Entrepreneur: 5 questions for merchants to ask credit card processors

U.S. merchants paid a record $198.25 billion in card processing fees in 2025, according to Nilson Report figures published by the Merchants Payments Coalition and cited by Entrepreneur. That total marks a 219% surge since 2009, when merchants paid $62.1 billion. For most businesses, card acceptance has become the largest operating cost after labor, driven largely by higher card usage rather than steep hikes in network interchange rates.

Why Card Processing Fees Rose While Network Interchange Rates Stayed Flat

When the Government Accountability Office studied interchange rates in 2009, Mastercard’s highest interchange rate stood at 3.25%. Today, that top rate had moved just five basis points to 3.30%. Visa’s top rate shifted from 2.95% up to 3.15%, though most Visa transactions still clear at 2.95% or less. While more consumers paying with plastic explain part of the climb to $198 billion, network rates alone do not account for why merchants watch their effective rates creep upward year after year. Entrepreneur reported that the expanding gap between stable network rates and rising merchant costs stems from processor markups and added fees.

How Ex-Bank Executives Uncovered Processor Markup Practices

A former executive at Fifth Third Processing Solutions, Vantiv, and Worldpay spent over a decade inside commercial bank credit card processing divisions before leaving the industry. During the Great Recession, shrinking transaction volumes reduced processor revenue. Instead of weathering the downturn, banking executives introduced new fees, including an $8.95 monthly charge per merchant ID that was celebrated internally as a revenue win. Disillusioned by these billing strategies, that executive and three former peers founded a credit card processing auditing firm in 2009 to protect merchants from unethical billing practices. Audits conducted by their firm reveal overbilling in approximately 99% of reviewed statements, with more than 90% of accounts improperly configured from the start.

The Critical Math Behind Interchange and Processor Markups

Interchange represents the wholesale cost every processor pays, accounting for 80% to 90% of what a merchant ought to pay. A competitive processor markup over interchange can range as low as 0.02% to 0.05%. However, commonly reported markups span from 0.15% to 0.90%. On $2 million in annual card sales, the gap between a 0.50% markup and a 0.05% markup costs a business $9,000 annually, excluding additional junk fees.

Five Written Questions to Expose Hidden Processing Costs

Entrepreneur outlined five specific questions that merchants should demand answered in writing, signed by a company officer on paper, before signing any processing contract:

• Fixed rates or unilateral increases: Almost all merchant agreements permit processors to change fees and terms at any time with minimal notice, often buried in the fine print of monthly statements. Visa and Mastercard adjust rates twice yearly in April and October, helping processor increases blend into the noise.
• Unbundled markups: Interchange-plus pricing separates wholesale interchange from the processor markup. Tiered and flat-rate pricing blend the two, allowing processors to obscure their actual cut.
• Termination and renewal traps: Contracts often include early termination fees, liquidated damages clauses billing for projected profit over the full term, and equipment leases surviving past the processing agreement. Auto-renewal clauses frequently demand cancellation notices up to 90 days before renewal.
• Controllable fees: While card brands set interchange and network assessments, processors control charges like annual PCI fees and regulatory compliance fees. Requesting a line-by-line label of pass-through costs versus processor-controlled fees exposes margin padding.
• Written promises: Verbal quotes regarding low effective rates or rate matches vanish if omitted from the signed contract.