Credit Card Processing Fundamentals

What you need to know about credit card processing.

US Businesses pay over $130 billion per year in processing fees, and an estimated $25-45 billion of that is the result of errors or overcharging.

That’s a staggering number. Why does this happen? In short: the credit card processing industry is incredibly complex. Almost everyone is being overcharged, and in order to avoid this wasted spend, it’s crucial to understand the intricacies of the processing world. Here are some of the fundamentals:

  • Businesses that accept credit cards are called “merchants”
  • Merchants work with processors–and the role of processors is to help the merchant take credit card payments, and receive the money
  • In return for this service, the processor charges the merchant via “processing fees” which are a percentage total of the transaction
  • However, the processor isn’t the only one who receives these fees
  • In fact, the processor only receives about 10% of the processing fees they collect
  • The rest go to the card brands and the banks 

And that’s just scratching the surface…

To truly understand the processing industry takes years of experience. The experts at Verisave have been focused on this industry for 20 years and can help your team make sense of your processing fees so that you can focus on what you do best.


numberless card

Assessment/network fees: a system of fees applied to transactions by the major credit card associations (e.g., Visa)  

Authorization fee: a flat fee applied to transactions by a processor 

Discount rate: a percentage fee applied to transactions by a processor  

Interchange: a system of categories, based on several factors, that determines the cost associated with accepting card transactions  

ISO (aka independent sales organization): an intermediary between merchant and processors; ISOs find new merchant clients for processors and provide support to merchants  

Issuer: an entity, often a bank, that provides a consumer with a credit card  

Miscellaneous fees: costs to the merchant, applied by their processor, that are independent of transactions  

Payment gateway: a nexus that connects a merchant’s software, virtual terminal, point of sale, etc.  

PCI Compliance: a set of security standards designed to ensure that merchants accept, process, store, and transmit card information in a secure manner  

PCI fees: there are two types of associated fees  

Program fee: a cost to a merchant related to program, required by the card associations and offered through a processor, that allows a merchant to attest to their PCI compliance  

Non-compliance fee: an additional cost to a merchant’s monthly fees applied if that merchant is not certified as PCI compliant  

Processor: an entity that provides a merchant account that is used to settle and fund transactions  

Surcharging: a percentage fee added to a transaction at checkout, paid by the consumer to recoup cost of acceptance fees  

It’s simple. Verisave clients boost their profits by reducing wasteful credit card processing fees through our expert optimization process.

Our work is entirely within the setup of the merchant account … we find errors, we fix them on the back end, and our clients return that extra money to their bottom lines. There’s no need to change processors.

Nothing else changes. There’s no disruption to any business practice or customer experience.

And we do all of the work.

Previous slide
Next slide