What markup means
When you take a card, the fee is made of three layers:
- Interchange. This goes to the bank that issued your customer’s card. Visa’s Canadian rate sheet calls these “fees paid by the Acquirer to the Issuer”. Your processor does not set them.
- Network fees. These go to the card networks, such as Visa and Mastercard. On TD’s fee list they are called “assessment fees”. TD lists the Visa and Mastercard assessment fees at 0.1017% each.
- The processor’s markup. This is the part your processor sets and keeps. It is usually a percentage plus a few cents a sale.
Your business pays one card fee on each sale to its processor, also called the acquirer. The processor keeps its own markup. It passes interchange on to the customer's bank, called the issuer, and network fees on to the card network, such as Visa or Mastercard.
Your processor may also charge monthly fees, such as a service fee or a statement fee. These are not part of the per-sale markup. But they are still money that goes to your processor.
Where it appears in each pricing model
| Pricing model | Where the markup is |
|---|---|
| Interchange plus | Its own line or lines, separate from interchange |
| Flat rate | Inside one rate. Not shown on its own |
| Differential (DRAF) | In the base rate and a “rate adjustment fee” |
Interchange plus. Helcim’s disclosure describes it this way: all card network fees and interchange are passed on, and Helcim “then adds its processing margin, which includes a (%) rate and a per transaction ($) fee.”
On TD’s sample interchange plus statement, interchange is listed card type by card type. TD’s own rate is a separate line per brand. In the sample, the “Mastercard credit rate” is 0.30%. A fee-change notice in the same sample shows the “Visa credit rate” going from 0.30% to 0.35%, with the change marked as coming from TD.
Flat rate. One rate covers everything. Square Canada lists 2.5% for in-person credit card sales and says “You pay the same base rate for every credit card.” You cannot split the markup out from that.
Differential. TD’s statement guide says the discount rate adjustment fee is the interchange differential plus a “rate adjustment fee”, times the sales amount. See Flat Rate vs Interchange Plus vs Tiered for how that model works.
Where the markup shows on a statement
On an interchange plus statement, the markup is made up of:
- The line or lines your processor charges as its own rate. On TD’s sample, that is the “credit rate” line for each brand.
- Any per-sale fee your processor adds.
- The monthly fees: service fee, statement fee, PCI fee and any others.
On a flat-rate statement the layers cannot be separated. The number that shows the full cost is the effective rate: total fees divided by total card sales. That shows the full cost in one number, whatever the model.
What affects the markup a processor quotes
Some things that change the markup, from the published examples:
- Your volume. Helcim’s disclosure lists five tiers. The in-person margin goes from 0.40% + 8¢ at $0 to $50,000 a month, down to 0.15% + 6¢ above $1,000,000 a month. Helcim says tiers are set on a three-month rolling average.
- How you take cards. Helcim’s margins for card-not-present sales (keyed and online) are higher than for in-person sales at every tier. At Tier 1 it is 0.50% + 25¢.
- Monthly fees. TD’s fee list includes a monthly service fee that “varies”, a minimum monthly discount fee of $30, a paper statement fee of $5 and a quarterly PCI fee of $0 to $29.85.
Can the markup change?
That depends on your contract. Two examples:
- TD’s terms say TD “may at any time during the Term increase any fee” or add a new one. TD says it will notify merchants 30 to 60 calendar days before certain increases, “as required by the Code of Conduct.”
- TD’s sample statement has a section listing upcoming fee changes, with the old fee, the new fee, and whether the change came from TD or a card network.
Questions to ask your processor
- Which line on my statement is your markup?
- Is it a percentage, a per-sale fee, or both?
- Which monthly fees do you charge, and what are they for?
- Can my rates go up during my contract? How much notice do I get?
Where to go from here
A processor’s own rate is on the monthly statement, along with its monthly fees. How to Read Your Merchant Statement shows where each section is. For the layer underneath, read What Is Interchange?
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