Why Your Processor Markup Matters More Than Interchange Rates

Many merchants obsess over interchange rates — the fees set by Visa, Mastercard, and other card networks. But here is the truth: interchange rates are the same regardless of which processor you use. They are set by the card networks and passed through identically. What varies dramatically between processors is the markup — the fees your processor charges on top of interchange.

Components of Processor Markup

A processor's markup typically includes: basis points (a percentage added to each transaction), a per-transaction fee (a flat cent amount per transaction), monthly account fees, and various ancillary fees (PCI, batch, statement, etc.).

How to Compare Markups

To compare processors apples-to-apples, look only at the markup — not the total rate. If Processor A quotes interchange + 0.20% + $0.08 and Processor B quotes interchange + 0.35% + $0.12, you can directly compare these markups because the interchange component will be identical between both processors.

Reasonable Markup Ranges

• High-volume merchants ($100K+/month): 0.05% to 0.15% + $0.05 to $0.08
• Mid-volume merchants ($20K-$100K/month): 0.15% to 0.30% + $0.08 to $0.12
• Low-volume merchants (under $20K/month): 0.25% to 0.50% + $0.10 to $0.15

Negotiation Leverage

Volume is king in rate negotiations. The more you process, the more willing processors are to reduce their markup. Bundling services (processing, gateway, POS) can also provide leverage. And always get competing quotes — nothing motivates a processor like the threat of losing your account.

Mogil Partners specializes in identifying and negotiating processor markups. We know the competitive ranges for every business type and volume level. Let us negotiate on your behalf.