And How to Get the Best Rate From Your Payment Processor
If payments feel confusing, you’re not alone. For most businesses, payments are treated like a necessary evil—something you set up once and never revisit. But here’s the truth: payments are one of your largest ongoing operating expenses, and small changes can unlock serious savings or revenue.
This guide will help you understand how payments actually work, what “good rates” really mean, and how to put yourself in the strongest possible negotiating position with your payment processor.
Part 1: How Payments Actually Work (The Simple Version)
Every card transaction involves multiple parties:
- The cardholder (your customer)
- The issuing bank (your customer’s bank)
- The card network (Visa, Mastercard, Amex, Discover)
- The processor / acquirer (the company handling the transaction)
- You (the merchant)
When a customer pays you, the issuing bank and card network take their cut first. These fees are called interchange and network assessments. They are non-negotiable and the same no matter which processor you use.
What is negotiable?
The processor’s markup.
This is where rates vary wildly and where most businesses overpay.
Part 2: Understanding the Three Pricing Models
If you don’t know which pricing model you’re on, that’s already a red flag.
1.Interchange-Plus (Best & Most Transparent)
This is the gold standard.
You pay:
- Actual interchange costs (passed through at cost)
- Plus a fixed processor markup (example: +0.20% + $0.10)
Why it’s best:
- Transparent
- Predictable
- Scales fairly as you grow
If your processor won’t offer interchange-plus, ask why.
2. Tiered Pricing (The Most Abused Model)
Transactions are bundled into “qualified,” “mid-qualified,” and “non-qualified” buckets.
Why it’s dangerous:
- The rules are vague
- Most transactions end up in the expensive tiers
- Processors control the narrative
This model makes it almost impossible to verify if you’re getting a fair deal.
3. Flat Rate Pricing (Convenient, Not Cheap)
Think “2.9% + $0.30.”
Why people use it:
- Easy to understand
- No monthly fees
Why it gets expensive:
- No benefit as volume grows
- You overpay on low-risk transactions
Flat rate pricing is great for very small businesses—but rarely optimal long-term.
Part 3: What “The Best Rate” Actually Means
Here’s the uncomfortable truth:
There is no single “best rate.”
The best rate depends on:
- Your average transaction size
- Card-present vs card-not-present volume
- Debit vs credit mix
- Industry risk profile
- Monthly volume consistency
A processor promising the “lowest rate” without seeing your data is selling marketing—not savings.
What you want instead:
- The lowest sustainable markup
- Minimal junk fees
- Pricing that improves as you scale
Part 4: The Fees You Should Be Watching Closely
Some fees matter far more than others.
Fees That Matter
- Processor markup (percentage + per-transaction fee)
- Monthly platform or gateway fees
- Authorization fees
- Chargeback fees
Fees That Are Often Noise
- Statement fees
- PCI fees (reasonable ones)
- Batch fees (small impact)
Pro tip: Processors love hiding margin in per-transaction fees, especially for high-volume merchants.
Part 5: How to Negotiate Better Rates (Yes, You Can)
Negotiation works best when you’re prepared.
Step 1: Get a Statement Analysis
Ask for a full breakdown of:
- Interchange
- Network fees
- Processor margin
If your processor can’t clearly explain this, that’s your cue.
Step 2: Leverage Volume (Even If You’re Mid-Market)
You don’t need millions in volume to negotiate.
You do need:
- Consistent monthly processing
- Low chargeback rates
- Clean operational history
Those three things make you attractive.
Step 3: Ask for the Right Concessions
Instead of asking for “lower rates,” ask for:
- Reduced processor markup
- Lower per-transaction fees
- Fee caps on large tickets
- Volume-based pricing tiers
Specific asks get better results.
Part 6: Red Flags to Watch For
If you see these, proceed carefully:
- Long-term contracts with auto-renewals
- Large early termination fees
- “Proprietary” pricing models
- Refusal to provide raw interchange data
- Overly complex statements
Transparency should not be optional.
Part 7: When Switching Processors Makes Sense (And When It Doesn’t)
Switching can save money—but it’s not always the answer.
Switch if:
- Your markup is clearly inflated
- You’ve outgrown flat-rate pricing
- You need better reporting or controls
- Your processor can’t support your growth
Don’t switch if:
- Savings are marginal
- Service quality would drop
- Your processor already optimizes for your business
Sometimes the smartest move is renegotiation, not migration.
Part 8: The Bigger Opportunity Most Businesses Miss
Here’s the part almost no one talks about.
Payments don’t just cost money.
They can make you money.
With the right setup, businesses can:
- Share in transaction revenue
- Embed payments into software platforms
- Control pricing and customer experience
- Turn payments into a recurring revenue stream
This is where modern payment partnerships—and embedded payments—change the game entirely.
Final Thought
The best payment relationship isn’t about chasing the lowest advertised rate. It’s about alignment—transparent pricing, fair margins, and a processor that grows with you instead of profiting from confusion.
If you understand your payments, you control them.
And when you control them, you win.
Why Many Growing Businesses Choose Usio
If everything in this guide resonates and you’re asking yourself, “Why doesn’t my processor already work this way?” — that’s exactly the gap Usio was built to fill.
Usio is consistently chosen by growing and mid-market businesses because transparency isn’t a talking point, it’s the foundation. Usio operates on true interchange-plus pricing, clearly separates processor markup from non-negotiable network fees, and provides reporting that actually makes sense to finance and operations teams.
What sets Usio apart:
- Radical pricing transparency: You always know what interchange costs are versus what Usio earns.
- Fair, scalable economics: As your volume grows, your pricing improves. You’re not penalized for success.
- Built for modern businesses: Beyond processing, Usio supports embedded payments, revenue share models, payouts, issuing, and billing solutions—turning payments from a cost center into a growth lever
- Service-first approach: You get real humans, real answers, and a processor that understands your business—not a call center reading a script.
The result? Businesses don’t just save money with Usio. They gain control, clarity, and a payments partner aligned with long-term growth.
If your current processor profits from confusion, it may be time for a more transparent relationship.
Usio believes payments should be understood, fairly priced, and work for you—not against you.