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\n\t\tOpinions expressed by Entrepreneur contributors are their own.\t<\/p>\n
In 2009, U.S. merchants paid $62.1 billion to accept credit and debit cards<\/a>. In 2025, they paid $198.25 billion, according to Nilson Report figures published by the Merchants Payments Coalition. For most businesses, card acceptance is now the largest operating cost after labor.<\/p>\n You would think the rates themselves must have exploded. They haven\u2019t. When the Government Accountability Office studied interchange in 2009, Mastercard\u2019s highest interchange rate<\/a> was 3.25%. Today it is 3.30%, five basis points in 17 years. Visa\u2019s top rate was 2.95%. It is now 3.15%, but that increase is recent, and most Visa transactions still clear at 2.95% or less. More people paying by card explains much of the growth in that $198 billion total. It does not explain why so many merchants watch their own effective rate creep up year after year while the networks\u2019 published rates barely move.<\/p>\n That gap is the processor\u2019s markup and the fees stacked on top of it. I know, because I helped collect them. I spent more than a decade in the credit card processing division of a commercial bank, as an executive at Fifth Third Processing Solutions, later Vantiv and Worldpay, now part of Global Payments. During the Great Recession, merchants processed less, so our revenue fell. <\/p>\n Instead of riding it out, the answer was new fees. The day we announced another one, a monthly charge of about $8.95 per merchant ID, the mood was celebration, not regret. I could no longer do it. I blurted out in a boardroom meeting I got into banking to make my mother proud, and I\u2019m leaving because I could no longer tell my mother what I did for a living. That was January 2009.<\/p>\n Later that year, three other former executives and I founded a credit card processing auditing firm to protect merchants from unethical billing practices. Our audits reveal overbilling in about 99% of the statements we review, and more than 90% of the accounts we audit aren\u2019t set up properly from the start.\u00a0<\/p>\n Here\u2019s the important math: Interchange, the wholesale cost every processor pays, accounts for 80% to 90% of what a merchant should typically pay. A competitive markup over interchange can be as low as 0.02% to 0.05%. However, commonly reported markups range from 0.15% to 0.90%. For example, on $2 million in annual card sales, the difference between a 0.50% markup and a 0.05% markup is $9,000 a year, not even accounting for additional junk fees.<\/p>\n Before you sign, ask these five questions. Get every answer in writing, signed by an officer of the company, on paper. Not an email, not a phone call. You want something that will hold up in court.<\/p>\n Nearly every merchant agreement lets the processor change its fees, and even its terms, at any time with nothing more than notice. That notice usually arrives as a line of fine print in the message box on your monthly statement, which almost nobody reads. Visa and Mastercard release rate changes twice a year, in April and October, with more than 200 rules and rates changing at once. A processor increase that lands in the same cycle disappears into that noise. A signed rate is a starting position, not a guarantee.<\/p>\n This is the single most revealing question on the list. Interchange-plus pricing shows interchange on one line and the processor\u2019s markup on another. Tiered and flat-rate pricing blend the two, so you can never tell what the processor is keeping. If a processor won\u2019t unbundle it, it is hiding the markup. Then ask the follow-up: Is interchange passed through at cost, or padded?<\/p>\n Look for early termination fees, liquidated damages clauses that bill you for the processor\u2019s projected profit on the rest of the term, and equipment leases that survive after the processing contract ends. Then find the auto-renewal clause. Many require you to cancel inside a narrow window years in the future, and some processors have pushed that notice period out to 90 days before renewal. By the time most merchants look, the window has closed and they are locked in for another term.<\/p>\n The card brands set interchange and network assessments. The processor sets much of what sits on top, even when it is named to sound official. \u201cAnnual PCI fee,\u201d \u201cregulatory compliance fee\u201d and similar line items sound like government or card-brand charges, and are often pure margin. Ask the processor to label every line on your statement as either a pass-through or its own. Anything it controls, you can negotiate. That $8.95 fee I watched get invented never appeared on anyone\u2019s statement as \u201cextra profit.\u201d<\/p>\n The classic pitch is a rep quoting a low effective rate that disappears after 90 days, or a promise to match any offer that nobody can find a year later. If the promise isn\u2019t in the contract, it doesn\u2019t exist.<\/p>\n It does not matter how good your rates are if the contract lets the processor change them whenever it wants. Negotiate the contract as hard as the pricing: strike or cap the termination fees, shorten or remove the auto-renewal and lock the markup in writing.<\/p>\n Then keep watching. Processors know most merchants have no idea what the codes and acronyms on a statement mean, and the ones who do have too many other fires to spend hours each month checking for overbilling. That is how accounts drift.<\/p>\n Remember, this is not like other vendor agreements where you validate the bill and then pay it. With merchant processing, you are giving them unvetted access to your bank account \u2014 which I often refer to as the \u201ckeys to the kingdom.\u201d They take what they want, and then they send you a statement that you can\u2019t read or validate.<\/p>\n Whether you\u2019re negotiating a contract or having an attorney vet it to ensure you are not signing a bad contract that could cost you a lot of money, you should use a firm that is an expert in this space.\u00a0<\/p>\n Yes, our firm can help with that, but many others can as well. However, do your homework, too. Make sure they are not a credit card processor pretending to be a credit card processing auditing firm. Check out their BBB, their LinkedIn profiles, etc., and make sure you dont sign anything that is not month-to-month and has a money-back guarantee.\u00a0\u00a0<\/p>\n<\/p><\/div>\n In 2009, U.S. merchants paid $62.1 billion to accept credit and debit cards<\/a>. In 2025, they paid $198.25 billion, according to Nilson Report figures published by the Merchants Payments Coalition. For most businesses, card acceptance is now the largest operating cost after labor.<\/p>\n You would think the rates themselves must have exploded. They haven\u2019t. When the Government Accountability Office studied interchange in 2009, Mastercard\u2019s highest interchange rate<\/a> was 3.25%. Today it is 3.30%, five basis points in 17 years. Visa\u2019s top rate was 2.95%. It is now 3.15%, but that increase is recent, and most Visa transactions still clear at 2.95% or less. More people paying by card explains much of the growth in that $198 billion total. It does not explain why so many merchants watch their own effective rate creep up year after year while the networks\u2019 published rates barely move.<\/p>\n That gap is the processor\u2019s markup and the fees stacked on top of it. I know, because I helped collect them. I spent more than a decade in the credit card processing division of a commercial bank, as an executive at Fifth Third Processing Solutions, later Vantiv and Worldpay, now part of Global Payments. During the Great Recession, merchants processed less, so our revenue fell. <\/p>\n<\/p><\/div>\nQuestion 1: \u201cIs my rate fixed, or can you raise it without my signature?\u201d<\/h2>\n
Question 2: \u201cWill you show me your markup separately from interchange?\u201d<\/h2>\n
Question 3: \u201cWhat happens if I want to leave?\u201d<\/h2>\n
Question 4: \u201cWhich fees on my statement do you control?\u201d<\/h2>\n
Question 5: \u201cWill you put every verbal promise in writing?\u201d<\/h2>\n
The contract is your only protection<\/h2>\n
Key Takeaways<\/h2>\n
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