How to Read a Card Processing Quote

A processing quote is designed to be compared against nothing. Here are the three pricing models behind every quote, one merchant run through all three, and the contract clauses that decide what you actually pay — from someone who reconciles these statements every month, not from anyone selling processing.

Three costs, one of which is negotiable

Every card sale carries three separate charges. Interchange goes to the bank that issued the customer’s card. Assessments go to Visa or Mastercard. Markup goes to your processor. The first two are set by the card networks, published openly, and identical through every processor in the country. The markup is the only part anyone can negotiate — and the entire craft of quoting is making that markup hard to see.

The three pricing models below are three different answers to a single question: how visible is the markup?

Tiered pricing: built for the sales call

Tiered pricing sorts your transactions into buckets — usually qualified, mid-qualified, and non-qualified — and charges a different rate for each. The number on the sales sheet is the qualified rate, because it is the lowest. Here is the part the sheet does not say: the processor decides what qualifies. The bucket definitions are not in the card network rules; they are in your processor’s own pricing schedule, and they can change with a notice buried in your statement.

In practice, a plain consumer debit card, swiped in person, qualifies. A rewards card — which is what most customers now carry — typically does not. Corporate cards, keyed-in transactions, and online sales fall to the bottom tier. So the advertised rate applies to a minority of your volume, and the processor controls how small that minority is. A downgrade does not look like a price increase; it looks like your customers’ cards getting fancier.

This is also how the “we will beat your current rate” pitch works. The salesperson compares their qualified tier against your effective rate — the average across everything you actually paid. Those are different units. It is like a hotel beating your average nightly spend with its off-season Tuesday price.

Flat rate: honest, and priced for the risk you bring

Flat-rate processors charge one blended figure — say 2.6% plus 10¢ per tap — regardless of which card the customer presents. There are no tiers, no downgrades, usually no monthly fees, and the quote genuinely is the price. The trade-off is that the blend is set high enough to cover the most expensive cards, so a business whose customers mostly pay with cheap regulated debit is subsidising everyone else’s rewards points.

Flat rate tends to win on low volume, where its lack of monthly fees matters, and to lose on high volume, where the padding in the blend adds up to real money. It is rarely the cheapest option past several tens of thousands of dollars a month — but it is almost never the trap, either.

Interchange-plus: the legible one

Interchange-plus (also called cost-plus or pass-through) charges you the actual interchange and assessments for each card, plus a stated markup — quoted like “interchange + 0.25% + 8¢”. The pass-through part is identical everywhere, so for the first time the quote states the only number that varies between processors: the markup itself. Two interchange-plus quotes can be compared directly, line against line. Two tiered quotes cannot be compared with anything, even with each other.

The statement is longer and messier — you will see dozens of interchange categories — but messy and honest beats clean and opaque. If a processor refuses to quote interchange-plus for an established business, that refusal is information.

One coffee shop, three quotes

Take a shop processing $20,000 a month across 1,600 transactions — a $12.50 average ticket. Assume its card mix produces average pass-through costs (interchange plus assessments) of about 1.7% plus 10¢ per transaction, and a realistic tiered outcome of half the volume qualified at the advertised 1.79%, the rest downgraded to 2.49% and 3.19% tiers, with a 25¢ item fee and $45 in monthly fees.

The quote with the smallest number on it is the most expensive by a third, and the two honest models land within a rounding error of each other — because at a $12.50 ticket, the per-item fees are most of the bill and no pricing model can negotiate interchange away. Change the merchant and the ranking changes too: at a $500 average ticket the per-item fees vanish, the flat-rate padding becomes the biggest cost on the table, and interchange-plus wins clearly. The model that is right for you depends on your ticket size and volume, which is exactly what a one-number quote conceals.

Red flags, in rough order of expense

• A rate below interchange. Rewards and corporate cards carry interchange well above many advertised teaser rates. A processor cannot buy interchange for less than the published schedule, so a quote below it is describing a bucket you will rarely land in, or a rate that will not survive its first review.
• An equipment lease. A terminal that retails for a few hundred dollars, leased at tens of dollars a month on a four-year non-cancellable term, is frequently the most expensive line in the entire arrangement — and the lease is usually with a separate company, so it survives a switch of processor.
• Liquidated damages on early termination. An ordinary flat cancellation fee is annoying. A clause charging your projected remaining fees for the full term is a lock on the door.
• Auto-renewal with a narrow exit window. Contracts that renew for a further year unless cancelled in writing inside a specific 30-day window, months before expiry.
• A savings analysis that compares unlike numbers. If the comparison sheet puts their qualified tier next to your total statement cost, the analysis is the sales tactic.
• “We will lower your interchange.” Nobody can. What a processor can genuinely do is cut its own markup, correct a wrong merchant category code, or move you to interchange-plus so the margin shows. Those are worth having — and none of them needs the claim.

What a fair quote looks like

Interchange-plus with the markup stated plainly. Month to month, or a term you would be comfortable losing. Purchased equipment, not leased. Every monthly fee listed with a name. And a willingness to compute the effective rate their pricing would have produced on your own last three statements — the one test a padded quote cannot pass. Run that arithmetic yourself in the effective rate calculator before anyone runs it for you.

Sources

• Visa — published US interchange reimbursement fees
• Mastercard — published US merchant interchange rates
• Federal Reserve — Regulation II, the cap on regulated debit interchange
• The worked example uses assumed card-mix costs, stated in the text; your own statement is the only source for yours

Checked 1 September 2026. Tell me if a claim here has gone stale.