The processor markup is the portion of your payment processing fees that goes directly to your payment processor or ISO (Independent Sales Organization) as their profit. Under interchange plus pricing, the markup is separated from interchange fees on your statement, making it easy to see what your processor earns on each transaction.
The markup typically has two components: a percentage and a per-transaction flat fee. For example, "interchange + 0.30% + $0.10" means the processor earns 0.30% of the transaction amount plus $0.10 on every transaction, regardless of interchange rates.
Under tiered pricing, the markup is hidden inside the bundled rate, making it impossible to see what the processor actually earns. A tiered pricing processor might charge 2.69% and pay interchange of 1.65% — earning a 1.04% markup — without you knowing it.
Typical processor markups under interchange plus: - Large merchants (over $1M/year): 0.05%–0.20% + $0.05–$0.10 - Mid-size merchants ($100K–$1M/year): 0.20%–0.40% + $0.10–$0.15 - Small merchants (under $100K/year): 0.35%–0.60% + $0.10–$0.25
ISOs and agents earn their income from this markup, which is why it's worth negotiating.
The processor markup is the only component of your processing costs that is negotiable. Interchange and assessment fees are fixed by card networks. Your processor's markup is set by them and can be reduced through negotiation, volume growth, or shopping your account competitively.
Even a 0.15% reduction in markup saves $150/month per $100,000 in volume. When negotiating, focus on both the percentage and the per-transaction fee — high average ticket merchants benefit more from lower percentages, while high transaction count merchants benefit more from lower per-transaction fees.
A hardware store processes $150,000/month with 3,000 transactions. Current markup: interchange + 0.45% + $0.15 Monthly markup cost: ($150,000 × 0.45%) + (3,000 × $0.15) = $675 + $450 = $1,125 After negotiating to: interchange + 0.25% + $0.10 Monthly markup cost: ($150,000 × 0.25%) + (3,000 × $0.10) = $375 + $300 = $675 Annual savings from negotiating markup: $5,400
For interchange plus pricing, fair markups range from 0.20%–0.40% + $0.10 for most small to mid-size businesses. High-volume merchants can negotiate to 0.05%–0.15%. Anything above 0.60% is high.
On an interchange plus statement, the markup appears separately from interchange fees. On a tiered pricing statement, it's hidden. Upload your statement for a free analysis to find out what you're actually paying in markup.
Yes, absolutely. Processors expect negotiation. Volume, industry risk, processing history, and competition all affect what markup you can negotiate. Most merchants who ask for a reduction get one.
At Liberty Bancard, our processor markup is disclosed on every statement — no hidden fees. We make our money on a fair, negotiated markup, not by hiding costs in tiered pricing or surprise fees. Contact us to see what markup we'd offer your business based on volume and card mix.
Continue learning: Browse all 60 payment processing terms in our Payment Processing Glossary, or upload your statement for a free analysis of your current processing costs.