Assessments, dues, and markup: who gets which cents

Every card fee you pay splits three ways. Interchange goes to the bank that issued the customer's card. Assessments and network fees go to Visa, Mastercard, Discover or American Express for running the rails. Markup goes to your processor for handling the transaction and your account. Of the three, exactly one is negotiable, and it is the third.

Knowing which cents are which converts a vague sense of being overcharged into a specific conversation.

Who actually collects interchange?

The issuing bank. Interchange is the largest of the three layers on most transactions and it is set by the card networks in published schedules, not by your processor. A processor cannot discount it, waive it, or beat a competitor on it, because none of them own it.

This is why "we'll beat your rate" offers so often disappoint. The floor is the same for everyone, and the only room is above the floor.

What are assessments and network fees for?

Running the network. Assessments are typically a small percentage of volume, and they sit alongside a set of per-transaction network fees with names that look like acronyms because they are — authorization fees, access fees, and similar. They are set by the networks and published; Visa maintains its fee schedules publicly.

These change on a published schedule, usually annually, and they change for everyone at once. A statement that jumps slightly in the same month every year is often this and nothing more.

So what part can you negotiate?

The markup, which is your processor's revenue. On interchange-plus pricing it is stated as a number — so many basis points plus so many cents — and you can compare it directly against another offer. On flat-rate or tiered pricing it is blended into a single percentage and cannot be isolated, which is the point of blending it.

That is not automatically a scam. A flat rate buys simplicity, and for a store with low volume and no appetite for statement archaeology, simplicity has value. But you should know that you are buying it, and roughly what it costs.

How do you tell what your markup actually is?

Take one month. Add up every fee on the statement. Divide by your total card volume. That gives you an effective rate, which is the only number that survives a comparison between two offers structured differently.

Then, if your statement itemizes interchange, subtract it and the network fees and look at what is left. What remains is the markup, and it is the number to take to a competitor. If your statement does not itemize, ask for a statement that does; providers can produce one, and a refusal is information.

Do this once a year rather than once. Interchange schedules change, network fees change on their own annual cycle, and your own card mix shifts as your customers change how they pay. An effective rate calculated in one year and remembered in the next is a number about a store that no longer exists.