How fees work
Every card fee is interchange, plus network assessments, plus processor markup, added together on each sale.
Last updated: Published by Avendo
On each transaction, the bank that issued the card takes interchange, the card network takes an assessment, and your processor adds its markup. The Card Fee Field Guide by Avendo walks through each part, shows which ones you can negotiate, and gives a simple formula for your effective rate.
Where a card fee goes
Part 1
Interchange is paid to the bank that issued your customer's card. Card networks publish interchange schedules, and the rate depends on things like card type and whether the card was present. Rewards and business cards often carry higher interchange than basic cards.
According to Revolution Payments, interchange is 75 to 90 percent of total processing fees, yet it is often left completely unexamined.
Part 2
Assessments are paid to the card network for using its rails. Revolution Payments describes them as generally 0.11% to 0.15% and non-negotiable, but not always flat.
One example from the same source: Mastercard charges higher assessments on transactions over $1,000. Every processor pays assessments, so they do not separate one quote from another.
Part 3
Markup is what your processor keeps. It is the part that changes between providers, and Revolution Payments estimates it at 10 to 25 percent of total fees.
On interchange-plus pricing you see it plainly; NerdWallet gives 0.4% plus 8 cents as an example. On flat rate pricing it is bundled inside one number.
| Fee part | Who receives it | Usually negotiable? | Published figure |
|---|---|---|---|
| Interchange | Card-issuing bank | No | 75 to 90 percent of total fees (Revolution Payments) |
| Assessments | Card network | No | 0.11% to 0.15%, not always flat (Revolution Payments) |
| Markup | Your processor | Often | 10 to 25 percent of total fees (Revolution Payments) |
| Monthly or extra fees | Your processor | Often | Example membership fee of $99 a month (Paystand) |
Your effective rate is total processing fees divided by total card sales, times 100. It is the cleanest way to compare months, providers and pricing models.
Most plans add a fixed amount per sale, such as the 10 cents in NerdWallet's sample flat rate. On a $100 order that fixed part is 0.1% of the sale. On a $5 order it is 2%, on top of the percentage. Clearly Payments singles out any business with lots of sub-$50 tickets as one that should look closely at this.
If your average order is small, ask every provider for both numbers, the percentage and the fixed fee, and run them against your real order sizes. A slightly higher percentage with a lower fixed fee can cost less overall.
Back to the credit card processing cost guideShort answers here. Every question is also on the full FAQ page.
Each transaction fee is interchange plus network assessments plus processor markup. Interchange is usually a percentage plus a fixed amount, assessments are a small percentage, and markup depends on your pricing model. On flat rate plans, all three are bundled into one number, such as 2.6% plus 10 cents.
See this answer in the FAQ: How are credit card processing fees calculated?Interchange is the fee the card-issuing bank receives on each card transaction. Card networks publish interchange schedules, and the rate depends on factors such as card type and how the payment was taken. Revolution Payments estimates interchange is 75 to 90 percent of total processing fees, making it the largest part of the bill.
See this answer in the FAQ: What is interchange?An assessment is the fee a card network such as Visa or Mastercard charges for using its network. Revolution Payments describes assessments as generally 0.11% to 0.15% and non-negotiable, but not always flat. For example, it notes that Mastercard charges higher assessments on transactions over $1,000.
See this answer in the FAQ: What is a card network assessment fee?Processor markup is the part of the fee your payment processor keeps for its service. It is the main part that varies between processors. Revolution Payments estimates markup is 10 to 25 percent of total card fees, and NerdWallet gives 0.4% plus 8 cents as an example interchange-plus markup.
See this answer in the FAQ: What is processor markup?Divide total processing fees by total card sales for the same period, then multiply by 100. Clearly Payments recommends computing these figures for the last 90 days before changing anything. The free calculator on this site does the math using numbers from your own statement.
See this answer in the FAQ: How do I calculate the effective rate for credit card processing?Many pricing plans include a fixed fee per transaction, such as 10 cents. On a $100 sale that fixed part is 0.1% of the total, but on a $5 sale it is 2%. Businesses with many low value orders should weigh the fixed fee as carefully as the percentage.
See this answer in the FAQ: Why do small transactions cost more as a percentage?Avendo connects your existing checkout to multiple payment processors and routes each sale to the best available rate. Tell the Avendo team about your store and ask how it would work for you.
Published by Avendo
