Most of us pick a gateway on API quality and docs, which is fair, that is the part we live in. The fee side usually gets treated as a business problem until someone asks why the numbers stopped working at scale, so here is the short version of how that bill is actually built.
The Three Layers In Every Transaction
Every card charge splits into three pieces. Interchange goes to the cardholder's issuing bank and is set by Visa and Mastercard. Assessments go to the card network itself, roughly 0.13 to 0.15 percent. The processor markup is what your provider keeps.
Interchange is the big one, usually 70 to 80 percent of the total, and it is genuinely fixed. No integration, no negotiation and no clever routing changes it. The only line anyone can move is the markup.
Why Flat Rate Feels Cheap And Then Does Not
Flat rate pricing bundles all three into one number, which is why 2.9 percent plus 30 cents is so easy to build against. You know the cost of a charge before you write the code.
Past roughly 20,000 dollars a month the bundle starts working against you, because interchange plus pricing exposes the actual interchange and charges a fixed markup on top, which usually lands in the 2.2 to 2.5 percent range for the same mix of cards. The tradeoff is a slower onboarding process and a statement that takes real effort to read.
What This Means In The Code
Two things follow from the structure. Rewards cards, corporate cards and card not present transactions all carry higher interchange, so your effective rate moves with your customer mix rather than with anything you shipped. Track fees divided by volume per month, not the headline rate, or you will be debugging a number that was never the number.
The other one is retries. Every authorization attempt is a real event on your merchant account, so a naive retry loop on soft declines quietly inflates your decline ratio and can put you in front of a risk team. Retry on a schedule with a cap, never immediately in a loop.
The full breakdown, including how the gateway to network to issuing bank chain actually runs and what each fee type covers, is in this guide to payment processing.
