Business owners often see a single rate on their payment processing statements and assume that number represents the full cost of accepting a card. According to William Stapleton, President and CEO of Iron Rock Payments, that assumption can lead to costly mistakes. Stapleton, who previously founded PayFacto and sold it to Visa in 2019, argues that the confusion is not accidental but a structural feature of how pricing is presented. "Most merchants are shown a rate, not a structure," he said. "A rate tells you almost nothing until you know what it's built from."
Stapleton breaks a typical card transaction fee into three separate components, each set by a different party. The first is the interchange fee, which goes to the bank that issued the customer's card and is set by the card networks. It is not negotiable by the processor and does not change based on which processor a merchant chooses. The second is the assessment fee, which goes to the card network, such as Visa or Mastercard. Like interchange, it is fixed and applies regardless of the processor. The third is the markup, which is the only portion set by the processor and the only part that is negotiable. "Interchange and assessments are the cost of the rails," Stapleton said. "The markup is the only line item that reflects the processor you picked."
This distinction matters because most confusion arises when business owners treat the total fee as one negotiable number. "If a business owner doesn't know which part of the number is fixed and which part is negotiable, they can't actually tell if they're getting a good deal," Stapleton said. "They're just comparing two totals without knowing what's inside either one." As a result, two processors can quote very different headline rates while charging similar effective totals, or the reverse. A lower quoted rate built on a higher markup can cost more than a higher quoted rate with a thinner markup, depending on how a business processes its cards.
Stapleton advises business owners to ask providers to show interchange and assessment costs separately from the markup, rather than accepting one blended rate. He also suggests asking how the markup is applied, since some providers use a flat percentage while others include per-transaction fees that affect businesses differently based on transaction size. "A business that runs a lot of small transactions is affected very differently by a per-transaction fee than a business that runs fewer, larger ones," he said. "The right structure depends on how the business actually processes, not on which number looks smallest on a sales sheet."
The implication for business owners is clear: understanding the components of a processing fee can lead to better decisions and potentially lower costs. For the payments industry, Stapleton's push for transparency may encourage more providers to break down fees, shifting competition toward markup rather than headline rates. Stapleton's goal is not to make every merchant an expert in interchange schedules but to give them a way to ask better questions before signing a contract. "You don't need to memorize the card network rules," he said. "You just need to know that not everything on your statement is negotiable, and the part that is negotiable is the part worth actually comparing." Iron Rock Payments works with business owners on that comparison directly, walking through statements line by line so fixed costs and markup are separated before any decision gets made.
