When a customer taps a card, the fee you pay is split among three parties. Two of them charge the same amount no matter which processor you use. Knowing which layer is which tells you where there is room to reclaim money and where there is not.
Layer 1: Interchange (goes to the card-issuing bank)
Interchange is a fee set by the card network and paid by your processor's bank (the acquirer) to the bank that issued the customer's card. Visa describes interchange reimbursement fees as transfer fees between acquiring banks and issuing banks for each Visa transaction, and notes that merchants do not pay interchange directly; they pay a merchant discount negotiated with their own financial institution. Mastercard says the same: interchange is established by Mastercard, generally paid by acquirers to issuers, and is one component of the merchant discount rate.
Key facts about interchange:
- The networks publish their U.S. rate tables. Visa and Mastercard both post current schedules (links in Sources). Mastercard says it typically updates rates twice a year.
- Each rate has qualification criteria. Mastercard lists merchant category, the time between authorization and clearing, whether card data was read electronically, whether enhanced data was sent, and the merchant's volume.
- Rates vary by card type. Rewards, premium and business cards cost more than basic cards.
- Debit from large banks is capped by federal rule. Under Regulation II, an issuer with $10 billion or more in assets may not receive more than $0.21 plus 0.05% of the transaction, plus a $0.01 fraud-prevention adjustment if eligible. In 2024 those regulated debit transactions averaged 0.47% of value, while debit from exempt smaller issuers averaged 1.21%.
Your processor cannot change interchange. It can only affect which rate your transactions qualify for, by sending complete data and settling on time.
Layer 2: Assessments and network fees (go to Visa, Mastercard, Discover, Amex)
Assessments are the networks' own charges, calculated as a small percentage of volume plus a few per-transaction and per-month items. Chase lists assessment fees on its statement guide as set by the card networks. They appear on interchange-plus statements as lines labeled by brand, such as "Visa assessment" or "Mastercard assessment," alongside the networks' per-transaction fees.
Like interchange, assessments pass through at cost. The networks do not publish a simple public price list for all of them, so the way to check is to compare the percentage on your statement with what your processor's fee schedule says it passes through.
Layer 3: Processor markup (goes to your processor)
Everything else is markup: the processor's percentage, per-transaction fees, monthly fees, PCI fees, statement fees, gateway fees and so on. This is the only layer your processor sets and the only layer that changes when you change plans or processors.
On a flat-rate plan the three layers are blended into one rate, so you cannot see the markup. On a tiered plan they are blended into three or four buckets. On an interchange-plus plan the statement shows interchange and assessments as pass-through lines and the markup as a separate percentage and per-item fee. See Credit Card Processing Pricing Models Explained.
How the three layers look on a statement
| Layer | Who sets it | Typical statement labels | Can your processor change it? |
|---|---|---|---|
| Interchange | Card network, paid to issuing bank | Category names from the Visa and Mastercard schedules, often with the card product (Rewards, Signature, World Elite) and "Regulated Debit" | No, only how you qualify |
| Assessments | Card network | "Assessment" plus per-transaction and per-month network items, labeled by brand | No |
| Markup | Your processor | Discount rate, per item, monthly, PCI, statement, gateway | Yes |
Labels differ by processor, and the networks' schedules (linked in Sources) list the category names. If you cannot tell which layer a line belongs to, Merchant Statement Analyzer classifies each one for you.
Why the split matters
Imagine two statements with the same 2.7% effective rate. On the first, interchange and assessments are 2.2% and markup is 0.5%. On the second, interchange and assessments are 1.6% and markup is 1.1%. The second merchant has far more to reclaim by changing plans, and the first merchant would gain little from switching but might lower interchange by fixing how transactions are submitted. The effective rate alone cannot tell them apart. The layers can.
FAQ
Is interchange negotiable?
Not by an individual merchant. Rates are set by the networks and published. What you can influence is qualification: card-present acceptance, prompt settlement and complete transaction data generally qualify for lower categories.
Do Square and Stripe pay interchange?
Yes. Every processor pays interchange and assessments on your transactions. A flat rate simply bundles those costs with the processor's markup into one number.
What is the Durbin Amendment?
The 2010 federal law behind Regulation II. It caps debit interchange for large issuers and bars networks from stopping merchants who offer discounts for cash, check or debit.
Why does my interchange-plus statement have dozens of interchange lines?
Each line is one interchange category. A busy shop can hit twenty or more categories in a month across Visa, Mastercard and Discover.
See your three layers in one upload
Merchant Statement Analyzer is free. Upload last month's statement to the analyzer and see interchange, assessments and markup separated, plus what other plans would have cost on the same statement.
Sources
- Visa, Regulations and fees for small business (interchange definition and link to the Visa USA interchange schedule): https://usa.visa.com/support/small-business/regulations-fees.html
- Visa USA Interchange Reimbursement Fees (PDF): https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf
- Mastercard, Interchange rates and fees: https://www.mastercard.com/us/en/business/support/merchant-interchange-rates.html
- Federal Reserve, Regulation II average debit card interchange fee (cap and 2024 averages): https://www.federalreserve.gov/paymentsystems/regii-average-interchange-fee.htm
- 15 U.S. Code 1693o-2, Reasonable fees and rules for payment card transactions: https://www.law.cornell.edu/uscode/text/15/1693o-2
- Chase, Merchant payment statements (assessment fees set by card networks): https://www.chase.com/business/support/payments/merchant-payment-statements