Also called: Credit card processing, Merchant processing, Merchant services, Payment processing services
What payment processing is
Payment processing is the set of services and systems that handles an electronic payment from customer approval through the movement of funds to your business. It supports card payments in person, online and in apps, as well as other methods such as digital wallets and bank transfers.
For a card sale, the payment gateway or terminal sends payment details to a processor. The processor routes the request through the card network to the customer’s issuing bank, which approves or declines it. Approval is not the same as a deposit. The transaction must still be submitted for settlement, and the funds then move through the network and acquiring bank to your business account.
Your processing bill has three layers, but only the processor markup is negotiable.
How the payment moves
A card authorization checks the account and reserves or approves the payment amount. The network carries that request and response between the processor and issuing bank. After you close or submit your batch, the processor sends approved transactions for settlement. Card deposits commonly take 24 to 48 hours, so a sale shown as approved at checkout may not yet appear in your bank balance.
Your payment setup affects how that flow works. A restaurant terminal handles card-present sales, while an online checkout sends card-not-present transactions through a gateway. A merchant account or acquiring service receives card funds before they reach your business bank account. Different steps, such as online entry or a premium rewards card, also affect the underlying card fees.
Two Visa network charges on a $100 credit sale
| Visa assessment | $0.14 |
|---|---|
| Visa credit authorization fee | $0.0195 |
| Combined network charges | About $0.16 |
Illustrative calculation using Visa’s published charges as of 2026. Excludes interchange and processor markup.
What it means for your costs
Card processing costs have three layers: interchange paid to the issuing bank, network fees paid to the card network, and processor markup. Interchange and network fees are set by others. The processor markup is the part you can negotiate, so a lower advertised rate does not tell you whether the markup or the total bill is lower.
As of 2026, Visa’s assessment is 0.14% on credit sales and 0.13% on debit and prepaid sales. Visa also charges an Acquirer Processing Fee of $0.0195 per credit authorization and $0.0155 per debit authorization. Mastercard’s assessment is 0.14% on sales, with an additional 0.01% on transactions of $1,000 or more, plus a $0.0195 Network Access and Brand Usage fee per authorization. These are network charges, not processor markup.
For a $100 Visa credit sale, the 0.14% assessment equals 14 cents, and the $0.0195 authorization fee adds about 2 cents. That is an illustrative calculation of two network charges only, not the transaction’s full cost. Interchange and your processor’s markup are additional.
Where it appears on your statement
Your monthly statement may show interchange by category, network charges such as Visa APF or FANF and Mastercard NABU, and processor charges such as a percentage markup or per-transaction fee. Bundled or tiered pricing can hide these layers inside a single rate, making it harder to tell which charges are pass-through costs and which are negotiable.
Compare the same month’s card volume and transaction count with the fees billed. Then separate interchange and network fees from processor markup, monthly charges and add-on fees. A statement that labels all charges as a discount rate or processing fee does not show you which part the processor controls.
What you can actually change
- Separate the layers. On your statement, identify interchange, network fees and processor markup separately. Do not treat pass-through network costs as a processor’s negotiable rate.
- Compare total cost. Compare processor proposals using the same sales volume, transaction count and card mix. Include per-transaction, monthly, gateway and other recurring charges.
- Review statement changes. Track your processor markup and recurring charges month to month. A change in total fees does not prove the markup changed, since card mix and transaction volume also affect the bill.
Frequently asked questions
What is the difference between a payment processor and a payment gateway?
A payment gateway captures and securely sends payment details, especially for online checkouts. The processor routes the transaction through the card network to the issuing bank and helps move approved transactions through settlement.
Is payment processing the same as a merchant account?
No. Payment processing is the service and infrastructure that handles transactions. A merchant account is an account used to receive card funds before they are deposited into your business bank account.
Which payment processing fees can you negotiate?
You can negotiate the processor markup. Interchange goes to the issuing bank, and network fees go to the card networks. Those two cost layers are not negotiable with your processor.
When does an approved card payment reach your bank account?
Authorization approves the sale but does not complete the deposit. After the transaction is submitted for settlement, card funds commonly reach a business account within 24 to 48 hours.