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Chapter 15 - Processing Fees Simplified

Are there fees beyond Interchange? When I first entered the bank card space I was asked a million times ‘What’s your rate?’. Today the same questions are asked by a merchant base generally in the dark as to how fees are assessed, not educated on ALL the fees from equipment to early cancellation fees. Which brings us back to both interchange - the core fees which constitute the majority of the fee assessed to the merchant, and all the ancillary fees charged against the merchant.


Merchants must pay fees to the issuing and acquiring banks, as well as the card associations. Processing fees are discussed, including who gets what fee. We review interchange in this context as well.


Consumers require some means to conduct a purchase. Whether face to face in a store, online purchases, or mobile transactions we review the expenses which are tied to each solution. We also discuss the merits and downfalls of each purchase method - cash, lease, and rental.


The processor (third party, ISO, or MSP) plus the agent receive their compensation within the fees assessed as part of the merchant agreement.  There are many fees which, collectively, constitute a significant earnings opportunity for processor and agent alike. We will discuss many of the fees to set the stage for our pricing discussion in a future chapter.

iProcess - Knowing the Payment Industry (Part 1)

Chapter 15 - Processing Fees Simplified


Be Creative. Use unconventional thinking. And have the guts to carry it out
- Lee Iaccoca

Merchant Fees ‘De-Mystified’

Payment processing is not an inscrutable event. Consumers make purchases, and merchants desire money. As many purchases are made with a credit card, the merchant understands that at the end of the day they must pay a ‘fee’ or ‘service charge’ to convert the electronic data captured at their store into money in their bank.

iProcess demands you are comfortable with merchant fees. Although the sale occurs between consumer and merchant, the ‘intermediaries’ who handle the money transfers when credit cards are used are critical in providing a reliable, convenient, and secure event.

Issuing and Acquiring banks will make money on each sale via interchange fees. The sales channels – third party processors, ISO and MSP organizations sell the services to the merchant, with agents act as the sales conduit between merchant and processor.

Everyone who provides a service wants to be paid. Interchange fees are but a portion of the expense associated with credit card processing and yes, although they can be confusing, ...

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iProcess - Sell Payment Processing Like a Pro!