Merchant Fees / Interchange.
In plain English
Merchant fees are the costs a business pays every time a customer pays with a credit or debit card. The biggest piece is interchange, a fee set by the card networks (like Visa and Mastercard) that goes to the bank that issued the customer's card. On top of interchange there is a small network assessment fee and a markup charged by your payment processor. Together these are sometimes quoted as one blended rate. The business, not the customer, normally absorbs these fees, so they come straight out of each sale.
01Why it matters
These fees quietly shave a slice off every card sale you make, and on thin margins that can be the difference between profit and loss. Understanding the pieces helps you compare processors and avoid overpaying.
02The math, step by step
A customer buys a $100 order with a credit card. Your processor charges a blended rate, which varies by card type and processor, plus a small flat per-transaction fee. If the all-in cost came to about $3 on that $100 sale, you would receive around $97. On a product with a 20 percent margin, that fee eats a real chunk of your profit.
03What this is NOT
Merchant and interchange fees are NOT account maintenance fees, and they are normally NOT paid by the customer. They are deducted from the merchant's proceeds on each card sale. Interchange specifically goes to the cardholder's bank, not to your own bank or your processor.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice