How Payment Processing Really Works (And Why Most Businesses Overpay)
Most businesses pay way more in processing fees than they realize. This breakdown explains where the money actually goes, why the system is confusing on purpose, and how to finally take control of your rates without switching your whole setup.
If you’re a business owner in 2025, you already know one thing: card fees add up FAST.
Whether you run a food truck, salon, retail boutique, mobile service, or an online store — every swipe, dip, tap, or invoice costs you something.
But most business owners don’t actually know what those fees mean,
how they’re calculated, or whether they’re being overcharged.
This guide breaks everything down in a simple way — no confusing jargon, no “processor talk.”
🔍 First: What Are You Actually Paying For?
Every time a card is used, 3 parties take a cut:
1️⃣ The Bank (Visa, Mastercard, Amex…) → “Interchange Fees”
This is the base cost.
No processor can remove or change these — they’re mandatory.
Typical cost: 1.4% – 2.4%
2️⃣ The Processor → “Markup”
This is where most business owners get overcharged.
This includes:
account fees
gateway fees
monthly fees
PCI fees
“non-qualified” fees
random fees nobody can explain
and the silent killer: percentage-based markup
This markup is why many small businesses end up paying 3.5% – 4.5%+ without knowing it.
3️⃣ The POS System
If you use Square, Clover, Stripe, Shopify, Toast, etc…
They charge their own fee on top of everything.
This is where the “2.9% + 30¢” or “3.5% + 15¢” comes from.
💸 Why Most Businesses Are Overpaying
Because:
✔ They’ve never looked at their effective rate
✔ They think the number “2.6%” on the brochure is the real fee (it’s not)
✔ They don’t know which fees are required vs optional
✔ They don’t realize they’re being upcharged 20–60%
Your true cost is not the rate you think you’re paying.
It’s your effective rate, which =
Total fees ÷ total monthly card volume
Example:
If you processed $20,000 and paid $760 in fees:
760 ÷ 20,000 = 3.8% effective rate
(Not 2.6% like Square advertises)
⚠️ The “Busy Business Owner Trap”
Most business owners are:
too busy
don’t have time to read statements
and never question the fees
That’s how processors get away with charging more.
💡 What Switching Actually Solves
When done right, you should get:
lower ongoing fees
no junk monthly charges
transparent statements
same-day payouts
human help, not a call center
a clean POS setup
business keeping more profit
Most businesses save:
$150–$450 per month
Some save much more depending on volume.
📞 Why I Offer Free Rate Checks
Because once you see your true rate, you immediately know whether you’re overpaying.
A rate check takes:
5–10 minutes
No pressure, no pitch.
You’ll get:
your real effective rate
what you should be paying
how much profit you could save every month
whether switching is worth it
Whether you switch or not — you walk away informed.
🔚 Final Thoughts
Understanding processing is the first step to protecting your business from unnecessary fees.
When you know:
what’s required
what’s optional
what’s markup
what’s too high
…you gain control again.
Your money should stay in your business — not disappear into hidden fees.
👉 Want to See Your Real Rate?
If you want me to run a free, simple breakdown:
📩 Message me on the site
📱 DM @tapinwithrobbie
💬 Or book a Free Rate Check appointment
A 5-minute check could save you hundreds every month.