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Chapter 17 - Contractual 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 17 - Contractual Fees Simplified


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

Contractual Fees

The associations enforce interchange, FANF, dues and assessments and PCI surcharges. None of this income makes its way into the hands of the sales agent, or the processor.

Contractual FeesThen how can you, the sales person, earn an income beyond the sales bonuses provided by the processor and the over ride on equipment sales?

In our industry, you earn a living, and many times a VERY good living, via incremental amounts - by fractions of a percent and pennies a transaction, as well as a few other methods.

And did I mention residual opportunities?

Contractual fees are the host of fees enacted by the processor as a means to generate additional income on top of that generated by adding fees on top of interchange.

Many of these fees can be reduced or even eliminated by the agent. Doing so will generally impact the income received by the agent. We encourage the agent to make a thorough review of these fees, as well as the capability for the agent to waive/alter the fees in question. We will discuss pricing in another chapter:

Cancellation Fee – If a merchant cancels their....

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