Credit Card Processing Fees: Interchange, Assessments, and Markup

Credit card processing fees appear as a single charge on your statement, but that amount includes three components: interchange, network fees, and the processor’s markup. Two of those three are set by Visa and Mastercard. They cost the same no matter which processor you sign with. The third one belongs to your processor.

Most of the confusion comes from treating your payment processing bill as a single number. Once you split it, it becomes much easier to see where your money is going and which charges you can negotiate.

This guide breaks down each layer, shows how other fees fit in, and explains what to look for on your statement. 

What Are Credit Card Processing Fees?

A processing fee is the total cost of accepting a card payment. Visa describes this as a merchant discount paid by the merchant to its financial institution, with interchange included in that charge. Some statements call it the merchant discount rate, or MDR.

A single card transaction involves four parties:

Most processors take their fees from your settlement rather than sending a separate invoice. That makes the charges easy to overlook because you simply receive slightly less than the sale amount.

The Three Layers of Every Processing Fee

Every processing fee falls into one of three categories:

One important point here: the network sets its prices, but your processor can add markup on top of the network fee.

Interchange Goes to the Customer's Bank

Interchange is often the largest component of card processing costs and goes directly to the bank that issued your customer’s card. The rate is based on the transaction, not on which payment processor you use. 

What affects the rate:

• Card type: Debit, credit, rewards, and business cards have different rates.

• How you accept it: Card-present transactions generally cost less than online payments.

• Merchant category code: This determines the applicable pricing schedule.

• Data level: Commercial cards may get lower rates when you provide Level 2 or 3 data, such as tax and line-item details.

Most categories charge a percentage and a per-transaction fee. Networks update their rates periodically.

Debit has separate rules. Fed's Regulation II caps interchange for large issuers at 21¢ + 0.05%, with a possible 1¢ fraud-prevention adjustment. Smaller issuers and credit cards aren't covered.

For more details on interchange fees, see our interchange settlement guide.

Assessments and Network Fees Go to Visa and Mastercard

This one confuses more merchants than any other. What looks like one fee is actually three separate charges:

• Assessments proper: A small percentage of your card volume.

• Per-item network fees: These appear as the Acquirer Processing Fee on Visa and Network Access and Brand Usage on Mastercard.

• Fixed and monthly charges: The best-known is Visa's Fixed Acquirer Network Fee, which scales with your number of locations or your card-not-present volume.

APF, NABU, and FANF are network charges. They are not interchange. They are not your processor's margin either.

A few situational charges may also appear:

• Cross-border fees on foreign-issued cards

• Digital enablement fees on e-commerce sales

• Integrity fees when transaction data comes through incomplete

The network sets these amounts. "Non-negotiable" describes the network's price. Anything above that amount is markup, not a network fee.

Markup Goes to Your Processor

Markup is what your payment provider adds on top of interchange and network fees. It usually includes a percentage, a per-transaction fee, and sometimes monthly or gateway fees.

Visa and Mastercard set the network fees, so those costs are the same regardless of which provider you use. The main difference between providers is their markup.

That markup doesn't all go to the processor. It can be split between the acquiring bank, processor, sales partner, and gateway or software provider. That margin helps cover the cost of the services they provide.

Example: a $100 credit card sale (illustrative numbers, not current rates)

In this example, of the $2.41 total, only $0.35 is the processor’s markup. The rest goes to the card issuer and network.

Other Processing Fees to Watch

Plenty of charges fall outside the three layers discussed above. The key questions are who charges the fee, what triggers it, and whether you can negotiate or avoid it.

One important distinction: The PCI Security Standards Council writes the security standard. It does not bill you. Your acquirer charges the PCI compliance fee. A PCI non-compliance fee may also disappear once you complete the required questionnaire.

Chargeback fees deserve attention too. They add to the cost of a lost sale and lost goods, so preventing disputes is often better than simply budgeting for the fee, which is why chargeback prevention matters.

Pricing Models: Interchange-Plus vs Tiered vs Flat-Rate vs Subscription

The main difference between these four pricing models is how clearly they show what you're paying for.

Interchange-plus generally makes it easiest to audit your costs. You can check the card network's rates, confirm the fees, and see exactly what you're paying in markup. Tiered pricing hides these costs behind broad categories, making higher-cost downgrades harder to spot.

How to Read the Fees on Your Statement

Let's break it down into five steps:

1. Identify the pricing model: One blended rate usually means flat or tiered pricing. Separate interchange lines usually mean interchange-plus.

2. Group each fee by who gets it: Sort them into issuer, network, or processor fees.

3. Check interchange rates: Compare your rates with current Visa and Mastercard schedules and look for downgrades, where transactions move into more expensive categories.

4. Check network fees: Compare them with published network rates. Any extra amount may be processor markup.

5. Calculate your rates: Divide total fees by card sales to get your effective rate. Then calculate your markup as a percentage of card sales. This shows the part you can negotiate.

Red flags: bundled rates with no breakdown, network fees above published rates, and unexplained monthly charges.

One caution: your effective rate depends on your card mix, average ticket, and how customers pay. A 2.6% rate isn't automatically worse than 2.2% if the businesses have different transaction types.

Why High-Risk Businesses Pay Higher Fees

“High-risk” is a designation from the acquirer, not set by Visa or Mastercard. Businesses may be classified this way because of high card-not-present volume, chargebacks, subscriptions, regulated products, or limited payment processing history.

The premium usually appears as higher markups, rolling reserves, setup or monitoring fees, and higher dispute costs. It can also mean fewer providers are willing to process the business.

The network-set fees are not different for high-risk businesses. The difference is mainly in the processor's markup and contract terms. 

How MobiusPay Helps

MobiusPay has been providing payment processing and underwriting services to high-risk merchants since 2010. Our team has more than a century of combined experience in banking and payments.

That experience helps in two key areas:

• Getting approved: We work with businesses other providers may decline.

• Managing disputes: We help prevent disputes from turning into larger monitoring problems.

Our gateway combines transaction management and fraud screening with industry-specific controls, including:

• Velocity checks

• Blacklisted BINs

• Ticket-size limits

• Industry-specific fraud controls

We also integrated directly with Visa's Order Insight platform in 2021. This can help resolve certain customer complaints before they become chargebacks.

MobiusPay also offers international processing, dispute resolution, and 24/7 support.

If you have your statement open, send it over. We'll help sort the fees into the three main layers and show you your actual markup rate. Start with high-risk payment consulting.

Frequently Asked Questions

What is the average credit card processing fee?

There is no single average fee. Your cost depends on your card mix, average ticket size, how much you sell in person, and your pricing model. For your own number, divide total fees by total card sales, then do it again using markup alone.

Can I pass processing fees to customers?

Sometimes. A surcharge on credit, a convenience fee for an alternate payment channel, and a cash discount program are three different things under three different rule sets. Check the network caps, the advance-notice and disclosure requirements, and whether your state restricts the practice. Check out our guide on surcharging.

Is interchange negotiable?

No. Visa and Mastercard set the interchange rate, and it's the same regardless of who processes your sales. You can influence which category your transactions fall into through card-present acceptance, data quality, and a correct merchant category code.