Why interchange sets the floor

No processor can charge you less than interchange, because interchange is not theirs to discount — it goes to the bank that issued your customer's card, and the card networks set it. On a typical US consumer credit card it runs somewhere between 1.5% and 2.5% plus a fixed amount, and a rewards or corporate card is higher still.

So when a rate is advertised as a fraction of a percent, that figure is the processor's margin. Add interchange and assessments and you get the real number. This is the whole mechanic of interchange plus pricing, and it is a perfectly legitimate structure — the problem is only ever a margin quoted as though it were the total.

What to add up

Put everything from one statement into the fees box above:

  • Interchange and assessments — on an interchange-plus statement these are itemised separately; they still count.
  • Processor margin — the percentage and per-item fee quoted to you.
  • Monthly account, statement and minimum fees.
  • Gateway or virtual terminal fee.
  • PCI compliance fee, and any non-compliance penalty.
  • Equipment lease — terminal leases in this channel often run several years and can exceed the hardware's value.
  • Early termination fee — not a monthly cost, but check whether one exists before you plan a switch.

The benchmark

Once you have a single percentage you can compare it to anything. Flat-rate processors publish around 2.9% + 30¢ for online volume with no monthly fee. Paydude publishes 2.6% + 25¢, falling to 2.5% + 15¢ as volume grows — no monthly platform fee, no PCI fee, no contract, and the rate improves automatically rather than on request.

If your effective rate is well above those figures, the difference is real money and worth acting on. If it is below them, you have a genuinely competitive interchange-plus deal — check the fixed fees and the contract term, then keep it.

GOOD QUESTIONS

Frequently asked

What are Merchant One's fees?+

Merchant One quotes pricing per business rather than publishing a standard rate card, so there is no single figure to look up. Advertised rates that begin with a fraction of a percent describe a margin over interchange, not an all-in cost. The only accurate number for your account is your effective rate: total fees divided by total volume on one statement.

Can a card processing rate really be 0.2%?+

Not as an all-in cost. Interchange — the part that goes to the bank that issued your customer's card — is typically 1.5% to 2.5% plus a fixed amount on a US consumer credit card, and no processor can charge below it. A rate quoted in tenths of a percent is the processor's margin on top of interchange, which is how interchange-plus pricing is normally expressed.

How do I calculate my real effective rate?+

Take one monthly statement and add every charge on it: interchange and assessments, the processor's percentage and per-item fees, monthly account and minimum fees, gateway, PCI and any equipment lease. Divide the total by the gross card volume for the same month. That percentage is what you actually pay.

Is Paydude cheaper than Merchant One?+

It depends on the deal you were quoted, which is why this page asks for your statement instead of asserting an answer. Paydude publishes 2.6% + 25¢ falling to 2.5% + 15¢ on volume, with no monthly platform fee, no PCI fee and no contract term. Enter your figures above and the calculator shows which way it falls at your own card mix.

What should I check before signing a merchant account?+

Four things: whether the quoted rate is a margin or an all-in cost, the full list of recurring monthly fees, the contract term and any early termination fee, and whether hardware is bought or leased. Those four decide the real cost far more often than the headline percentage does.