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Avatar Of Allen Kopelman ALLEN KOPELMAN

Where Does Your Money Go? Payment Processing Fees Explained

Nationwide Payment Systems 

Where Does Your Money Go? Payment Processing Fees Explained (2026)

Learn where your payment processing fees go. Understand interchange, hidden fees, and how to avoid overpaying—especially if you process over $25K/month. 

Presented by Allen Kopelman, CEO — Nationwide Payment Systems-Host of B2B Vault: The Biz2Biz Podcast 

AI OVERVIEW

Every time you accept a credit card, your Money gets split between multiple parties—issuing banks, card networks, and your payment processor. 

Most businesses don’t realize how much they’re actually paying—or how much their provider is marking up transactions. 

If you’re processing over $25,000 per month and using a flat-rate provider (2.6%–4%+), you’re likely overpaying—especially on debit cards where true costs can be as low as 0.05% + $0.22. 

This guide breaks down exactly where your money goes, how fees work, and how to avoid unnecessary charges. 

The Truth: Every Transaction Gets Split 

When a customer pays you $100, you don’t get $100. 

That money is divided into three main categories: 

 

  1. Interchange Fees (The Biggest Piece)

This is paid to the customer’s bank (issuing bank). 

💡 Example (regulated debit card): 

  • 0.05% + $0.22  

That means on a $100 transaction: 

  • The bank gets about $0.27.  

 

👉 Here’s the problem: 

Flat-rate processors charge: 

  • 2.6% to 4%+  

So instead of paying $0.27… 
You might be paying $2.60 to $4.00. 

That margin? 
👉 That’s where they make their money. 

 

  1. Card Brand Fees (Assessment Fees)

Paid to: 

  • Visa  
  • Mastercard  
  • American Express  

These fees are small: 

  • Typically, ~0.10% – 0.15%  

They cover network infrastructure and brand costs. 

 

  1. Processor Markup (WhatYou’reActually Being Charged) 

This is what your payment provider adds on top. 

Transparent model: 

  • Interchange + small markup.  

Flat-rate model: 

  • Bundles everything  
  • Hides the markup.  

 

💡 Reality Check: 
If you don’t know your markup… 
👉 You don’t know what you’re paying. 

sponsored by 

Where Does Your Money Go? Payment Processing Fees Explained &Raquo; B2B 1
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Why Flat-Rate Pricing Gets Expensive Fast 

Flat-rate pricing is designed for simplicity—not savings. 

Example: 

Transaction Type 

True Cost 

Flat Rate 

What You Pay 

Debit Card 

0.05% + $0.22 

2.9% 

10x+ markup 

Credit Card 

~1.5%–2.2% 

2.9% 

Marked up 

Rewards Card 

~2.2%–3% 

2.9% 

Slight markup 

 

Key Insight: 

👉 Flat-rate companies make their biggest profits on: 

  • Debit cards  
  • Regulated cards  
  • Lower-risk transactions  

 

If You’re Doing Over $25K/Month — You’re Overpaying 

At scale, flat-rate pricing becomes a liability. 

If your business processes: 

  • $25K/month → you’re likely overpaying.  
  • $50K–$100K/month → you’re definitely overpaying.  
  • $250K+/month → it’s costing you serious money.  

 

💡 Simple rule: 

👉 The more you process, the more you should be on interchange-plus pricing 

 

The Hidden Fees Nobody Talks About 

Here’s where it gets worse… 

Some providers add junk fees that have nothing to do with processing: 

🚩 Common “Made-Up” Fees 

  • Platform fees  
  • Compliance fees  
  • Statement fees  
  • Monthly minimums (with no value)  

 

👉 These fees can be added: 

  • $29/month  
  • $79/month  
  • Even $200+/month  

With no real benefit. 

 

The One Fee You Should NEVER Pay 

❌ PCI Non-Compliance Fees 

This is one of the biggest traps in the industry. 

If you don’t complete your PCI compliance: 

  • You get charged $29 to $200/month.  

 

Here’s the reality: 

✔ It takes 10–15 minutes 
✔ It’s usually an online questionnaire 
✔ You can assign it to an employee 

 

👉 Action Step: 

  • Log into your processor’s PCI portal.  
  • Complete the questionnaire.  
  • Eliminate the fee permanently.  

 

💡 Bottom Line: 
Paying PCI non-compliance fees = paying for nothing. 

 

Merchant Account vs Flat-Rate: The Real Difference 

Flat-Rate Providers (Stripe, Square, PayPal) 

Pros: 

  • Easy setup  
  • Simple pricing  

Cons: 

  • Higher costs at scale  
  • Hidden margins  
  • Less flexibility  
  • Risk of accounting shutdowns  

 

Merchant Account (Interchange-Plus) 

Pros: 

  • Transparent pricing  
  • Lower costs  
  • Custom setup  
  • Better long-term scalability  

 

👉 This is why serious businesses switch. 

 

How to Actually Lower Your Fees 

Here’s what works: 

✅ Move to interchange-plus pricing 

✅ Add ACH for large or repeat payments 

✅ Optimize Level 2/3 data (for B2B) 

✅ Eliminate junk fees 

✅ Complete PCI compliance 

 

Real-World Example 

A business processing $100K/month: 

  • Flat-rate at 2.9% → $2,900/month  
  • Optimized pricing → ~$2,000–$2,300  

👉 Savings: $600–$900/month 
👉 Annual savings: $7,200–$10,800 

 

Why Businesses Work With Nationwide Payment Systems 

We don’t just give you a rate—we break down your entire cost structure. 

What we focus on: 

  • Interchange-plus pricing.  
  • ACH + credit card optimization.  
  • Smart invoicing with NPSONE  
  • Level 2/3 optimization  
  • No junk fees  
  • 24/7 real support  

 

Call to Action 

👉 Book a Free Processing Review 

We’ll: 

  • Analyze your current statement.  
  • Show you exactly where your money is going.  
  • Identify savings opportunities.  

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Where Does Your Money Go? Payment Processing Fees Explained &Raquo; Public

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Contact Us

Payment Processing & Merchant Fees FAQ

1. What is interchange in payment processing?
+
Interchange is the fee paid to the cardholder’s bank for processing a transaction.

2. Why are debit card fees so low?
+
Regulated debit cards are capped at 0.05% + $0.22 under federal law.

3. What is a fair processing rate?
+
It depends on your business, but interchange-plus is typically the most transparent and cost-effective.

4. What are PCI non-compliance fees?
+
Fees charged when a business doesn’t complete required Security compliance—often avoidable.

5. Are flat-rate processors more expensive?
+
Yes, especially for businesses processing over $25K/month.

6. What are assessment fees?
+
Fees paid to card networks like Visa and Mastercard.

7. How can I reduce processing fees?
+
Switch pricing models, add ACH, and eliminate unnecessary fees.

8. What is a junk fee in payment processing?
+
A fee not directly tied to transaction costs, often added by providers to increase revenue.

9. What is interchange-plus pricing?
+
A pricing model where you pay actual costs plus a fixed markup.

10. Should I complete PCI compliance myself?
+
Yes—it’s quick and avoids unnecessary monthly penalties.

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ALLEN KOPELMAN CEO, Nationwide Payment Systems | Host of the B2B Vault: The Biz to Biz Podcast

Allen Co-Founded Nationwide Payment Systems Inc. in 2001, with the plan to sell credit card processing services and equipment to merchants in the South Florida area and provide concierge style service for each client. Quickly the company grew to 1000 plus clients and we were had clients all over the United States.
The entrepreneurial bug started early in Allen’s life as comes from a family of business owners and learn about business from early age behind the cash registers at his father’s clothing stores in Miami. Later going to Culinary School in Atlanta and being a Chef, then Executive Chef for Metro Hotels in Dallas, Texas running food and beverage operations in Hotels. In 1992 a move back to Florida and opening a restaurant, catering company and consulting group.
After gaining a couple of years of experience selling merchant services, Allen Co-Founded Nationwide Payment Systems with David Burney. Together the company started and quickly grew, products were added, processing banks and the company became laser focused on technology that would help merchants. Along with that came a focus on hard to place businesses that many banks did not want to work with.

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