Every time a credit card is accepted, the business pays credit card processing fees made up of three separate costs bundled into one line on the statement. Most business owners have seen the total — very few have seen the components. Understanding what actually makes up credit card processing fees is the difference between accepting whatever rate was quoted and knowing whether the business is being overcharged.
What Makes Up Credit Card Processing Fees
Every card transaction involves three separate fees. They are almost always presented as a single blended number — which is part of why most businesses never examine them individually.
75–90%
Interchange
The largest piece of credit card processing fees — paid directly to the bank that issued the card. Set by Visa and Mastercard, not the processor. Rates vary significantly by card type and how correctly the transaction is submitted.
~0.14%
Assessments
Paid to the card networks for the right to run transactions on their rails. Generally 0.11% to 0.15% and non-negotiable — but not always flat. Mastercard charges higher assessments on transactions over $1,000.
The Rest
Processor Markup
The only piece that can actually be negotiated. This is where pricing models diverge — flat-rate, tiered, interchange-plus — and where the real difference between processors shows up.
The published interchange and assessment schedules are the same regardless of which processor is used. But qualification — whether a transaction actually lands in the interchange category it is supposed to — depends heavily on how the processor and gateway submit that transaction. Two businesses with identical card mixes can pay meaningfully different effective credit card processing fees because one processor submits cleaner data than the other.
The Key Insight
Most businesses spend all their time negotiating the processor’s markup — which is 10 to 25 percent of total credit card processing fees. The interchange component, which is 75 to 90 percent of the total, is often left completely unexamined. That is where the real money is.
Credit Card Processing Fees for B2B Merchants Are Different
For businesses accepting commercial, purchasing, or government cards, standard consumer interchange rates do not apply. B2B and B2G transactions have their own interchange categories — and qualifying for the lowest ones requires submitting more transaction detail than a typical retail sale. Invoice number, tax amount, line-item detail, purchase order number — this additional data is what determines whether a commercial card transaction qualifies for the lowest available interchange rate or defaults to a significantly higher one.
This became more complicated in 2025 and 2026. Visa replaced its traditional Level 3 processing program with the Commercial Enhanced Data Program — known as Product 3 or CEDP — in October 2025. Then in April 2026, Visa formally retired Level 2 altogether for most card types. The practical effect is that a business can be sending the same enhanced data it always has and still not be receiving the commercial interchange rate it expects — simply because the program that data used to qualify for no longer exists in the same form.
What This Means for B2B Credit Card Processing Fees
The difference between a Standard non-qualified corporate card rate and a properly submitted CEDP/Product 3 rate can be substantial — often 1 percent or more per transaction. On significant B2B volume, that difference is tens of thousands of dollars per year. It is also completely silent — transactions process, money arrives, and the business has no idea it is paying more than it should.
Large-ticket transactions add another layer. Visa, Mastercard, and Discover each run separate large ticket interchange programs with their own dollar thresholds and rates. Qualifying for them still requires the correct enhanced data to be present. A large transaction can miss the available large-ticket rate if the required data and qualification criteria are not met — and again, the transaction still processes without any obvious error.
“Two businesses with identical card mixes and identical processor rates can pay very different effective credit card processing fees — simply because one account is configured correctly and the other is not.”
How Downgrades Increase Credit Card Processing Fees
The rate quoted by a processor assumes every transaction qualifies for the best available interchange category. A significant portion of transactions at many businesses do not — and the result is a downgrade to a more expensive interchange category that the business typically never notices.
On a Visa statement, downgrades commonly appear in categories labeled EIRF — Electronic Interchange Reimbursement Fee — or Standard. These are Visa’s own interchange categories, and they are not the same thing as the non-qualified bucket on a tiered-pricing statement. Tiered pricing is a processor’s own pricing structure, and its non-qualified tier is a separate concept that can overlap with, but is not identical to, an actual network downgrade. Understanding the difference matters when trying to diagnose where a rate increase is actually coming from.
Common Downgrade Triggers
- Keying in a card number instead of swiping, dipping, or tapping
- Missing or incomplete address verification (AVS) or CVV data
- An authorization amount that does not match the final settled amount
- Settling outside the required timeframe for the applicable interchange category
- Missing enhanced data on commercial and government cards
- An incorrect merchant category code
Each downgrade can add anywhere from half a point to over a point and a half onto that transaction’s effective rate. Individually they look small. Across a month of meaningful volume, they are often the biggest gap between the rate a business thinks it is paying and the rate it is actually paying.
Effective Rate vs. Qualification
Effective rate — total fees divided by total volume — is a useful top-level diagnostic. But it is an aggregate. If the effective rate climbs, that indicates something changed — it does not identify whether the cause is a markup increase, a shift in card mix, or downgrades happening on specific transaction types. For B2B and commercial card volume especially, the qualification-level review is where the real money is.
What Is Changing With Credit Card Processing Fees in 2026
Several things are actively affecting credit card processing fees in 2026 — some locked in, some still working through the courts or Congress.
The Visa/Mastercard interchange settlement — Visa and Mastercard reached a proposed settlement with merchants in November 2025 that would end over two decades of interchange litigation. The terms call for a 10 basis point reduction in average posted credit interchange for five years, plus a rate cap on standard consumer cards. As of mid-2026 the settlement has preliminary court approval, with final approval expected later in 2026 or early 2027. The reduction is not fully locked in and may not yet be reflected in current processor pricing. Worth confirming directly with the processor rather than assuming the cut has already landed on the statement.
Visa’s shift to Product 3/CEDP — as covered above, this is already affecting B2B and government card qualification right now, regardless of where the broader settlement lands. Businesses that have not reviewed their commercial card interchange qualification since October 2025 should do so.
Federal Reserve debit proposal — the Fed has proposed cutting the regulated debit interchange cap, which would lower costs on debit transactions from larger banks. A meaningful chunk of debit volume would be affected, though not all of it.
The Credit Card Competition Act — endorsed by the White House earlier in 2026 and moving with unusual bipartisan momentum, this legislation would require banks with $100 billion or more in assets to enable credit card routing over at least two unaffiliated networks. It is not law yet, and any real merchant impact is likely a year or more out even if it passes — but it is worth watching.
How to Audit Your Credit Card Processing Fees
Auditing credit card processing fees does not require being a payments expert. A few steps cover most of the ground.
- Calculate the effective rate. Total fees divided by total volume for a full month. A strong first diagnostic even though it does not explain why the number is what it is.
- Look for downgrade and qualification activity. Most statements break out qualified vs. non-qualified volume or list categories like EIRF and Standard directly. A high share outside the best categories usually points to a fixable data or handling issue.
- For commercial or government cards — check Product 3/CEDP qualification specifically. Sending enhanced data is no longer sufficient on its own. Confirm it is actually landing in the right program under the current Visa interchange structure.
- Separate markup from pass-through costs. Interchange and assessment schedules are published and consistent across all processors. Anything above that baseline is the processor’s margin — it should be clearly broken out, not buried in a blended rate.
- Look for ancillary fees. PCI compliance fees, monthly minimums, statement fees, batch fees, gateway fees, cancellation fees and chargeback fees all add to the effective cost. Individually small — collectively significant.
What a Credit Card Processing Fee Review Actually Looks Like
Most processor reviews focus on the markup — the smallest component of credit card processing fees. A comprehensive review looks at the whole picture: how transactions are qualifying at the interchange level, whether commercial card data is submitting correctly under the current Visa and MasterCard programs, whether downgrades are occurring and why, and whether the pricing model is actually transparent enough to identify when something changes.
Revolution Payments performs complimentary statement reviews that go beyond processor pricing. The review covers interchange qualification, downgrade activity, commercial card optimization, and overall credit card processing fee structure — with a clear breakdown of what is being paid, what it should cost, and where the gaps are.
Send a recent processing statement for a no-obligation review. If everything looks correct, that will be the first thing said. If there are opportunities to reduce credit card processing fees, the review will show exactly where they are and what it would take to address them.
Want to Know What Your Transactions Are Actually Costing?
Send a recent processing statement for a complimentary credit card processing fee review — interchange qualification, downgrade activity, commercial card optimization, and overall cost structure.Call 888-790-3450 — Free Statement ReviewNo obligation · No long-term agreements · Revolution Payments