1. Interchange — The wholesale cost set by Visa/Mastercard/Amex. Goes to the card-issuing bank. Non-negotiable. Ranges from ~0.05% (debit, regulated) to 2.4%+ (premium rewards cards). This is the floor every processor pays.
2. Assessment fee — A small network fee charged by Visa/Mastercard/Discover directly. Typically 0.13–0.15% per transaction. Also non-negotiable.
3. Processor markup — What your payment processor adds on top of interchange + assessment. This is the only part that’s negotiable. It can be structured as flat-rate, tiered, or interchange-plus.
| Pricing Model | How It Works | Who It Favors | Transparency |
|---|---|---|---|
| Flat-Rate (Square, Stripe) | One rate for everything — e.g. 2.6% + 10¢ regardless of card type | Low-volume or mixed card types | Simple, but you can’t see your real wholesale cost |
| Interchange-Plus (I+) | Actual interchange cost + fixed processor markup — e.g. IC + 0.30% + 15¢ | Medium-to-high volume | Full visibility into wholesale cost vs markup |
| Tiered / Bundled (Legacy ISOs) | “Qualified,” “mid-qualified,” “non-qualified” buckets. Downgrade fees apply. | Mostly the processor | Very low — hard to audit or compare |
| Subscription (Stax, Helcim) | Fixed monthly fee + interchange only — no per-transaction markup percentage | High-volume businesses | Very high — pure wholesale cost + flat fee |
Text PJ your last processing statement. We’ll calculate your real effective rate and tell you whether you’re overpaying — in plain language, no sales pitch.
Text PJ — 773-544-1231Premium cards (Visa Signature, Amex Platinum, etc.) have higher interchange rates because the card network funds the rewards program from that interchange. A regular Visa debit card might cost 0.05% + 22¢ in interchange. A Visa Infinite rewards card costs 2.10% + 10¢. On flat-rate pricing, you pay 2.6% for both. On interchange-plus, you see the actual difference.
A chargeback is when a customer disputes a charge with their bank directly, bypassing you. The bank provisionally refunds the customer and debits your account. You have ~7–30 days to respond with evidence. To reduce chargebacks: use clear business name descriptors on statements, get signed receipts, use AVS for card-not-present, and respond to every dispute even if you’re likely to lose — a pattern of non-response worsens your chargeback ratio.
PCI DSS (Payment Card Industry Data Security Standard) is a set of security requirements for any business that stores, transmits, or processes cardholder data. If you take cards, you need to complete an annual Self-Assessment Questionnaire (SAQ). Most small businesses using a hosted payment page or Square/Stripe terminal are SAQ-A (simplest level). Non-compliance fees are a pure processor profit center — complete the questionnaire and the fee disappears.
Run the math: (current effective rate − new effective rate) × annual volume = gross savings. Subtract ETF + setup time + hardware cost. For most businesses processing $15,000+/month, the savings exceed switching costs within 3–6 months. If you’re under $5,000/month, the savings are usually under $50/month — probably not worth the admin overhead.
Your effective rate is total fees paid ÷ total volume processed, expressed as a percentage. It’s the only honest way to compare processors because it accounts for all fees (transaction fees, monthly fees, batch fees). To calculate it: find your monthly statement, divide total fees by total sales volume, multiply by 100.
In California, surcharging is legal under certain conditions: you must disclose it at the point of entry and point of sale, the surcharge can’t exceed your actual cost, and debit card surcharges are federally prohibited. Many San Diego businesses add a “cash discount” program instead — list a slightly higher price and give a discount for cash, which achieves the same economic result without the surcharge disclosure rules.