Every card transaction gets priced in layers. Once you understand those layers, you can actually understand your cost structure, not just haggle over a rate.
The three layers
- Interchange: set by the card networks and paid to the bank that issued the card. It changes based on card type, your business type, and how the sale is made.
- Network fees: charged by the card networks themselves.
- Processor pricing: the markup and per-transaction fees your processor charges.
Pricing models you'll run into
- Interchange-plus: interchange passed through, plus a set markup
- Tiered: transactions sorted into qualified, mid, or non-qualified buckets
- Flat rate: one blended rate no matter the card type
- Program pricing: the setup depends on the program you're using
Why small percentages add up
A business that processes $150,000 a month at a 3% rate pays $4,500 a month, or $54,000 a year, just to take cards. Cutting even part of that frees up real money to reinvest. Your own numbers depend on your volume, card mix and pricing.
Educational content
This article is for education only and is not legal, tax, or accounting advice. Program availability, disclosure rules, and allowed structures vary by state, card network rules, processor requirements, and how your business is set up. Talk to your own advisors before you adopt a program.