2.5%-3.5% is normal, higher means you’re likely overpaying)