Where your processing money actually goes
Every processing statement is three things stacked together, and only one of them is negotiable. Once you can see which is which, a sales call becomes a much shorter conversation. This page walks the three layers, the three pricing structures built on top of them, the junk fees that ride along, and the exact script for negotiating the only layer that moves. It is the longest fifteen minutes of reading on this site and the most profitable.
Judd Alsup and the Equip Payment Solutions team, who install and support restaurant POS systems nationwide and sell Shift4 Dine and Clover.Updated August 9, 2026. Sources and dates cited on every figure.
The short answer
Every processing bill is three layers, one negotiable:
- Interchange set by the card networks, identical through every processor; card present restaurant blends typically land near 1.95% plus 10 cents.
- Assessments the networks' own small cut, also fixed everywhere.
- Processor markup the only negotiable layer; visible as a stated number on interchange plus pricing, hidden inside the rate on flat and tiered pricing.
- The one question that cuts through your effective rate, total fees over total volume, in writing.
The rest of this page is the case for each line, with sources.
The three layers on every statement
Interchange, which nobody can discount
Set by Visa and Mastercard, paid to the bank that issued your customer's card. Identical for every processor on earth. Card present restaurant transactions typically blend near 1.95% plus 10 cents, and it moves with the cards your guests carry. Any rep who claims to beat interchange is describing something else.
Assessments, which are also fixed
The card networks' own cut, a small fraction of a percent, collected by Visa and Mastercard on every transaction that rides their rails. Also identical everywhere, through every processor, with no exceptions to shop for. Between them, interchange and assessments are most of your bill and none of it is a choice, which is exactly what makes the third layer the entire conversation.
The processor's markup, which is the whole negotiation
This is the only layer anyone controls. On interchange plus pricing it is stated as a number you can see. On flat rate or tiered pricing it is blended into one percentage, which is convenient for the seller and expensive for you.
Why flat rate looks simpler and usually is not
A flat rate is one number, which feels honest. What it hides is that your actual interchange varies by card, and on the cards where interchange is cheap the processor simply keeps the difference. You never see it, because there is nothing on the statement to see.
Interchange plus shows interchange at cost and the markup separately. It looks more complicated and it is the reason you can tell whether you are being treated fairly. Slide the markup in our calculator and you can watch what a quarter point does over a year.
Four questions that end a vague sales call
What is my effective rate, in writing?
Total cost divided by total volume. If a rep will not commit to it, you have learned what you needed to.
Is this interchange plus, tiered, or flat?
If the answer takes more than one sentence, it is tiered. Ask which of the three structures the quote uses and watch whether the answer is a word or a story.
What is the contract length and the early termination fee?
Ask separately about the hardware lease, which is frequently a different agreement with a different end date.
What annual fees exist?
Program fees, regulatory fees, PCI fees and yearly escalators. Ours are a $250 annual program fee per device plus an annual regulatory fee, and they are in our quotes.
The three pricing structures, and who each one serves
Every processing offer you will ever see is one of three structures. Flat rate: one blended percentage, Square's model, simple to understand and priced with headroom so the processor wins on your cheap cards. Tiered: qualified, mid qualified and non qualified buckets that let the processor move transactions into more expensive tiers by rules you never see; this structure survives because its statements are unreadable, and getting off it is usually the biggest single saving in the industry. Interchange plus: the card networks' cost passed through at cost, plus a stated markup; harder to read at first, and the only structure where you can audit what you pay against published interchange tables.
The structural honesty ranking is interchange plus, then flat rate, then tiered, and it is not close. That ranking is independent of whether the specific quote is good: a greedy interchange plus markup can lose to a fair flat rate. Which is why the structure question and the effective rate question are both necessary, and why every page on this site keeps repeating the second one.
Dual pricing and cash discounting are the fourth conversation, orthogonal to the other three: they move most card cost to the card paying guest via a posted cash price and a card price. Done correctly, with signage and receipt disclosure, they are legal in all fifty states and several systems including ours implement them cleanly. Done sloppily they read as a junk fee and generate exactly the reviews you would expect. The mechanics in writing, always, before agreeing.
The junk fee field guide
PCI compliance and PCI non compliance fees
The first is a real cost some processors pass through at $10 to $30 a month; the second is a penalty for not completing an annual questionnaire, and it is entirely avoidable. If your statement carries a non compliance line, completing the questionnaire is the highest hourly wage available in your restaurant this month.
Statement, batch and gateway fees
A few dollars each, monthly, forever, and negotiable to zero more often than reps admit. Individually trivial, collectively a tenth of a point at modest volume.
Annual and semi annual mystery lines
Program fees, regulatory fees, membership fees, arriving each January when nobody reads statements. This is why the statement guide tells you to pull a January statement specifically. Ours are named on our own pricing page, which is the disclosure standard every vendor should meet.
The escalator clause
A percentage bump each year, ours included at CPI plus 1% or 4%, whichever is greater, and Toast's reported right to raise rates on 30 days notice. Escalators are industry standard; unstated escalators are not. Ask for the clause.
The negotiation, scripted
Processing negotiations reward preparation over charm, and the preparation is four documents: your last three statements, your computed effective rate, one competing quote in writing, and the list of every fee on your current statement you cannot explain. With those in hand, the conversation is short. State your effective rate. State the competing number. Ask what they can do, in writing, and ask each unexplained fee to justify its existence by name. Silence after each question does more work than any argument.
What makes this work is that processor pricing has real room in it for exactly the customers who never ask: the margin on an unshopped account subsidizes the discounts given to shopped ones. Moving yourself from the first group to the second requires no leverage beyond the paperwork and the willingness to use the word 'no'. And if the incumbent will not move against a fair written quote, the quote is your exit plan already drafted; the switching guide takes it from there.
One warning about the counter-move: a rep who responds to rate pressure by proposing a switch to a 'simpler' pricing structure is usually proposing tiered pricing with better marketing. Any restructure that makes your statement harder to audit is movement in the wrong direction, whatever the teaser rate says. The structures are ranked above; do not trade down the ranking for a first year discount.
Questions owners ask
What is a good effective rate for a restaurant?
It depends heavily on your average ticket, because fixed per transaction fees hit small tickets hardest. A full service restaurant with a healthy average ticket should be able to see an effective rate meaningfully below 3%. A coffee shop at a $5 average will be higher no matter who processes it, and any rep promising otherwise is not being straight with you.
Can I pass card fees to customers?
Cash discounting is legal in all fifty states. Surcharging is legal in most but is capped by card network rules, cannot exceed your cost of acceptance, and requires written notice to the networks plus clear disclosure at the point of sale and on the receipt. Debit surcharging is prohibited federally. Get the specific program in writing.
What actually is interchange?
The fee the card issuing bank collects on every transaction, set by Visa and Mastercard in published tables that vary by card type and entry method. It is identical through every processor on earth, which is the fact that makes rate shopping tractable: since the bottom layer is fixed, the entire negotiation is the markup on top of it.
Why does my rate go up when someone pays with a fancy travel card?
Premium and corporate cards carry the highest interchange, and on interchange plus pricing you see that cost directly. On flat rate pricing you pay it invisibly: the blended rate was set high enough to cover those cards, so on every plain debit swipe the processor keeps the difference. Your card mix decides which structure treats you better, which is why the steakhouse and the coffee shop get opposite advice on this site.
Are debit cards really that much cheaper to accept?
Regulated debit, cards from the largest banks, carries interchange capped by federal rule at a fraction of credit interchange, which makes debit heavy rooms structurally cheap to process. On interchange plus you collect that saving directly; on flat rate the processor collects it, which is why a diner or cafe with a heavy debit mix is leaving the most money on the table under a blended rate. Your card mix is on your statement, and it is worth knowing before any quote conversation.
Does the POS choice lock in the processing choice?
In this category, almost always yes: Toast, Square, Shift4, SpotOn and Genius all require their own processing, Lightspeed reportedly penalizes outside processors at $400 a month, and Clover devices are frequently locked to the reseller's processor. That bundling is precisely why POS shopping is really processing shopping, and why this page sits at the center of the site rather than off to the side.
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