Components of cost
Total processing cost typically combines interchange, network assessments, and the processor's markup. Each is calculated differently, and only by seeing all three can you understand effective cost.
Interchange
Interchange is the fee set by the card networks that goes to the issuing bank. It varies by card type, transaction method, and business category, and is generally the largest portion of cost.
Assessments
Assessments are network-level fees that fund the card networks themselves. They are smaller than interchange but apply across qualifying volume.
Markup
The processor's markup is the negotiable portion — what you pay above interchange and assessments. It may be expressed as a rate, a per-item fee, a monthly fee, or bundled into a tiered or flat structure.
Pricing models
Interchange-plus shows cost transparently; tiered groups transactions into qualified, mid-qualified, and non-qualified buckets; flat-rate charges one rate regardless of card type. Each model suits different volumes and profiles.
Reading a statement
A processing statement shows volume, fees, chargebacks, reserves, and adjustments. Reviewing it line by line — effective rate, downgrades, incidental fees, and reserve activity — is the most reliable way to understand true cost and spot issues.
Common surprises
Hidden downgrades, batch fees, PCI non-compliance fees, non-qualified surcharges, and reserve releases can all shift effective cost well above a quoted rate. Understanding these helps you evaluate whether a different structure may fit better.