Most business owners never see a clean breakdown of what they pay to accept a card. They see one number on a statement and assume that number is the whole story. It usually isn't. William Stapleton, President and CEO of Iron Rock Payments, has spent his career on the payments side of that statement, first building PayFacto and now running Iron Rock Payments. He says the confusion is not an accident of the industry; it is a structural feature of how pricing is presented. "Most merchants are shown a rate, not a structure," Stapleton said. "A rate tells you almost nothing until you know what it's built from."
Stapleton breaks a typical card transaction fee into three separate pieces, each set by a different party. The first is the interchange fee, which goes to the bank that issued the customer's card and is set by the card networks themselves. It is not something a processor negotiates on a merchant's behalf, and it does not change based on who the merchant chooses to work with. The second is the assessment fee, which goes to the card network, whether that is Visa, Mastercard, or another network. Like interchange, this is fixed and applies no matter which processor a business uses. The third is the markup, which is the part the processor sets and the only piece of the fee that is actually negotiable. "Interchange and assessments are the cost of the rails," Stapleton said. "The markup is the only line item that reflects the processor you picked."
This distinction matters greatly when comparing providers. Stapleton says most of the confusion he sees from business owners comes from treating the total fee as one negotiable number, when only a fraction of it can move. "If a business owner doesn't know which part of the number is fixed and which part is negotiable, they can't actually tell if they're getting a good deal," he said. "They're just comparing two totals without knowing what's inside either one." This also explains why two processors can quote very different headline rates while charging similar effective totals, or the reverse. A lower quoted rate built on a higher markup can cost more than a higher quoted rate with a thinner one, depending on how a business actually processes its cards.
Stapleton's approach with Iron Rock Payments starts with getting a business owner to separate the fixed costs from the markup before comparing anything else. He suggests business owners ask a provider to show interchange and assessment costs separately from the markup, rather than accepting one blended rate. He also suggests asking how the markup is applied, since some providers apply it as a flat percentage and others build in per-transaction fees that behave differently depending on transaction size. "A business that runs a lot of small transactions is affected very differently by a per-transaction fee than a business that runs fewer, larger ones," he said. "The right structure depends on how the business actually processes, not on which number looks smallest on a sales sheet."
Stapleton said the goal of laying this out is not to make every merchant an expert in interchange schedules. It's to give business owners a way to ask better questions before they sign anything. "You don't need to memorize the card network rules," he said. "You just need to know that not everything on your statement is negotiable, and the part that is negotiable is the part worth actually comparing." Iron Rock Payments works with business owners on that comparison directly, walking through statements line by line so the fixed costs and the markup are separated before any decision gets made. William Stapleton is President and CEO of Iron Rock Payments, a credit card processing company. He previously founded PayFacto, a payment processing company based in Montreal that was sold to Visa in 2019. He lives in Frisco, Texas.
