Plain-English answers
for business owners.

What is interchange?

Interchange is the wholesale fee that Visa, Mastercard, Discover, and Amex charge every time a card is run. It's the line on your statement that hides the most savings — because most processors don't want you to look at it directly.

Here's the clean version. When a customer pays you with a card, the money has to go from their bank (the "issuing bank") to yours (the "acquiring bank"). Along the way, three parties take a cut: the card network (Visa or Mastercard), the issuing bank, and your processor. The card network and the issuing bank's share is called interchange.

Interchange isn't one number. It's hundreds of rates depending on what kind of card was used (rewards cards cost more), how it was run (swiped/chipped is cheaper than keyed-in), and what kind of business you are (grocery and utilities pay less than restaurants and travel). Visa publishes the full table publicly — but most processors quietly mark it up before showing it to you.

The thing to understand: interchange is the same for every processor. Visa charges Visa's rate. What changes between processors is the markup on top — and that's the only piece anybody is actually negotiating. When someone tells you they "have a special low rate from Visa," they don't. They have a smaller markup. That's good. Just know what you're comparing.

Want to apply this to your business? Book a call and I'll read your statement with you.

Why are processing statements so confusing?

Because they're written for processors, not for you. Once you know what to look for, you can read one in about sixty seconds.

A typical statement is 4-12 pages of dense charts. Most of it is regulatory boilerplate; very little of it actually tells you what your business is paying. Here's the short version of what to look at.

Find the "summary" or "fees breakdown" page. On most statements it's page 1 or 2. You're looking for three things: total volume processed (how much your customers paid you in cards), total fees, and the date range. Divide total fees by total volume — that's your effective rate. That's the only number that matters for comparison.

Look for any "non-qualified" or "downgrade" buckets. If your statement uses tiered pricing, expensive cards (rewards, business, international) get bumped into a "non-qualified" tier — sometimes 4%+. The processor pockets the spread. Interchange-plus pricing eliminates this entirely.

Hunt the recurring junk fees. "PCI compliance fee," "regulatory fee," "monthly minimum," "statement fee," "batch fee," "non-PCI compliance fee" — some of these are real. Many are just monthly markup with branding. They add up to $50-$200/month for a typical small business and almost none of them are negotiable on the original contract — which is why they show up.

Want to apply this to your business? Book a call — send me the PDF first if you want.

ACH vs. Credit Card

Different rails, different fees, different fits. The right answer depends on your ticket size, your customer relationship, and how fast you need the money.

Credit card is what most people mean when they say "card payment." Pricing is a percentage (typically 2.3-3.5% all-in) plus a small per-transaction fee. The money is authorized in seconds, settles to your bank in 1-2 business days, and the card networks handle disputes. Great for retail-style transactions, anywhere a customer pulls out their wallet, and any time you need an instant authorization.

ACH (also called eCheck or direct debit) moves money bank-to-bank through the Automated Clearing House network. Pricing is flat — typically $0.25 to $1.50 per transaction, sometimes with a small percentage cap. Settlement is slower (1-3 business days, sometimes more) and there's no instant auth. Reversals can happen up to 60 days later for unauthorized debits.

Here's the rule of thumb: card is better for small tickets and impulse purchases. ACH is better for large invoices, recurring billing, and B2B. The math: on a $5,000 invoice, a credit card costs you about $145 in fees. The same invoice over ACH costs you a flat dollar. On thirty of those a month, you're leaving $50,000 a year on the table.

Want to apply this to your business? Book a call — five minutes will tell us whether it's worth the switch.

Traditional vs. Modern Processing

Surcharge, cash discount, dual pricing, interchange-plus, flat-rate — these are pricing models, not products. Each one fits a different kind of business.

Traditional processing means you, the business, eat the card processing fee out of your revenue. Pricing is either flat-rate (e.g., Square at 2.6% + $0.10) or interchange-plus (e.g., interchange + 0.30% + $0.10). It's the simplest model and the right answer for most retail and restaurant businesses where customers expect the price on the menu to be the price they pay.

Surcharge programs shift the credit card processing fee to the customer who chose to pay by credit card — typically as a 3% surcharge stated at checkout. Debit card transactions and cash never get surcharged. This is allowed in most states (with specific disclosure rules) and is most common in B2B, professional services, and trade businesses with bigger tickets where the saved fee is real money. Done correctly, it eats a clean 90%+ off your effective card rate.

Cash discount is the inverse: you raise all your menu prices a few percent and offer a "cash discount" if the customer pays in cash. It's legal in all 50 states and looks identical to the customer experience of a surcharge — just framed differently. The IRS treats the bookkeeping a little differently, which can matter at scale.

Dual pricing shows two prices on the menu / receipt — one for cash, one for card — and lets the customer choose. It's the most transparent of the three "pass the fee" models and is increasingly the standard at independent restaurants and gas stations.

Want to apply this to your business? Book a call — I'll tell you which model actually saves you money once your real numbers are on the table.