What are
merchant services?

The processing account. Often called a merchant account, this is the arrangement with an acquiring bank that authorizes card transactions and routes the money to you. It is the legal and financial core of the whole setup; everything else connects to it.

The payment gateway. The software that securely carries card data from your website, invoice, or terminal to the processor. For in-person sales on a modern terminal the gateway is usually invisible, but for online payments it is the piece that encrypts and transmits each transaction.

The terminal or point of sale. The hardware or app your customer interacts with: a card reader, a countertop register, or a POS system that also tracks inventory and customers alongside the payment.

Underwriting. Before anyone lets you take cards, they verify your business, because the processor is on the hook if you take payment and never deliver. Good providers make this a short in-app form; bad ones make it a week of faxing documents.

Funding. The schedule on which settled money lands in your bank account. One to two business days is the modern standard; anything slower is a choice the provider is making, not a technical limit.

Chargeback handling. When a customer disputes a charge, someone has to gather your evidence and submit a response. Some providers give you a dashboard for this; others give you a deadline and a fax number.

PCI compliance support. Card data has to be handled to the PCI-DSS security standard. Many providers charge a monthly “PCI fee” for this; the honest ones simply build compliance into the product.

Every card transaction is priced in three layers, and confusing them is how merchants end up overpaying.

Layer one: interchange. The largest slice, set by the card networks and paid to the bank that issued your customer's card. It varies by card type — a basic debit card costs far less than a premium rewards credit card. No processor controls this; it is the wholesale cost of the payment.

Layer two: assessments. Small fees the card networks (Visa, Mastercard, and so on) charge for using their rails. Like interchange, these are fixed costs every processor pays.

Layer three: the processor markup. The only layer your provider actually sets. This is where the real difference between providers lives, and it is where monthly fees, statement fees, per-transaction cents, and batch fees all hide.

When a provider quotes you a rate, always ask which layers the number includes. A quote of the markup alone will look great until the first statement arrives.

Your effective rate is the single most honest number on your processing statement, and it takes about two minutes to calculate:

Effective rate = total fees charged ÷ total card volume processed

Take last month's statement. Find the total amount the provider charged you — every line: processing, monthly fees, PCI fees, batch fees, all of it. Say it adds up to $1,148. Now find your total card sales for the same month. Say that is $40,000.

$1,148 ÷ $40,000 = 2.87% effective rate

That 2.87% is what you actually pay to accept cards, whatever the sales rep quoted. If the quoted rate was 2.6%, the extra 0.27% came from somewhere — and the statement will show you where. Run this calculation every time you evaluate a provider, including when you compare rates across providers.

Flat rate pricing charges one percentage on every transaction regardless of card type. It is simple to predict and easy to verify on a statement. It suits most small and mid-sized businesses, and it removes the reclassification games entirely. At very high volumes with sophisticated accounting, some businesses can shave basis points with interchange-plus — but they pay for it in complexity.

Interchange-plus passes the wholesale interchange and assessment costs through and adds a stated markup. It can be the cheapest model for high-volume merchants with low interchange mixes, but the statement is hard to read and the total moves with your card mix.

Tiered pricing sorts transactions into “qualified,” “mid-qualified,” and “non-qualified” buckets, each with a different rate. The advertised rate is the qualified bucket; rewards cards, corporate cards, and keyed transactions slide into the expensive ones. It is the model most often behind a quoted rate that never matches the statement, and it is rarely the right choice for anyone.

Use this checklist against any provider, us included:

• The all-in rate in writing. Not the headline rate — the effective rate on a sample statement for a business like yours.
• Per-transaction fees. A percentage plus a fixed cent amount punishes businesses with smaller average tickets.
• Monthly charges. Statement fees, gateway fees, PCI fees, minimums. Add a year of them to the rate comparison.
• Contract terms. Month-to-month or multi-year? Is there an early termination fee, and how is it calculated?
• Funding speed. Next-day or two-day deposits are standard; longer holds deserve an explanation.
• Chargeback process. Can you respond with evidence in a dashboard, or is it a deadline and a fax machine?
• Rate-lock language. Can the provider raise your markup with 30 days' notice, or is the rate contractually stable?

Simple uses flat-rate pricing: 2.19% on card-present transactions with no per-transaction fee, no monthly minimum, no statement fee, no separate PCI fee, and no early termination fee. Plans start at $99 per month.

See the full merchant services offering

For typical numbers by business size, see what credit card processing costs a small business in 2026, or compare providers on the lowest credit card processing rate.