Glossary

Interchange-Plus

Cost-Plus

Generally the most transparent pricing model. The merchant pays the actual interchange and card brand fees for each transaction, plus a fixed processor markup (for example, interchange + 0.30% + $0.10). The processor's margin is shown separately on the statement.

Tiered Pricing

Qualified; Mid-Qualified; Non-Qualified

Transactions are sorted into tiers, usually Qualified, Mid-Qualified, and Non-Qualified, each with its own rate. The processor decides how cards are tiered, so it's often less transparent than interchange-plus and can cost more.

Flat Rate Pricing

Blended Pricing

One fixed rate for every transaction regardless of card type (for example, 2.9% + $0.30). Simple and predictable, but higher-volume merchants or those with many debit transactions often pay more than with interchange-plus.

Subscription Pricing

Membership Pricing

The merchant pays a flat monthly subscription and gets interchange with no percentage markup, plus a small per-transaction fee. Can be cost-effective for high-volume merchants.

ERR (Enhanced Recover Reduced)

A variation of tiered pricing. The merchant pays a base rate, and any transaction that doesn't qualify for the lowest rate gets an extra surcharge on top. Often hard to read on statements.

Surcharge Program

The merchant passes processing costs to customers who pay by credit card. Card network rules cap the fee at the merchant's actual cost of acceptance, up to a network maximum (Visa's is lower than Mastercard's). Not allowed on debit or prepaid cards, and banned or restricted in some states. The merchant must notify its processor in advance and disclose the fee at the point of entry, at checkout, and on the receipt.

Cash Discount / Dual Pricing

Cash Discount; Dual Pricing

Prices include the card processing cost, and customers who pay cash receive a discount. With dual pricing, both cash and card prices are displayed. Unlike surcharging, it can apply to debit cards.

Convenience Fee Model

Convenience Fee

A fee for using an alternative payment channel, such as paying online or by phone instead of in person. Under Visa's rules it must be a flat amount and apply to every form of payment accepted in that channel, not only cards. Government, utilities, and education often use a separate network service fee program instead, which can be a percentage.

Interchange Fee

The largest part of most processing costs, paid to the cardholder's bank (issuer) on every transaction. Set by the card networks, such as Visa and Mastercard, and varies by card type, acceptance method, and industry.

Assessment Fee

Card Brand Fee; Network Fee

A small percentage the card networks charge on every transaction for using their network. Non-negotiable and passed through by every processor.

Processor Markup

Service Fee

The portion of the rate the processor or ISO keeps, charged on top of interchange and assessments. For most merchants, the only negotiable part of processing cost. On interchange-plus statements it is shown as its own line, sometimes labeled Service Fee, as a percentage and/or per-item markup.

Discount Rate

The total percentage a merchant pays on each transaction, combining interchange, assessments, and processor markup into one figure.

Per-Transaction Fee

A flat fee charged on every transaction, usually measured in cents, often paired with a percentage rate (for example, 2.9% + $0.30).

Authorization Fee

Auth Fee

Charged each time a transaction is submitted for authorization, whether approved or declined.

Decline Fee

An authorization fee charged when a transaction is declined. Some processors list declines separately from approvals.

Reversal Fee

A per-item fee for canceling an authorization before it settles.

Batch Fee

Charged each time a merchant settles, or "closes," a batch of transactions, usually once per day.

AVS Fee

Address Verification Service Fee

Charged for using the Address Verification Service (AVS), a fraud tool that checks the cardholder's billing address on card-not-present transactions.

Gateway Fee

A monthly and/or per-transaction fee for the payment gateway that connects a website, online store, or virtual terminal to the processor.

Network Fee (Processor)

TSYS Network Fee

A per-transaction or percentage fee the processor charges for access to its network. Separate from card brand fees; sometimes labeled with the processor's name (e.g., "TSYS Network Fee").

Cross-Border Fee

An extra percentage charged when the card was issued outside the merchant's country.

Non-Qualified / Mid-Qualified Surcharge

Non-Qualified Surcharge; Mid-Qualified Surcharge; Downgrade

Found in tiered pricing. A higher rate charged when a transaction doesn't meet "qualified" criteria, such as rewards, business, or keyed-in cards. Also called a downgrade.

Voice Authorization Fee

Charged when a merchant calls in to authorize a transaction by phone instead of processing it electronically.

Monthly Fee

Account on File Fee; Account Service Fee

A recurring monthly charge for maintaining the merchant account, covering servicing, support, and reporting access. Some statements label it Account on File Fee or Account Service Fee.

Monthly Minimum

Minimum Discount Fee

Ensures the processor earns a minimum amount in fees each month. If fees fall below it, the difference is charged at month's end. Some statements show it as a Minimum Discount Fee, charged when percentage-based fees fall below the monthly minimum.

Statement Fee

A monthly fee for generating and providing account statements.

Online Access / Reporting Fee

Online Access Fee; Reporting Fee

A monthly fee for access to the merchant's online reporting portal.

PCI Compliance Fee

A monthly or annual charge for tools and support that help a merchant meet the Payment Card Industry Data Security Standard (PCI DSS), which protects cardholder data.

PCI Non-Compliance Fee

A penalty charged when a merchant hasn't validated PCI DSS compliance, usually by failing to complete the annual Self-Assessment Questionnaire (SAQ).

Annual Fee

A once-a-year charge for maintaining the merchant account, often billed in addition to monthly fees.

1099-K Fee

IRS Reporting Fee

An annual fee, usually billed once a year, to cover the cost of preparing and filing Form 1099-K with the IRS. Payment processors are required to report each merchant's gross card sales on this form, and a copy is sent to the merchant for tax filing. It may also appear as an "IRS Reporting Fee" or be bundled into a regulatory fee.

TIN Mismatch Fee

Charged when the business name and Tax ID (TIN/EIN) on the merchant account don't match IRS records. Until it's corrected, the processor may be required to apply IRS backup withholding, holding back a percentage of the merchant's deposits set by the IRS (currently 24%) and sending it to the IRS. Keeping the legal name and EIN on file exactly as they appear on IRS documents avoids both.

Regulatory / Compliance Fee

Regulatory Fee; Compliance Fee

A recurring fee some processors charge to cover card network rules, IRS reporting, and other regulatory requirements.

Fixed Acquirer Network Fee (FANF)

FANF

A monthly Visa fee based on number of locations (card-present) or processing volume (card-not-present).

Wireless / Equipment Fee

Wireless Fee; Equipment Fee

A monthly charge for renting or leasing a terminal, or for wireless data service on a mobile terminal.

Application Fee

A one-time fee to submit and underwrite a merchant account application. Some processors waive it; others charge it whether or not the account is approved.

Setup Fee

A one-time fee to configure the account, gateway, or equipment once the merchant is approved.

ETF (Early Termination Fee)

ETF; Early Termination Fee

Charged if a merchant closes the account before the contract term ends. Terms vary by processor and often run for several years with automatic renewal. Some contracts use a flat ETF; others use liquidated damages based on estimated lost revenue.

Research Fee

Charged when a merchant asks the processor to investigate a statement issue after the window for reporting statement errors has closed. That window is set by the merchant agreement.

Chargeback Fee

Charged when a cardholder disputes a transaction and a chargeback is filed. Applies whether or not the merchant wins the dispute.

Retrieval Fee

Charged when the cardholder's bank requests more information about a transaction, usually before deciding whether to file a chargeback.

Pre-Arbitration / Arbitration Fee

Pre-Arbitration Fee; Arbitration Fee

Charged when a disputed chargeback escalates to the card network for a final ruling. Usually much higher than a standard chargeback fee.

Chargeback Reversal (Representment)

Chargeback Reversal; Representment

A chargeback the merchant successfully disputed, with funds returned. Some networks charge a fee to represent a chargeback.

Rolling Reserve

Not a fee, but common for high-risk merchants. A percentage of daily sales is held for a set period (often up to 180 days, in line with chargeback time limits) to cover potential chargebacks, then released on a rolling basis.

Upfront / Fixed Reserve

Upfront Reserve; Fixed Reserve

A lump sum held by the processor at account opening or after a risk review, released after a set period or when the account closes.

Reserve Balance / Reserve Held

Reserve Balance; Reserve Held

The total amount currently held in a merchant's reserve account, shown alongside daily reserve funding and releases.

High-Risk Fee

Higher rates or added monthly fees for merchants in industries with elevated chargeback or fraud risk, such as CBD, travel, nutraceuticals, and subscriptions.

ACH Reject / NSF Fee

ACH Reject Fee; NSF Fee

Charged when the processor can't debit fees from the merchant's bank account due to insufficient funds or closed account details.

Visa Acquirer Service Fee (Credit / Debit)

Visa Acquirer Service Fee

Visa's main assessment fee, a small percentage on every Visa transaction. Credit and debit are charged at slightly different rates.

Visa NAPF (Network Acquirer Processing Fee) / APF

NAPF; APF; Network Acquirer Processing Fee

A per-item fee on every Visa authorization attempt. Rates differ for credit, debit, domestic, and international cards; reversals are charged too.

Visa Digital Commerce Services Fee

A small percentage charged mainly on card-not-present transactions that covers Visa's tokenization and other digital commerce services. Some statements also show a card-present version.

Visa International Service Assessment (ISA)

ISA

A percentage fee charged when a U.S. merchant accepts a Visa card issued outside the U.S.

Visa International Acquirer Fee (IAF)

IAF

An additional percentage on international Visa transactions, on top of the ISA.

Visa BASE II Transmission Fee

BASE II

A tiny per-item fee for sending transactions through BASE II, Visa's clearing and settlement system.

Visa Credit Voucher Fee

A per-item fee charged when a merchant processes a refund back to a Visa card.

Visa Commercial Solutions Fee

A small percentage on transactions made with Visa business, corporate, or purchasing cards.

Visa Misuse of Authorization Fee

Charged when a transaction is authorized but never settled or properly reversed.

Visa Reattempt Fee

Charged when a merchant retries a card after a "never approve" decline, or retries too many times within 30 days. Common with subscription billing.

Visa CVV2 Verification Fee

CVV2 Fee

A small per-item Visa fee for checking the 3-digit security code (CVV2) on the back of the card.

Mastercard Acquirer Brand Volume Fee

Mastercard's main assessment fee, a small percentage on every Mastercard sale.

Mastercard Large Ticket Assessment (Credit 1K)

Credit 1K

A higher assessment rate on Mastercard credit transactions of $1,000 or more.

Mastercard Acquirer License Fee

A small percentage on Mastercard volume that processors charge to pass along Mastercard's annual license fee for the right to process Mastercard.

NABU (Network Access and Brand Usage) Fee

NABU

A per-transaction fee for using the Mastercard network, charged on sale authorizations and on refunds. Cards issued outside the U.S. are charged a higher rate.

Mastercard Cross-Border Fee

A percentage charged when a U.S. merchant accepts a Mastercard issued outside the U.S.

Mastercard Acquirer Program Support Fee

An additional percentage on international Mastercard transactions, on top of the cross-border fee.

Mastercard Digital Enablement Fee (DEF)

DEF; DEF Min

A small percentage on card-not-present transactions, with a set minimum and maximum per transaction. Sometimes listed as "DEF" or "DEF Min."

Mastercard Location Fee

A flat fee, usually billed monthly, for each merchant location that accepts Mastercard. Very low-volume locations and some nonprofits are exempt.

Mastercard File Transmission Fee

A tiny per-item fee for transmitting transaction files through Mastercard's network.

Mastercard Claims Fee

A per-case fee for processing a dispute through Mastercom, Mastercard's chargeback system.

Mastercard Force Post Fee

Charged when a transaction is submitted for settlement without an approved authorization.

Mastercard Fallback Avoidance Fee

Charged when a chip card is swiped on a chip-enabled terminal instead of being inserted.

Discover Acquirer Assessment Fee

Discover's main assessment fee, a small percentage on every Discover transaction.

Discover Network Authorization Fee

A per-authorization fee for using the Discover network.

Discover Data Usage Charge

A tiny per-item fee on Discover transactions for transmitting data.

Discover Digital Investment Fee

A small percentage on card-not-present Discover sales (keyed, online, or mobile) that supports Discover's digital payment infrastructure.

Discover International Service Fee

A percentage charged when a U.S. merchant accepts a Discover card issued outside the U.S.

Amex Network / Assessment Fee

Amex Network Fee; Amex Assessment Fee

Amex's main network fee, a small percentage on every Amex transaction processed through a merchant account (OptBlue).

Amex Card-Not-Present (Non-Swiped) Fee

Amex Non-Swiped Fee

An additional percentage on Amex transactions that are keyed in or processed online.

Amex Inbound Fee

A percentage charged when a U.S. merchant accepts an Amex card issued outside the U.S.

Amex Discount Fee

The percentage rate charged on Amex transactions. Under OptBlue, the wholesale discount rate Amex charges the processor works like interchange for Visa and Mastercard.

Amex Program Continuation Fee

A percentage on Amex charges for OptBlue merchants whose Amex volume over a rolling 12 months exceeds the program's volume limit. The rate rises at higher volume tiers.

PIN Debit Network Fees

STAR; ACCEL; NYCE; Maestro

Fees charged by the networks that route PIN and PINless debit transactions, including per-item, dispute, and exception fees.

NYCE Merchant Participation Fee

An annual per-location fee for merchants set up to route transactions over NYCE. Charged whether or not any NYCE transactions occurred.

Regulated Debit (Durbin)

Regulated Debit; Durbin

Debit cards from banks and credit unions with $10 billion or more in assets. Interchange is capped under federal law (the Durbin Amendment and the Federal Reserve's Regulation II), which usually makes them among the cheapest cards to accept.

Unregulated / Exempt Debit

Unregulated Debit; Exempt Debit

Debit cards from smaller banks and credit unions (under $10 billion in assets). Not covered by the Durbin cap, so interchange is usually higher.

CPS / eComm Preferred / UCAF

CPS/e-Commerce Preferred; eComm Preferred; UCAF

Interchange categories for online transactions that include extra security data, such as 3-D Secure authentication or tokenization. Usually a lower rate than basic card-not-present.

Rewards / Premium Card Categories

Visa Signature Preferred (VSP); Visa Infinite; Mastercard World; World Elite; Discover Premium Plus

Higher interchange for rewards credit cards, such as Visa Signature Preferred (VSP), Visa Infinite, Mastercard World and World Elite, and Discover Premium Plus.

Commercial / Business Card Categories

Commercial Card; Business Card; Corporate Card; Purchasing Card

Interchange for business, corporate, and purchasing cards. Typically higher than consumer cards.

Prepaid (PPD)

PPD; Prepaid

Interchange categories for prepaid and gift cards.

Interregional (InterReg)

InterReg

Interchange categories for cards issued outside the U.S., usually with added cross-border network fees.

Large Ticket

Special interchange rates for high-dollar commercial transactions, typically on business or purchasing cards.

Interchange Pass-Through

A statement line showing actual interchange passed through at cost. Appears under interchange-plus pricing.

Daily Discount vs. Monthly Discount

Daily Discount; Monthly Discount; Fees Paid; Net Fees Due

Daily discount takes fees out of each deposit; monthly discount takes one lump sum at month's end. Many statements show both "Fees Paid" (daily) and "Net Fees Due" (the month-end remainder).