Small Business Guide
Credit card processing fees, explained
Processing fees feel like a black box on purpose. They are not as complicated as they look. Here is what you are actually paying for, the pricing models you will be quoted, and how to compare two offers without getting played.
The three parts of every fee
Every processing fee, from every provider, is built from the same three pieces. Only one of them is negotiable.
Interchange
The biggest piece. It goes to the bank that issued your customer’s card (Visa, Mastercard, and the rest set the rates). No processor can waive it, and it changes based on the card type. A rewards card or a corporate card costs more than a basic debit card.
Assessments
A smaller slice that goes to the card networks themselves. Like interchange, it is fixed and the same for everyone. Nobody marks this up or discounts it.
Processor markup
This is the only part that is actually negotiable, and the only part that changes from one provider to the next. It is what your processor keeps. When someone quotes you a "rate," this is the piece you are really shopping.
The takeaway: when you shop processors, you are really only shopping the markup. Interchange and assessments are the same wherever you go.
The pricing models you will be quoted
Flat rate
One simple percentage on every sale. Easy to predict and easy to read on a statement. You may pay a little more on cards that would otherwise be cheap, in exchange for never having to think about it.
Interchange-plus
You pay the true interchange and assessments, plus a clearly stated markup. The most transparent model, because you can see exactly what the processor keeps. Usually the best fit once your volume grows.
Tiered
Sales get sorted into "qualified," "mid-qualified," and "non-qualified" buckets. This is where surprises hide, because the provider decides which bucket each sale lands in. Read these quotes carefully.
How to compare two quotes
- Compare the effective rate (total monthly fees divided by total card sales), not the headline number.
- Add up the monthly extras: statement fees, batch fees, PCI fees, gateway fees, minimums. They quietly raise the real cost.
- Be careful with tiered pricing. If the provider decides which bucket each sale lands in, the headline rate is not the rate you will actually pay.
- Ask about the contract: term length, early-termination fees, and whether the equipment is locked to that processor.
Why we do not post a rate here
Your real cost depends on your card mix, your average ticket, your monthly volume, and how you take payments. Anyone who quotes you one flat number without asking those questions is guessing, or hoping you will not check the math. We would rather look at your actual statement and show you the real effective rate, then tell you honestly whether you can do better.
Common questions
What is a credit card processing fee?
It is what you pay to accept a card payment. Every fee is built from three parts: interchange (goes to the card-issuing bank), assessments (go to the card networks), and the processor markup (what your provider keeps). Only the markup is negotiable.
What is interchange?
Interchange is the rate set by the card networks that goes to the bank that issued your customer’s card. It is the largest part of most fees, it is the same no matter which processor you use, and it cannot be waived.
What is the difference between flat rate and interchange-plus?
Flat rate charges one simple percentage on every sale, which is predictable but can cost a bit more on otherwise-cheap cards. Interchange-plus passes through the true network costs and adds a clearly stated markup, so you can see exactly what the processor earns. Interchange-plus is usually the more transparent choice as volume grows.
What is my "effective rate"?
Take all the fees on your statement for the month and divide by your total card sales for that month. That single percentage is your effective rate, and it is the only honest way to compare two providers. A headline "rate" tells you almost nothing on its own.
How do I lower my processing fees?
Compare on effective rate, not the teaser number. Watch for tiered pricing and add-on "junk" fees (statement fees, batch fees, PCI fees). Make sure your equipment is set up to qualify transactions correctly. Norvet does a free comparison against your current statement so you can see the real numbers.
See your real rate
Send us your current statement. We will work out your true effective rate and tell you whether you can do better. Free, no obligation.
Want the basics first? Read what is a payment terminal or our payments overview.