Payment Processing Fees Explained: How Do Processors Charge for Transaction Fees?

Every eCommerce business experiences payment processing fees, but understanding how they work is key to optimizing your payment strategy and maximizing your bottom line. In this deep dive, we’ll clarify the fee structures processors use, how they’re calculated, and what merchants should look for when choosing a provider.

1. The Core Components of Payment Processing Fees

Payment processors typically apply a combination of these fee elements:

1. Interchange Fees – Charged by card networks (Visa, Mastercard, etc.) to the processor, these vary based on card type (debit, credit, rewards), merchant category, and transaction type (in‑person vs. online).
   
   
   

2. Processor Markup – What your processor adds to the interchange fee. This can be:
   
   
   

   • Flat‑rate per transaction (e.g., 2.9% + $0.30).
     
     
     

   • Tiered pricing (qualified, mid-qualified, non-qualified).
     
     
     

   • Interchange-plus (interchange + fixed markup).
     
     
     

3. Assessment Fees – Small percentages (typically 0.11% to 0.15%) taken by card networks to cover administrative costs.
   
   
   

4. Additional Charges – These may include monthly account fees, batch settlement fees, PCI compliance fees, chargeback fees, cross-border fees, and gateway fees.
   
   
   

2. Common Pricing Models Finally Demystified

Understanding these pricing models helps you choose a plan aligned with your transaction volume and risk profile:

• Flat-Rate Pricing
  Simple and all-inclusive (e.g., 2.9% + $0.30), ideal for small or seasonal businesses with predictable costs, but often includes higher markup.
  
  
  

• Tiered Pricing
  Processors group transactions into:
  
  
  

  • Qualified: Low-risk – lowest rate
    
    
    

  • Mid-Qualified: Moderate rate
    
    
    

  • Non-Qualified: High rate
    While it offers some savings, true tiering transparency is rare.
    
    
    

• Interchange-Plus Pricing
  You pay the exact interchange fee plus a fixed markup (e.g., interchange + 0.25% + $0.10). This model is the most transparent and scalable for merchants processing mid to high volumes.
  
  
  

3. Example Breakdown: How Fees Stack Up

Here’s a simplified example for a $100 online purchase, illustrating an interchange-plus model:

Here, the merchant nets $97.62 from a $100 sale. With high-volume sales, even small percentage differences become significant.

4. Factors That Drive Fee Variations

Several elements influence the fees you’ll be quoted:

• Card Type: Rewards or corporate cards typically have higher interchange.
  
  
  

• Transaction Method: Card-present vs. online or keyed-in transactions.
  
  
  

• Merchant Category Code (MCC): Some industries (e.g., travel, hospitality) face higher rates.
  
  
  

• Risk Profile: Merchants with frequent chargebacks or large sales volumes may be deemed higher risk.
  
  
  

• International Transactions: Cross-border and currency conversion fees increase costs.
  
  
  

5. How to Minimize Your Payment Costs

To keep costs lean and predictable:

• Choose transparent pricing – Prefer interchange-plus models that clearly separate costs.
  
  
  

• Optimize for “qualified” transactions – Ensure you’re capturing and passing all relevant transaction data.
  
  
  

• Audit monthly statements – Compare processor rates with published interchange fees and back out markups.
  
  
  

• Negotiate volume discounts – Providers may reduce costs based on your sales volume and history.
  
  
  

• Reduce chargebacks – Implement fraud tools and clear dispute resolution strategies.
  
  
  

6. Why Lasso Checkout Is a Strong Solution for eCommerce Merchants

At Lasso, we’re designed to help online sellers manage and scale payment infrastructure efficiently:

• Transparent pricing: Interchange-plus fees with clear, flat markups.
  
  
  

• Advanced fraud protection: Reduces the risk and complexity of chargebacks.
  
  
  

• Optimized checkout experience: Engineered to increase conversion and reduce declines.
  
  
  

• Dedicated support: Access to experts who understand eCommerce payment dynamics.
  
  
  

A Quick Summary

• Every transaction includes interchange, assessment, and processor markup.
  
  
  

• Pricing models (flat-rate, tiered, interchange-plus) vary widely in transparency and cost.
  
  
  

• Interchange-plus is generally the most cost-efficient for growing merchants.
  
  
  

• Regular fee audits and data optimization are key to reducing expenses.
  
  
  

• With clear pricing and tech-focused tools, Lasso Checkout empowers merchants to process payments smarter and cheaper.
  
  
  

By understanding how payment processor fees are structured and what influences them, you can dramatically improve your margins and optimize your eCommerce operation. Looking for personalized advice on your current payment setup? Reach out to Lasso’s team—we’re here to help.