Also called: Bank card, Card, Plastic
What a payment card is
A payment card is a credential your customer uses to pay from a credit, debit, or prepaid account. It can be a physical card or card details stored in a digital wallet. Credit purchases draw on a line of credit, debit purchases draw on a bank account, and prepaid purchases draw on funds loaded onto the card.
The card connects the customer, your business, their issuing bank, your acquiring bank, and a card network such as Visa or Mastercard. The issuer approves or declines the purchase. Approval is not the transfer of funds: transactions are later cleared and settled into your merchant account.
The card type affects the underlying cost, but your processor’s markup is the part you can negotiate.
How card payments work
At checkout, your terminal, website, or payment link sends the transaction details through your payment system to the processor and acquiring bank. The request passes through the card network to the issuer, which checks the account and returns an approval or decline. An approved sale can proceed, but the money arrives through a separate settlement process.
Businesses batch approved card transactions before settlement. Settlement commonly takes 1 to 3 business days, depending on the processor and bank. The timing matters when you plan payroll, supplier payments, or daily cash balances.
Why card type matters to your costs
A card payment has three cost layers: interchange paid to the issuing bank, network fees paid to the card network, and your processor’s markup. Card type affects interchange, so a debit card and a premium rewards or business credit card can carry different underlying costs for the same sale. Only the processor markup is negotiable.
The way you accept the card also matters. A card presented at your counter is a card-present transaction; a payment entered online or over the phone is card-not-present. Card category, how the card was presented, and the transaction data you submit help determine the processing cost. Your card itself does not have one fixed processing rate.
Debit acceptance has an additional routing consideration. Regulation II requires at least two unaffiliated networks on each debit card, giving merchants a choice of routes. For debit cards issued by banks with $10 billion or more in assets, the interchange cap remains in force as of 2026, despite a proposed reduction in 2023 and a 2025 court ruling stayed pending appeal.
What you can actually change
- Compare card mix. Review your monthly sales by credit, debit, and card-present or card-not-present transactions. Compare those totals with the interchange and network fees on your statement.
- Check debit routing. Confirm your debit setup supports the available unaffiliated networks. Compare routing options and make sure your business is not paying processor markup as though it were a network fee.
- Separate the markup. Ask for interchange, network fees, and processor markup to be shown separately in your pricing. Focus negotiations on the markup, not the non-negotiable interchange rate.
Frequently asked questions
Is a payment card the same as a credit card?
No. Payment card is the broader term. Credit cards draw on a line of credit, while debit cards draw on a bank account and prepaid cards draw on loaded funds. These card types can have different processing costs.
Does a digital wallet payment count as a card payment?
A digital wallet can transmit payment card credentials for a purchase. The payment still travels through the card-processing system when the wallet uses a credit or debit card, though the customer may not present a physical card.
Can you negotiate payment card fees?
You cannot negotiate interchange rates set through card-network schedules, or network fees. You can negotiate the processor markup. Your statement should make the different cost layers clear enough to compare.
Why does a card payment cost more than another?
The card category, how the customer presented it, and the transaction data sent for processing affect the underlying cost. A card-present purchase and an online card-not-present purchase can fall into different processing categories.