Straight answer
Why are my credit card processing fees so high?
Because your effective rate has drifted above the interchange floor. Interchange is set by the card networks and every processor pays exactly the same. Everything above it is markup, and markup gets adjusted upward after signing, in increments small enough that nobody calls. Your card mix matters too. Rewards cards, corporate cards, and keyed-in transactions all cost more than a swiped debit card.
The number worth knowing is your effective rate: twelve months of total cost divided by twelve months of volume. Most owners have never calculated it.
Do this yourself
Four steps, one afternoon, no help required.
We would rather you run this than take our word for it. If the answer is that you are priced well, you have saved yourself a phone call.
Pull twelve months of processing statements
All of them, from every processor. If you take payments through more than one system, and most businesses do, you need every one.
Add up every cost, not just the discount rate
Discount rate, per-transaction fees, monthly fees, gateway fees, PCI fees, statement fees, batch fees, chargeback fees, and anything netted out of a deposit before it reached your account.
Add up total card volume for the same twelve months
Gross, before any fees came out.
Divide cost by volume
That is your effective rate. It is usually higher than the rate you remember agreeing to, and it is the only number worth comparing.
What the gap is worth
The fee is an expense. The multiple is the real cost.
A processing cost you remove does not just come back as cash. It comes back as earnings, and earnings are what a buyer applies a multiple to when they value the business.
That is why this is worth doing years before you intend to sell anything, and why it is a strange thing to leave to the month you decide to.
Illustrative only
| Annual card volume | $2,000,000 |
| Current effective rate | 3.5% |
| Annual cost | $70,000 |
| At 2.6% | $52,000 |
| Annual difference | $18,000 |
Hypothetical, illustrative. Shown to demonstrate the mechanism. It is not a projection of your result or a promise of savings.
Common questions
The rest of it.
- Why are my credit card processing fees so high?
- Almost always because your effective rate has drifted above the interchange floor. Interchange is fixed by the card networks and every processor pays the same. Everything above it is markup, and markup gets adjusted upward after signing in increments too small to notice. Card mix matters too: rewards cards, corporate cards, and keyed-in transactions all cost more than a swiped debit card.
- What is a good effective rate?
- Divide twelve months of total processing cost by twelve months of card volume. That is your effective rate, and it is the only number that matters. What counts as good depends on your card mix and average ticket, so the useful comparison is not against a benchmark, it is against what the same volume would cost on a different program.
- Why can I not find all the fees on my bank statement?
- Some processors deduct fees from each batch before the deposit arrives, so the cost never appears as an expense. Your revenue just shows up smaller. Others bill monthly in a lump that lands in a general ledger account alongside bank charges. Both make the true annual figure hard to see without assembling it deliberately.
- Is switching processors disruptive?
- Usually less than owners expect, and it depends far more on your point of sale or field service software than on the processor. The honest answer is that it varies, which is why the first step is finding out what you are paying rather than deciding to switch.
Or we do it with you
We will assemble the number and hand it to you.
Processing is one of ten categories we look at. It costs nothing, it takes about forty minutes of your time, and you keep the findings whether or not you do anything with us.