Understanding Payment Processing Fees
On a $100 sale you'll pay roughly $3.20. About $1.94 goes to banks and card networks. You can't change that part. About $1.26 goes to your processor. You can change that part, and not only by negotiating.
For scale, against a real published rate: Square's Free plan is 2.6% + 15c in person, so that $100 sale costs $2.75. Online it's 3.3% + 30c, so $3.60 (squareup.com/us/en/payments/our-fees, verified 2026-08-02).
Payment processing fees are confusing. Here's what you actually need to know.
This is the guided path version. For hidden fees and statement auditing, see the Processor Fees Guide. For qualifying for lower rates, see Interchange Optimization.
Where Your Fees Go
Here's a real example of a $100 Visa credit card transaction:
| Component | Amount | Who Gets It | Can You Negotiate? |
|---|---|---|---|
| Interchange | ~$1.80 | Customer's bank (Chase, Citi, etc.) | No |
| Assessment | ~$0.14 | Card network (Visa, Mastercard) | No |
| Processor Markup | ~$1.26 | Your processor (Stripe, Square, etc.) | Yes, at volume |
| Total | ~$3.20 |
Rates vary by card type, transaction type, and your pricing model.
On American Express: Amex cards usually cost 0.3-0.5% more than Visa or Mastercard. Amex is both the network and the issuer.
The Three Components Explained
- Interchange Fee: The biggest piece. It goes to the bank that issued the customer's card, the issuer. You're paying that bank to carry the risk that the charge is good and the customer pays their bill. The card networks set the rates. You can't negotiate them.
- Assessment Fee: A smaller fee, and it goes to the network itself. Visa and Mastercard charge it for running the wires between banks. Also non-negotiable.
- Processor Markup: What your payment processor charges you. It pays for software, fraud protection, support and infrastructure. This is the only piece you can move.
How Pricing Models Affect Your Fees
On flat-rate pricing (Stripe, Square, PayPal)? You pay one rate on every transaction. Skip to When Should You Care.
- Flat-rate: You never see the components. The processor bundles everything into one rate. Square's Free plan is 2.6% + 15c in person and 3.3% + 30c online. It's simple and predictable. You overpay on cheap cards so you can underpay on expensive ones. See our processor comparison.
- Interchange-plus: The most transparent model. You pay the real interchange and assessment on each sale, plus a published markup. Helcim's entry band is interchange + 0.40% + 8c in person and interchange + 0.50% + 25c online, no monthly fee (helcim.com/pricing, verified 2026-08-02). You see what you pay and who gets it.
- Tiered: Sales get sorted into buckets: qualified, mid-qualified, non-qualified. Each bucket has its own rate. Good luck finding out why a sale landed where it did. It's the least transparent model and usually the worst deal.
When Should You Care About This?
| Your Monthly Volume | What to Do |
|---|---|
| Under $10K | Focus on growing. But spend 20 minutes checking your card mix, because interchange-plus with no monthly fee can beat flat rate even here. |
| $10K - $50K | Get one interchange-plus quote and compare it properly. Also ask your current processor about volume discounts - a simple email can save you 0.1-0.2%. |
| $50K - $100K | If you're still on flat rate, this is where it starts costing real money. Published interchange-plus bands drop automatically at $50K. |
| Over $100K | Negotiate the markup, not the headline rate. Every 0.1% saved is $100+/month in your pocket. |
That advice made sense when interchange-plus carried a monthly fee you had to grow into. It doesn't any more. Helcim charges $0 a month. No setup, PCI, statement or cancellation fee either. It publishes six volume bands that apply automatically as you grow (helcim.com/pricing, verified 2026-08-02).
There's no fixed cost to amortise now. So the deciding factor is ticket size, not volume. Square Free in person and Helcim's entry band cost the same on a $9.23 ticket. Above that, Helcim's lower percentage wins. Below it, Square's smaller fixed fee wins. See how we model processing cost.
Reading Your Statement
Here's the fastest way to check if you're overpaying:
- Log into your processor dashboard
- Find last month's total sales and total fees
- Divide fees by sales. That's your effective rate
- Healthy range for most small businesses in person: 2.5-3.2%. Online runs higher
Before you panic at a high number, check your published rate. It may be doing exactly what it says. Square's Free plan online is 3.3% + 30c. A store with a $50 average ticket lands at 3.90%. That's design, not a mistake. If that's you, the fix is a new plan or a new processor. Not a rate review email.
Is your effective rate well above the published rate for your channel and ticket size? Then something else is going on. Email your processor and ask for a rate review. Or compare current pricing in the Processor Comparison.
Some processors bury extra fees in your statement. Common ones to look for:
- PCI non-compliance fee if you haven't completed your annual PCI (the security standard for handling card data) questionnaire
- Monthly minimum fee if your processing volume is too low
- Statement fee for mailing a paper statement
These are real. The amounts are processor-specific, not an industry standard. Moneris publishes a CA$5.00 minimum merchant discount rate, a CA$5.00 Moneris Go software fee and a CA$2.00 paper statement fee (moneris.com/en/pricing, verified 2026-08-02). Ask yours for its full fee schedule. Don't assume a range.
Four processors say on their own pages that they charge nothing like this. Square: "no monthly subscription costs" on the Free plan. Stripe: "does not charge setup fees, monthly fees, or any other hidden fees." PayPal: none on standard commercial accounts. Helcim is the bluntest of the four: "no setup, PCI, cancellation, or statement fees." All verified 2026-08-02.
On a flat-rate plan, your statement is simple. On interchange-plus or tiered, ask for a detailed breakdown if you don't get one. For help reconciling, see settlement and reconciliation.
Your First Week Action
Log into your processor dashboard. Find your effective rate: total fees divided by total sales. Write it down. That number tells you when optimizing is worth the time.
You've Completed the Payments Basics
You now understand:
- The players in the payments ecosystem
- How to choose a payment processor
- The different types of payment processing fees
Next Steps
Come back to these after finishing The Guide: