Now that you know where processing fees come from, you know that the best credit card processor is the one that offers you the lowest markup over interchange and assessments. You shouldn't be shopping for the lowest rates. Instead, you should be shopping for the lowest overall markup over base cost. Furthermore, you want to look at the whole picture and consider the effective rate. Don't just focus on the interchange markup or another single fee.

Separate Costs

Interchange and assessments account for much of processing expense, and they're not negotiable. Separate costs into interchange, assessments and markups when shopping for a merchant account and focus solely on getting the lowest markup.

Simplicity is Expensive

Simplicity is expensive when it comes to credit card processing. Companies like Square and PayPal are making nice profits by offering flat rate pricing to businesses that don't spend the time to learn how processing fees really work.

For most businesses, credit card processing fees are second only to rental and real estate expense. All business people and entrepreneurs are busy, but the time invested in learning about credit card processing fees will pay off in spades.

Simple and competitive are two very different things, and for most businesses, credit card processing fees are either one or the other.