Why receiving payments with cards generates costs for your business?
The Sale
When a merchant completes a sale and credit card payment is accepted the transaction is handled by multiple systems and networks that verify its authenticity and security through their platforms. Each entity (Franchise / Bank / Processor) charges a small fee in the transaction process like a toll for using its platforms also to ensure that the merchant receives the payment for each sale.

This route is different for each transaction therefore its cost may be slightly different for each sale. The variation depends on several factors such as the card type used to complete the payment, transaction amount, risk level, etc.
Example: A $100 sale made in any business which payment is made with a credit card, result in a commission scenario structured as follows.

Interchange Rates

When a customer uses its card, the card owner (commonly a Bank) generates an interchange fee, usually this fee refers to a percentage of the sale or a small portion of the transaction.
e.g. The Issuing bank charges a commission of 2.5% + $ 0.10 per transaction
You Pay $ 2,60

Assessment Fee (Brand Fee)

Card franchises (Visa, Mastercard, AMEX, Dinners Club, etc.), charge a commission when your card is used in a business.
e.g. The Brand charges a commission of 0.10% + 0.05 per transaction.
You Pay $ 0,15

Transaction Fee

The processor or transaction's acquirer charges for routing through its platforms and to facilitate communication between issuing and acquiring banks, and Brands.
e.g. The Processor charges a commission of 1% + $ 0.05 per transaction.
You Pay $ 1,05

The merchant makes a sale in the amount of:


Total fees for this transaction:


The merchant receives in your account:


Choices that Suit your Business
As explained above, processing fees can be negotiable however sometimes it is difficult to understand and apply in daily basis because its value can fluctuate due to several factors.

Generally, the fees can be structured in 3 different ways for the benefit of your business model.
Fixed Rate
Fixed Percentage per transaction
Default single fee that includes all costs associated with the transaction. This model is very popular today since there are no surprises and merchants can anticipate easily the financial costs by receiving payments for their sales.
Fixed Interchange
Fixed Percentage + Transaction Fee
The merchant pays a fixed percentage fee for each transaction regardless of card type, amount or risk. All the fee mentioned above are included in this fixed cost. Additionally, it pays a transaction fee based on the number of operations it performs in an agreed period of time between the business and its transactional service provider.
Traditional Exchange
Variable Percentage + Transaction Fee
The 3 fees explained above, which very transaction to transaction , are transferred to the merchant. This means that the merchant pays separately a variable percentage for each transaction plus a fixed cost for the operation. It can be difficult for merchants to predict how much each transaction costs, since each will have a different cost.