Merchant services & payments
What it actually costs to accept a card.
Every card sale carries a fee, and most of it is a pass-through cost no processor controls. The part that's actually up to the processor — the markup — is the part quotes work hard to blur. This is a plain-English breakdown of how card-acceptance costs are built, so you can read a merchant-services quote critically and compare on the number that matters. It's education, not a sales pitch — we don't sell processing.
The fee is three parts, not one
What you pay to accept a card breaks into three pieces. Interchange goes to the bank that issued your customer's card and is the biggest chunk — the card networks publish the schedules, and it varies by card type and how the sale is taken. Assessments are the smaller fees the card networks themselves charge. Both of those are pass-through costs that are the same no matter which processor you use. The third piece — the processor's markup — is the only part that's actually up to the company selling you the service, which is exactly why it's the part to compare.
One useful fact about the pass-through layer: debit-card interchange at large banks is capped by the Federal Reserve's Regulation II, while credit-card interchange is set by the card networks and generally runs higher and varies more by card type. So your effective cost also depends on the card mix your customers happen to use — something no processor controls.
Four things to look at — in this order
Because most of the cost is fixed pass-through, comparing processors well means looking past the headline rate at the things they actually decide. Run every quote through these.
The pricing model — interchange-plus, flat, or tiered
This decides whether you can even see what you're paying. Interchange-plus separates the pass-through cost from the processor's markup, so the number that's actually up to the processor is visible. Flat-rate blends everything into one simple rate — predictable, often costlier at volume. Tiered pricing hides the markup inside buckets the processor controls. If transparency matters to you, that's a reason to favor interchange-plus.
The effective rate, not the headline rate
The rate a processor advertises is rarely the rate you pay. Add up a real month's fees — percentage, per-transaction, monthly, statement, gateway, PCI, batch — and divide by total volume to get your effective rate. That single number, computed the same way across quotes, is the only honest comparison. A low teaser rate with fat add-ons can cost more than a plainer, higher-looking one.
Hardware, POS, and your in-person / online mix
What you need to actually take payment: a countertop terminal, a mobile reader, a full point-of-sale system, an online checkout and gateway, or some combination. Card-present sales cost less to accept than online ones, so the right setup follows how you sell. Watch for hardware you're leasing versus buying, and whether the gear locks you to one processor.
Contract terms — chargebacks, PCI, and getting out
The fine print is where merchant deals go wrong: chargeback fees and dispute handling, PCI-compliance fees (and non-compliance penalties), long contracts, auto-renewal, and early-termination fees. Read the exit terms before you sign, not after. A processor you can leave cleanly is worth more than a slightly lower rate you're locked into.
The one calculation to do
Compare on the effective rate, computed the same way
Take a real statement, add up every fee it charged — the percentage cuts, the per-transaction fees, and every monthly, gateway, statement, PCI, and batch line — then divide the total by the sales volume that ran through it. That's your effective rate. Do it identically for each quote you're weighing. It collapses a page of confusing line items into one honest number, and it's the only comparison that can't be gamed by a low advertised rate stacked with add-ons.
One thing merchant services is not
Payment processing is a service you buy, not a deposit you hold — so, unlike a business checking or savings account, there's no FDIC insurance attached to the processing itself. The money settles into your business bank account, and that account is where deposit insurance applies. Keep the two ideas separate: the processor moves money and charges a fee to do it; the bank holds the money and is the FDIC-insured party. ClearValue Banking is neither — we just explain how both work.
Frequently asked
What is interchange, and who actually sets it?
Interchange is the fee that goes to the card-issuing bank every time a customer pays with a card — the largest single piece of what it costs a business to accept cards. The card networks (Visa, Mastercard, and others) publish the interchange schedules; the issuing bank collects it. Neither your processor nor the merchant sets it. Credit-card interchange is set by the networks and varies by card type, while debit-card interchange at large banks is capped by the Federal Reserve's Regulation II. Because interchange is a pass-through cost, the clearest way to compare processors is on the markup they add on top of it, not on the total rate.
What are the different pricing models, and which is clearest?
Three common ones. Interchange-plus quotes interchange (the pass-through cost) separately from the processor's fixed markup, so you can see exactly what the processor keeps — it's the most transparent. Flat-rate charges one blended percentage plus a fixed per-transaction fee regardless of card type — simple and predictable, often pricier at volume. Tiered pricing buckets transactions into 'qualified/mid/non-qualified' rates and is the hardest to audit, because the processor decides which bucket each sale lands in. If you want to know what you're paying, interchange-plus makes it visible.
What's the difference between accepting cards in person and online?
In-person (card-present) transactions are cheaper to accept and carry less fraud risk, because the physical card and often a chip or tap verify the buyer. Online (card-not-present) transactions cost more in interchange and carry more fraud and chargeback risk, since the card isn't physically there. If you sell both ways, expect different effective rates and different fraud tools for each — and factor that into which processor and hardware actually fit your mix.
Does ClearValue Banking sell or recommend payment processing?
No. We're an independent education publisher, not a payment processor, bank, or broker. We don't sell merchant accounts, take a cut of your processing, or endorse a specific provider. This page explains how card-acceptance costs are built so you can read a processor's quote critically and compare on the number that matters — the markup — rather than on a headline rate.