Payment Processing Fees Explained: What Canadian Businesses Actually Pay
Understanding payment processing fees can feel like learning a new language. Between interchange, assessments, markups, and monthly fees, it's hard to know if you're getting a fair deal.
In this guide, we'll break down every fee you might see on your processing statement and explain what you're really paying for.
The Three Categories of Fees
All payment processing fees fall into three categories:
1. Interchange Fees (Non-Negotiable)
Set by Visa and Mastercard, paid to the card-issuing bank. These are the same regardless of which processor you use.
2. Assessment Fees (Non-Negotiable)
Small fees paid directly to Visa and Mastercard. Also the same for everyone.
3. Processor Markup (Negotiable)
This is how your processor makes money—and where you have room to negotiate.
Interchange Fees Breakdown
Interchange is the biggest chunk of your processing costs. Rates vary based on:
Card Type
| Card Type | Typical Interchange |
|---|---|
| Debit (in-person) | 0.75% - 1.0% |
| Basic Credit | 1.40% - 1.65% |
| Rewards Credit | 1.80% - 2.10% |
| Premium/Infinite | 2.00% - 2.40% |
| Corporate | 2.00% - 2.65% |
Transaction Method
| Method | Additional Cost |
|---|---|
| Swiped/Tapped | Lowest rate |
| Keyed (card present) | +0.30% - 0.50% |
| Online/Phone | +0.50% - 0.75% |
Business Type
Some industries get preferential rates:
- Grocery stores: Lower rates on debit
- Utilities: Special rates for recurring payments
- Non-profits: Reduced rates on donations
Assessment Fees
These are small fees charged by the card networks:
| Network | Assessment |
|---|---|
| Visa | 0.11% - 0.13% |
| Mastercard | 0.11% - 0.13% |
Plus per-transaction fees:
- Network access fee: ~$0.02 per transaction
- Fixed acquirer fee: ~$0.01 per transaction
These typically add 0.13-0.15% to each transaction.
Processor Markup
This is where processors make their profit. Common structures:
Interchange-Plus (Transparent)
A fixed markup added to interchange:
- Example: Interchange + 0.20% + $0.08
- You see actual interchange on your statement
- Easy to compare processors
Tiered/Bundled (Opaque)
Transactions grouped into tiers:
- Qualified: 1.69%
- Mid-qualified: 2.19%
- Non-qualified: 2.89%
- Processor controls which tier applies
- Hard to compare or verify
Flat Rate (Simple but Expensive)
One rate for everything:
- Example: 2.65% per transaction
- Easy to understand
- Usually the most expensive option
Monthly and Annual Fees
Beyond per-transaction costs, watch for these:
Legitimate Fees
| Fee | Typical Range | Notes |
|---|---|---|
| Monthly/Statement Fee | $10-25 | Basic account maintenance |
| Gateway Fee | $10-25 | For online processing |
| PCI Compliance Fee | $0-15 | Some include free |
Red Flag Fees
| Fee | Watch Out |
|---|---|
| PCI Non-Compliance | $50-100/mo penalty |
| Regulatory Fee | Often inflated |
| "Technology" Fee | Vague, usually markup |
| Batch Fee | $0.25+ per batch |
| Annual Fee | Often hidden |
Calculating Your Effective Rate
Your effective rate is what you actually pay, calculated as:
Total Fees ÷ Total Volume × 100 = Effective Rate
Example:
- Monthly volume: $25,000
- Total fees: $562.50
- Effective rate: 2.25%
Compare this to your advertised rate—if there's a big gap, you're likely overpaying.
Sample Statement Analysis
Let's analyze a real (anonymized) statement:
Tiered Pricing Example:
- Monthly volume: $32,450
- Qualified transactions: $4,867 @ 1.69% = $82.25
- Mid-qualified: $12,980 @ 2.29% = $297.24
- Non-qualified: $14,603 @ 2.99% = $436.63
- Monthly fee: $25
- PCI fee: $15
- Total: $856.12 (2.64% effective)
Same Volume with Interchange-Plus:
- Interchange (average): 1.65% = $535.43
- Markup: 0.20% = $64.90
- Per-transaction: $0.08 × 450 = $36.00
- Monthly fee: $10
- PCI fee: $0 (included)
- Total: $646.33 (1.99% effective)
Monthly savings: $209.79 Annual savings: $2,517.48
Getting a Fair Deal
To ensure you're not overpaying:
- Know your effective rate - Calculate it monthly
- Choose interchange-plus - Transparency saves money
- Review statements monthly - Catch fee increases
- Negotiate annually - Especially if volume grew
- Avoid long contracts - Month-to-month gives you leverage
PaymentsPlus Pricing
We keep it simple and transparent:
Card-Present (swiped/tapped):
- Interchange + 0.20% + $0.08
Card-Not-Present (online/phone):
- Interchange + 0.35% + $0.10
Monthly:
- $10/month (includes PCI compliance)
No hidden fees. No long contracts. No surprises.
Get your free quote and see exactly what you'd pay.
Want us to analyze your current statement? Send it to us for a free, no-obligation comparison.