Where your effective
rate actually goes

Pull your last statement and find your effective rate — total fees divided by total card volume. If you are a typical $5M–$50M founder running a blended card mix, that number probably lands somewhere between 2.4% and 3.1%. Most owners treat it as a single, immovable cost of doing business. It is not. It is three stacked layers, and two of them you cannot touch.

Understanding which is which is the difference between negotiating from leverage and negotiating from hope.

Layer one: interchange (you cannot move this)

Interchange is the fee the card-issuing bank keeps. It is set by Visa and Mastercard in published tables that run hundreds of rows deep, and every processor on earth pays the identical rate. A Visa Rewards credit card swiped in a card-present retail environment carries its own rate; a corporate card keyed into an e-commerce form carries a much higher one. Visa and Mastercard publish these tables openly — you can read them.

For a blended mix of debit and credit, interchange commonly lands in the neighborhood of 1.6%–1.9% plus a per-item fee. The exact figure depends entirely on your card mix, your industry category, and how cards are entered. No processor can discount interchange. Anyone who claims to is renaming something else.

Layer two: assessments (you also cannot move this)

Assessments are the networks' own cut — Visa, Mastercard, Discover, and Amex charging for the privilege of running on their rails. These are small and fixed: Visa and Mastercard assessments sit around 0.13%–0.14% plus a sliver of per-transaction network fees (NABU, APF, and the like). Like interchange, assessments are identical for everyone. A $50M merchant and a $500K merchant pay the same assessment percentage.

Interchange plus assessments is the floor. No processor can go below it. The only question is how much sits on top.

Layer three: processor markup (this is the whole game)

Everything above the floor is processor markup — the margin your processor adds for moving the transaction, providing the gateway, funding your account, and turning a profit. This is the only line item that is negotiable, and it is where pricing models quietly do their damage.

The trap is the pricing model itself, not just the rate:

• Flat rate (e.g. a clean "2.6% + 10¢") bundles interchange, assessments, and markup into one number. Simple — and it means you never see how thin or fat the markup is. On a debit-heavy mix where true interchange is low, flat rate can hide an enormous spread.
• Tiered ("qualified / mid-qualified / non-qualified") is the least transparent model in the industry. The processor decides which bucket each transaction falls into, and reward cards quietly get downgraded into the expensive tier.
• Interchange-plus shows you interchange and assessments at cost, then adds a stated markup — say, "interchange + 0.25% + 8¢." Because the markup is explicit, you can compare quotes apples-to-apples and audit it line by line.

What this means on a real statement

Take a merchant doing $2M a year at a 2.90% effective rate — $58,000 in annual fees. If the interchange-and-assessment floor for their mix is roughly 1.92%, then about 0.98% — call it $19,600 a year — is markup. Trimming that markup from ~98 bps to ~35 bps via a transparent interchange-plus deal recovers on the order of $12,000 annually without touching a single thing the networks control.

These are illustrative figures, not a promise — your real numbers live on your statement. But the structure holds: the floor is fixed, the markup is yours to negotiate, and you cannot negotiate what you cannot see.