How Payment Processing Works

A clear breakdown of interchange, assessments, and processor markup. Understand what you can and cannot control.

Every transaction has three cost components

Interchange Fees

Non-negotiable costs set by the card networks and paid to the card-issuing banks for each transaction. They cover fraud risk, processing infrastructure, and the cost of extending credit.

Assessment Fees

Non-negotiable charges set by the card networks (Visa, Mastercard, Discover, Amex) to cover the cost of maintaining their payment rails. They apply to every transaction.

Processor Markup

You Control This

The only part of your pricing you can control. This includes per transaction markup, monthly fees, annual fees, and any additional charges your processor adds on top of interchange and assessments.

Your total cost = Interchange + Assessments + Processor Markup

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Where Processors Hide Extra Margin

Padding that looks like interchange or assessments

Hidden markup disguised as non-negotiable fees.

Non-qualified transactions that should be qualified

Improper categorization that raises your effective rate.

Vague or bundled line items

Unclear charges that make it impossible to audit your bill.

Per Transaction Markup

The small markup added to each transaction. Usually the biggest source of avoidable cost.

Monthly and Annual Fees

Account fees, statement fees, PCI fees, and more. Some are legitimate, many are inflated.

Unnecessary ancillary fees

Extra charges for services that should be included.

Extra Junk and Hidden Fees

Nonsense fees disguised as necessary charges. Often the easiest savings opportunity.

What these issues look like on real statements

Padding that looks like interchange.

This 0.15% edition is pure markupdisguise this interchange

Non-qualified transactions that should be qualified.

This transaction should’ve qualified at 1.65%, not 2.3%

Vague, bundled line items.

No explanation. No breakdown. Just a charge.

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