Plain-English guide

How credit card processing actually works.

Every card swipe sets off a chain of messages between banks and networks that finishes in about two seconds. Here’s what happens behind the scenes — and where your fees come from.

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The 30-second version

Five players, two seconds, one approval.

When a customer pays by card, your terminal asks their bank “is this card good for this amount?” That question travels through a processor and a card network to the customer’s bank, which answers yes or no. The money itself moves a day or two later in a step called settlement.

The transaction flow

From tap to approval.

1. Cardholder

Customer taps, dips, or keys their card to pay.

2. Merchant

Your terminal or gateway captures the card details securely.

3. Processor

The acquirer/processor routes the request to the right network.

4. Card Network

Visa, Mastercard, Amex, or Discover passes it to the issuer.

5. Issuing Bank

The customer’s bank approves or declines — then the answer travels back.

The approval races back through the same chain in about two seconds. One to two business days later, settlement deposits the funds into your account — minus processing fees, unless you use Dual Pricing.

Where the fees come from

Three layers, one total rate.

The percentage you pay is built from three parts. Understanding them is the first step to lowering your bill:

Interchange — set by the card networks and paid to the customer’s issuing bank. It’s the biggest piece and it’s non-negotiable for everyone.
Assessments — small fees the networks (Visa, Mastercard) charge on volume.
Processor markup — what your provider adds on top. This is the only part that’s negotiable — and where many merchants quietly overpay.

The takeaway: two businesses with identical sales can pay very different rates depending on processor markup and pricing model. A free rate review reveals exactly which layer is costing you.

How Dual Pricing changes the picture

Dual Pricing doesn’t eliminate interchange — nothing can. Instead, it shifts that cost to the card-paying customer through a clearly posted card price, while cash customers get a discount. The result: your effective processing cost approaches zero, compliantly. See exactly how Dual Pricing works →

Glossary

The terms, decoded.

Interchange: The base fee set by card networks and paid to the cardholder’s bank on every transaction. The same for all processors.
Acquirer / Processor: The company that connects your business to the card networks and moves funds into your bank account.
Issuing bank: The bank that gave your customer their card and decides whether to approve each charge.
Authorization: The instant yes/no check confirming the card is valid and has funds available.
Settlement / Batch: The end-of-day process that finalizes approved transactions and sends money to your account.
Effective rate: Total fees divided by total card volume — the single best number for comparing what you really pay.
EMV: The chip-card standard that reduces fraud and shifts liability away from compliant merchants.
PCI DSS: The security standard every business that accepts cards must follow to protect cardholder data.

FAQ

Processing questions, answered.

Your total monthly fees divided by your total card volume. It is the single best number for comparing what you actually pay across processors.

Most of the bill is interchange (set by the card networks) plus your processor’s markup. The markup is the negotiable part — and where many merchants quietly overpay.

The base fee paid to the cardholder’s bank on every transaction. It is the same for all processors and cannot be eliminated — only shifted, which is what Dual Pricing does.

It moves the card-acceptance cost to the card-paying customer through a clearly posted price, so your effective processing cost approaches zero — compliantly.