When a customer pays with a credit or debit card, the transaction generates fees that flow to three different parties: the card-issuing bank, the card network, and your processor. The largest of these — accounting for 70%–80% of your total processing cost — is the **interchange fee**.
What Are Interchange Fees?
Interchange fees are set by card networks (Visa, Mastercard, Discover, American Express) and paid to the bank that issued the customer's card. They compensate the issuing bank for the risk of extending credit, fraud protection, and rewards programs.
The critical fact: Interchange fees are non-negotiable. Every processor pays the same interchange rates. No amount of negotiation with your processor changes what Visa or Mastercard charges.
Interchange Rate Ranges
The difference between a regulated debit card (0.05% + $0.22) and a premium rewards card (2.50% + $0.10) is enormous. This is why your effective rate varies from month to month — it depends on what cards your customers use.
Why You Can't Negotiate Interchange Away
Your processor can lower their markup. They can eliminate junk fees. They can give you a better deal on per-transaction charges. But they cannot change the interchange rate — it flows directly to the issuing bank.
When a processor says they're giving you a "better rate," they're adjusting their markup, not the underlying interchange. If your effective rate is 2.8% and interchange accounts for 2.0% of that, the processor can only negotiate on the remaining 0.8%.
The Network Offset Pricing Solution
Network Offset Pricing doesn't negotiate interchange. It shifts the cost. By displaying a cash price and a card price, the card price covers the entire processing cost — interchange, assessments, and processor markup combined.
The merchant's effective rate approaches zero. Interchange still exists, but the card price accounts for it transparently.
- Negotiate: 2.8% → 2.5% (saves $1,800/year on $50K/month)
- Network Offset Pricing: 2.8% → ~0% (saves $16,800/year on $50K/month)
Marcus C. leads PaySec's merchant education initiatives. With over 12 years in payment processing and merchant services, he specializes in translating complex pricing models into plain-English guidance for small business owners.
$10,000+
in potential annual savings with optimized payment processing.
Get Started
The first step to reducing your processing costs is understanding exactly what you are paying today. Request a free statement analysis and we will show you a side-by-side comparison of your current costs versus what you could save with Network Offset Pricing.