Merchant account fees calculator

A merchant statement has three layers and only the top one gets discussed. The bottom layer is interchange, which goes to the bank that issued your customer's card. The middle layer is assessments, which go to the card networks: on North Carolina's published pass-through schedule, 0.14 percent for Visa credit, 0.13 percent for Mastercard, 0.14 percent for Discover and 0.165 percent for American Express, plus Mastercard's network access fee of $0.0195 per authorization. Neither layer is your processor's money and neither is negotiable by anyone in the chain.

The top layer is where your processor makes its living, and it has two halves. One is the markup on every transaction, which is the number everybody negotiates. The other is a long tail of small fixed charges billed monthly, annually or per settlement batch, and almost nobody negotiates those, because each one is too small to be worth a phone call on its own. The Junk Fee Annualizer exists to price the tail rather than the markup.

The full set is short enough to list. Monthly: a statement fee, an account or service fee, a PCI compliance program fee, a PCI non-compliance fee, a gateway fee, a terminal or equipment rental, and sometimes a flat line called a network access fee. Annually: an annual or membership fee, sometimes a separate annual PCI program fee, and occasionally an IRS reporting or 1099-K fee. Per settlement: a batch fee. And one that is not periodic at all, the early termination fee, which you only pay on the way out but which prices your ability to leave.

Two deserve a warning about their names. Heartland's merchant processing agreement tells the merchant, in a footnote to its own fee schedule, that a monthly fee will appear on the statement titled Service and Regulatory Mandate Fee. Nothing about it is a mandate. And a flat monthly network access fee is not the network's: the real one is $0.0195 an authorization and moves with your transaction count. A line that calls itself a network fee and does not move with your volume is a processor fee wearing a network's clothes.

A percentage fee is a rate by construction. A fixed fee is a rate too, but you have to divide to see it, and the divisor is your volume. That is the entire mechanism this page exists to expose. Take the $1,323 annual bill in the worked example above and hold it still while the volume moves: at $5,000 a month it is 221 basis points, at $10,000 it is 110, at $15,000 it is 74, at $25,000 it is 44, at $50,000 it is 22 and at $100,000 it is 11. Same fees, same processor, same statement. Nine times the volume, one twentieth of the rate.

The consequence is that fixed fees are regressive, and they are worst for exactly the merchants who negotiate least. A business processing $100,000 a month can shrug at $1,323 because it is a rounding error against interchange. A business processing $5,000 a month is paying more in fixed fees than most processors charge in markup, and it is usually the one being told that its rate is competitive. The rate probably is competitive. The rate is not the bill.

This is also why comparing processors on rate alone gives the wrong answer at the bottom of the market. A flat-rate account at 2.9 percent plus 30 cents with no monthly fees is often more expensive per transaction than an interchange-plus account at cost plus 0.25 percent, and cheaper in total, because the second account carries $110 a month of fixed charges that the first does not. The crossover moves with volume and it is worth working out rather than assuming. The Junk Fee Annualizer gives you one half of that comparison and the effective rate calculator gives you the other.

This one deserves its own section because it is the only line on the list that is pure penalty, entirely within your control, and charged every single month until you act. It is not a fine from the card networks. No regulator receives it. Your processor charges it because you have not filed an annual self-assessment questionnaire, and it keeps charging until you do. North Carolina's contract with Fiserv states the mechanism exactly: the non-receipt of PCI validation fee is $19.95 a month, charged for each month after the PCI validation due date until validation is received.

The amounts vary far more than any other line here. The state contract's $19.95 a month is $239.40 a year. A completed Heartland merchant agreement filed in a Georgia council packet shows the fee at $125.00 a month, which is $1,500 a year for not filling in a form. Neither figure is a market rate, because there is no market: the processor sets it and the processor keeps it, and there is nothing on the other side of the transaction.

The fix is genuinely small for most small merchants. The PCI Security Standards Council publishes a set of self-assessment questionnaires and the shortest, SAQ A, covers merchants who accept only card-not-present transactions and have outsourced all account data handling to compliant third parties, keeping no account data in electronic form on their own systems or premises. That describes a great many small ecommerce sellers using a hosted checkout. A merchant swiping cards in a store falls into a different questionnaire, and one that stores card numbers falls into a much longer one, so the first job is finding out which applies to you rather than starting to answer questions. Once it is filed, ask for the months already charged to be credited, then diarize the anniversary: the commonest way this fee comes back is a validation lapsing at twelve months while nobody is watching.

The credibility of a page like this rests entirely on not calling everything a scam, so here is the honest split. Interchange and assessments are pass through: the money leaves your processor and goes to an issuing bank or a card network at published rates, and no processor can waive them. If a salesperson offers to cut your interchange, that is a reliable signal that they are describing something else, usually their own markup.

A gateway fee is a real service. Authorize.net publishes $25 a month for its gateway on every plan, and a gateway really does route card-not-present transactions. It is on this list for duplication rather than invention: merchants routinely pay a gateway fee to a reseller on top of the fee the gateway itself charges, or pay for a gateway their processor already includes. The PCI compliance program fee is the genuinely ambiguous one. At its best it buys quarterly external scanning by an approved scanning vendor and a breach liability warranty. At its worst it buys a login. The test is one question: which approved scanning vendor is attached to my account? If nobody can name one, you are paying for a login, and Helcim publishes $0 for the same annual self-assessment alongside no minimums, software fees or statement fees.

The rest are margin. A statement fee was postage when statements went out in envelopes. An annual fee is a monthly fee collected in one hit, timed to land in a month you are not reading closely, and nothing costs a processor money once a year and nothing the other eleven months. An IRS reporting or 1099-K fee charges you for something the processor already has to do, because 26 U.S.C. 6050W obliges a payment settlement entity to file an information return on the payments it settles for you. A monthly minimum is margin too, but with an honest structure behind it, and it only ever costs you the shortfall.

Work down the ranked list in annual dollars, not in order of annoyance. On the worked example that is terminal rental at $420, gateway at $300, PCI non-compliance at $239.40, PCI program fee at $120, account fee at $119.40, annual fee at $99, batch fee at $25.20 and the monthly minimum at nothing. Ask for all of them in one call rather than one a quarter: the cost of the call is the same, and a processor with a retention target responds better to a list than to a nibble.

Terminal rental is the most reliably winnable and the least often attacked. North Carolina's state contract prices the same Clover Flex Gen 3 three ways: $734.00 to buy, $35.00 a month to rent month to month, and $78.00 a month on a 36 month lease. The rental passes the purchase price in 21 months and then keeps charging. The lease is $2,808 across the term for a $734 device and, unlike a rental, usually cannot be cancelled. Never sign an equipment lease with a separate leasing company: it survives the end of your processing agreement. Price the exit too. The Federal Trade Commission's July 2022 action against First American Payment Systems described an enrollment flow that hid a three year auto-renewing term and a $495 cancellation fee, and settled with $4.9 million turned over for refunds. Get your own fee, term end date and auto-renewal notice window in writing, because that window is often 30 to 90 days and missing it renews you. A $495 exit spread across 24 remaining months is $247.50 a year, which a better rate frequently repays inside a quarter.

Sometimes the right answer is to do nothing, and the Junk Fee Annualizer says so as clearly as it says the opposite. If your fixed fees come to under about 10 basis points on your volume, the tail is not your problem and interchange qualification and your pricing model are. If your monthly minimum shows as costing nothing, leave it alone rather than negotiating a floor you never touch. And if $10 a month buys a PCI program with a named scanning vendor and a breach warranty, that is a product you are buying rather than a fee you are suffering. Knowing which is which is the point.