Markup

How it works

A gap of 0.20% between two quotes reads like a rounding error. On $600,000 of annual card volume it is $1,200 a year. That is the whole reason markup is the line to argue over: interchange costs the same whoever you sign with, assessments too, and the markup is the only part of the price a competing processor is free to move.

Every card sale splits three ways. Interchange goes to the bank that issued the card, assessments go to the network, and what is left goes to your processor and to whoever resold you the account. That remainder is the markup, normally quoted as a percentage of volume plus a few cents per transaction. It does not stop there. Monthly account fees, statement fees, PCI fees and batch fees all land in the same pocket, so treat them as part of the same number.

How it reaches you matters as much as how big it is. Daily discount pricing deducts it from each deposit, so your bank statement never shows the gross sale. Monthly billing takes one lump sum you can audit instead. Most agreements also let the processor reprice on written notice, and that notice is often a single line at the foot of a statement. On a tiered or flat-rate statement none of it is itemised at all, so your effective rate is the only handle you have.

Worked example

Your markup on a $50,000 month can be 0.42% of volume while the quote in your hand says 0.30%. Here is how. The processor prices at interchange plus 0.30% and $0.10 per transaction, and you run 500 sales. Volume markup is $150, transaction markup $50, so $200, and a $10 statement fee takes it to $210. Add $900 of interchange and assessments and the total cost is $1,110, an effective rate of 2.22%.

Frequently asked questions

What is a good markup for credit card processing?

Between about 0.15% and 0.50% plus $0.05 to $0.15 per transaction is where most small businesses on interchange-plus land, with the lower end reserved for higher volume. Above that, push back. Ask for the quote in writing as a stated percentage and per-item fee, and compare offers on markup alone, because interchange costs every processor you approach exactly the same.

Can you negotiate your processing markup?

Processors set the markup themselves, so yes, they can cut it to win or keep an account, and twelve months of statements showing steady volume is the strongest thing you can put in front of them. Ask for a rate review rather than a new contract, since a rewritten agreement can reset your term and your cancellation terms. Interchange and assessments are fixed by the networks and nobody can discount them.

How do I find the markup on my statement?

Look for a line that sits apart from interchange. On an interchange-plus statement it shows as a stated percentage and per-item fee, often labelled discount rate or processor fee. Tiered and flat-rate statements do not break it out at all. There you have to work backwards: calculate your effective rate and treat anything above a realistic wholesale cost as markup.