Good payment processing feels invisible to customers, and it is best when it goes silent for a business too.
In fact, to make a simple purchase on a website, payment providers and card networks have built enormous infrastructure to reach even an average level. This apparently makes it costly for them.
For merchants, card processing fees can feel complicated, and they should. They are rarely a single, unified price, because of a wide range of services.
Nevertheless, your average card payment processing fee structure consists of three distinct parts that combine to create your total rate.
We’re here to help you understand how it works, to create some sort of payment processing breakdown using our own experience in terms of operating costs, forecast margins, and to choose the right payment partner for your business or which to avoid.
The three components of card payment processing
Every card payment you accept moves through five key stages:
Customer: Initiates the payment at your checkout.
Issuing bank: Approves the funds and deducts the amount from the customer’s account.
Card network: Routes the transaction data securely between banks.
Acquiring partner: Processes the transaction and manages gateway security.
Merchant: Receives the settled payout in their business account.
Each step in this chain has an associated cost. Together, these form the three core pillars of card payment processing:
Interchange fees: Paid to the customer’s card-issuing bank.
Scheme fees: Paid to the card brand network.
Acquirer markup: Retained by your merchant payment processor as an acquiring fee.
When combined, these three charges make up your total card processing expense.
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Pillar 1: Interchange fees
The interchange fee is usually the largest portion of your total processing cost. Your payment processor pays this fee directly to the bank that issued your customer’s card (the issuing bank).
Issuing banks essentially make this card in order to make a profit- the interchange fee is their terms. Of course, they also take full responsibility for handling card security and absorb fraud losses when unauthorized charges occur – especially with credit cards.
Several factors influence the interchange fees for any given purchase:
Card type: Debit cards pull funds directly from existing bank balances, making them lower risk. As a result, debit cards usually have lower interchange fees than consumer credit cards. Commercial and corporate cards often carry the highest rates.
Cardholder location: Banks rank each country by risk – generally, domestic transactions carry the lowest rates, and developing countries carry the highest interchange fees.
Regulations: In the European Economic Area (EEA), regulatory caps limit consumer card interchange. Other jurisdictions have their own rules. However, these caps do not apply to corporate cards or cards issued outside the region.
Transaction security: Transactions protected by Strong Customer Authentication (SCA) and 3D Secure verify the shopper’s identity. This is the highest security level, and such payments benefit from lower interchange rates.
Pillar 2: Scheme fees
Scheme fees – also known as card scheme assessments – are just how much you will pay to Visa/Mastercard.
Card networks do not issue cards to consumers, nor do they hold merchant funds – this is entirely banks’ and payment providers’ responsibility.
Instead, they build and maintain the global digital rails that connect cardholders, banks, and merchants worldwide.
Scheme fees cover the cost of maintaining this network. They support:
Global payment routing and continuous uptime.
Real-time network security, fraud detection, and tokenization.
Brand governance, dispute resolution frameworks, and scheme rules.
Card networks set these fees directly. They apply equally to all payment processors and merchants, meaning they are non-negotiable.
Important note: scheme fees typically combine a tiny percentage of transaction volume with a small, flat fee per transaction.
Pillar 3: Acquirer markup
The acquirer markup (or acquiring fee) is the fee your payment processor charges for their technology and operational services.
Any bank or payment provider needs a secure payment gateway – it’s important and costly. Only a payment gateway can link a merchant account with card networks.
Your acquiring partner provides this infrastructure, and that’s how money can travel using Visa from clients’ deposits into your account.
The acquirer markup covers essential business services, including:
Checkout technology: Providing hosted payment pages, APIs, and host-to-host integrations.
Risk management: Continuous transaction monitoring, screening tools, and chargeback handling.
Regulatory compliance: Maintaining rigorous PCI DSS data security standards.
Settlement and reporting: Processing payouts and providing real-time financial reporting.
Customer support: Assisting your technical and operational teams whenever issues arise.
How it comes together: The merchant discount rate (MDR)
The total fee you pay to accept card payments is called the merchant discount rate (MDR). Don’t be confused by the word “discount”; in MDR card processing, it represents the percentage deducted from each transaction before funds settle into your business account.
There are currently 2 models the payment industry uses for the merchant discount rate:
1. Blended pricing
Blended pricing combines interchange, scheme fees, and the acquirer markup into one straightforward rate.
This is a regular go-to option for most merchants. Typically, this model pairs a standard percentage with a small, fixed fee per transaction.
This is the simplest way: you pay the same predictable rate regardless of your clients’ card type. This model simplifies accounting and makes unit costs easy to forecast.
2. Interchange++ pricing
Interchange++ (interchange plus plus) is a pass-through pricing model. Instead of bundling costs, your processor charges you the exact interchange fees, the exact scheme fees, plus the exact acquirer markup.
The interchange plus structure has the benefits of saving money at scale: this model provides complete visibility into where every cent of your processing spend goes.
Almost every major corporation uses this model.
What influences your overall processing costs?
Even with a fixed pricing model, several operational factors determine your total costs:
In-person vs. online checkout: Online transactions are classified as Card-Not-Present (CNP). Because you can’t inspect the physical card, CNP sales carry slightly higher risk, which affects your overall card payment processing fee structure.
International sales volume: Selling to international shoppers expands your reach, but foreign cards mean currency exchange and card scheme assessments would occur eventually.
Your business risk profile: A key point for any company seeking a payment provider: high-risk industries automatically mean higher fees because of much higher chargeback ratios; many payment providers do not work with them. This is especially important for e-commerce card fees in Europe and acquiring terms.
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Streamline your card processing with Genome
Understanding fee mechanics is only the first step – choosing the right partner is even more important. We at Genome are making card payment processing transparent, flexible, and made for modern digital commerce.
Soon, you will be able to accept major cards – Visa and Mastercard – across European and international markets.
You can also use European euro-only SEPA rail for fast and cheap transactions via instant bank payments: an account-to-account, chargeback-free system – all under one secure setup:
A unified payment mix: Do not limit your checkout to cards alone. Pair card payment processing with instant bank transfers via Open Banking and SEPA Instant. Europe currently has the most diverse preferences and payment options – use it to give them their preferred payment methods and boost your sales.
Flexible checkout integrations: Launch quickly with a hosted payment page to keep card data off your servers and minimize your PCI DSS compliance scope. Prefer complete brand control? Use our host-to-host integration (coming soon) to run a fully customized checkout under your own domain.
Robust risk prevention: We use advanced security screening and transaction monitoring to protect you.
Open your Genome merchant account to activate card payment processing and access instant bank payments.
