Who’s Involved When a Payment Is Made?

The Merchant Services Provider (Your Credit Card Processor)

This is the company that moves money from your customer’s card or bank account into your business bank account. They connect your business to the major card networks: Visa, Mastercard, American Express, Discover, Maestro, and various regional networks.

Think of them as the financial plumbing behind every transaction.

Fees they typically charge:

• Monthly account fee. A flat fee to keep your account open and active.
• Percentage fee per transaction. A small percentage of each sale, typically ranging from 1.5% to 3%.
• Per-transaction fee. A flat fee on every transaction, often somewhere between $0.10 and $0.30.
• Batch fee. A fee charged each time you settle your transactions. More on this in the Fees You’ll Pay section.
• Equipment rental fee. If your processor provides a physical card terminal or point-of-sale device, many charge a monthly rental for the hardware. Over time this can cost more than simply purchasing the equipment outright, so it’s worth doing the math.
• Annual ecommerce gateway fee. For businesses taking payments online, some providers charge an annual fee for access to the payment gateway software rather than, or in addition to, a monthly fee. From a bookkeeping standpoint this works like an equipment rental: it’s the cost of access to the infrastructure that makes online payment acceptance possible, just in digital form instead of a physical terminal.

The Payment Gateway

If you accept payments online, you also need a payment gateway. This is a separate piece of software that securely connects your website or ecommerce platform to your processor. It encrypts your customer’s payment information and sends the payment request to the processor for approval.

Think of it as the secure tunnel between your checkout page and your bank.

An important pricing note: all ecommerce transactions are classified as “card-not-present,” meaning the physical card isn’t in front of you when the payment is made. Card-not-present transactions carry the highest processing rates across the board because the fraud risk is higher than an in-person swipe or chip read. This applies regardless of which processor or gateway you use.

It also means the rate you see advertised is almost never the rate you’ll actually pay for ecommerce. Processors advertise their best rate, typically the qualified, in-person, PIN debit rate, because it’s the lowest and most appealing number. Ecommerce transactions don’t qualify for that rate. The rate you actually pay will always be higher. When evaluating any processor for online payments, ask specifically what the card-not-present rate is, not the advertised rate. More on rate tiers in the How Rates Work section below.

Fees gateways typically charge:

• Monthly gateway fee. A recurring fee to use the gateway service.
• Gateway transaction fee. An additional per-transaction fee on top of whatever your processor charges.

How Rates Work

Qualified Rates, Non-Qualified Rates, and “Discount” Rates

This is where merchant statements get confusing fast, partly because the industry uses terms that don’t mean what you’d expect.

Qualified rates are the lowest rate tier a processor offers, applied to transactions that meet specific criteria: typically a standard consumer credit card or PIN debit card, swiped in person, processed the same day. Everything else may be bumped to a higher tier.

Non-qualified rates apply to transactions that don’t meet those criteria. Rewards cards, corporate cards, hand-keyed transactions, and cards from certain international issuers often fall into this category. Non-qualified rates can be significantly higher than qualified rates, sometimes two to three times as much, and many business owners don’t realize their transactions are being charged at the higher rate.

Discount rate is industry jargon for the overall percentage fee the processor charges on a transaction. Despite the word “discount,” this is not a reduction in your costs. It’s simply the name for the fee, the processor’s cut. When a salesperson talks about your “discount rate,” they mean what you’re paying, not what you’re saving.

When comparing processors, always ask which rate tier applies to your most common transaction type. A low headline rate may only apply to a narrow slice of your actual sales. And if you’re selling online, card-not-present transactions always fall into the higher rate tiers. Always.

The Right Rate Isn’t Always the Lowest Rate

Here’s something that surprises a lot of business owners: sometimes it makes sense to negotiate a higher per-transaction fee in exchange for a lower percentage rate. Whether that trade works in your favor depends entirely on what you’re selling.

A bakery is a good example.

Bakery A sells custom wedding cakes at $1,000 each. They process a small number of transactions, but each one is large. The percentage rate is what matters most to them. At 2.5%, that’s $25 on every cake sold. Negotiate that down to 1.8% and they save $7 per cake, which adds up quickly. A slightly higher flat transaction fee, say $0.50 instead of $0.10, barely registers on a $1,000 sale.

Bakery B sells individual cupcakes at $1 each. They process a huge number of small transactions. For them, the flat transaction fee is what matters most. If every $1 cupcake sale triggers a $0.30 transaction fee, they’re losing 30% of the sale to fees before the percentage even applies. A high flat fee on low-dollar transactions can make a product line unprofitable outright.

The right fee structure depends on your average transaction size. Before agreeing to any rate, do the math on what you actually sell and what each transaction costs you under different fee structures. A good advisor will help you model this out. It’s not complicated, but it’s easy to overlook.

Interchange-Plus vs. Flat-Rate Pricing

There are two main ways processors structure their pricing, and which one works better for your business depends largely on your volume.

Flat-rate pricing is what you see with services like Stripe and Square. You pay a single rate on every transaction, say 2.9% plus $0.30, regardless of card type, transaction type, or anything else. It’s simple, predictable, and easy to budget for. For low-volume businesses or those just getting started, that simplicity has real value.

Interchange-plus pricing is more transparent but more complex. The processor charges you the actual interchange rate (the base cost set by Visa and Mastercard for each card type) plus a fixed markup, for example interchange + 0.30% + $0.10. Because the markup is separated from the base cost, you can see exactly what the processor is making. For businesses processing significant volume, interchange-plus is almost always cheaper than flat-rate over time, because you’re not paying a blended rate that subsidizes the processor’s margin on low-cost transactions.

The crossover point varies, but many businesses find that once they’re processing $10,000 to $20,000 per month or more, interchange-plus starts to make meaningful financial sense. Below that threshold, the simplicity of flat-rate may outweigh the potential savings.

This is a conversation worth having before you commit to any pricing structure, and exactly the kind of thing that’s easy to get wrong when comparing providers without a clear framework.

Fees You’ll Pay

Transaction Fees

Every time a payment is processed, you’re typically charged two things: a percentage of the sale and a flat per-transaction fee. Together these are usually written as something like 2.5% + $0.10 per transaction.

Credit card transactions generally carry higher fees because they involve more parties and more risk. eCheck and ACH payments, where money moves directly from a customer’s bank account similar to an electronic check, are usually cheaper to process, often a fraction of the cost, but they take longer to settle and have different rules. If your business handles larger payments and your customers are willing to pay by bank transfer, eCheck/ACH can represent a meaningful cost savings.

Batch Fees

At the end of each business day, your processor batches all of your transactions and sends them to the banking network for settlement. This is when money actually starts moving toward your account. Many processors charge a fee each time this happens, typically a small flat amount per batch.

The fee is per batch, not per transaction. If you process ten transactions in a day, that’s still one batch and one fee. But if you’re processing payments every single day, that fee hits every single day. Over the course of a year it can quietly add up to hundreds of dollars. For a small business, that’s a real number worth paying attention to.

Monthly Minimum Fees

Some processors and gateways require you to generate a minimum amount in processing fees each month. If your sales volume doesn’t reach that minimum, they charge you the difference.

If your contract has a $25 monthly minimum and you only generated $10 in fees that month, you get billed an extra $15.

If your business has slow seasons or inconsistent sales, pay close attention to monthly minimums before signing anything.

Compliance and Security

PCI Compliance: What It Is and Why It Matters

PCI DSS, the Payment Card Industry Data Security Standard, is a set of security requirements that every business accepting card payments must follow to protect cardholder data.

Most processors charge a PCI compliance fee, either monthly or annually, to cover the cost of maintaining compliance tools and documentation. Some providers waive this fee if you complete their online compliance questionnaire and demonstrate your systems meet the required standards. It’s worth doing, both to avoid the fee and because the requirements genuinely help protect your business and your customers.

Your hosting environment is part of your PCI scope. If your website touches cardholder data in any way, even just passing it along to a gateway, the server it runs on falls under PCI requirements.

PCI Non-Compliance Fees

If you don’t complete your PCI compliance steps, many processors charge a monthly non-compliance penalty. This fee is often higher than the regular compliance fee and it keeps running every month until you’ve completed the required steps.

This one catches a lot of small business owners off guard. It can run into the hundreds of dollars per year, billed quietly month after month. Check your statement. If you see a non-compliance fee, address it immediately.

PCI compliance also isn’t always a one-time event. Many processors require annual recertification, and some have quarterly requirements as well. Your processor will typically send reminder emails when these are due. Pay attention to those emails. Ignoring them is one of the most common and most avoidable ways businesses end up paying non-compliance fees for months before they notice.

Risks and Gotchas

Account Holds and Frozen Funds

One of the most disruptive things that can happen to a business is logging in to find that their processor has placed a hold on their funds, sometimes tens of thousands of dollars, sometimes more, with minimal notice and no clear timeline for release.

This is legal. Processors have broad authority under their merchant agreements to hold funds when they identify activity outside expected parameters. Common triggers include:

• A sudden spike in volume well above your stated monthly average
• An unusually high number of chargebacks or disputes
• Transactions significantly larger than your stated average ticket size
• Processing in a new product category or geography without notice
• Being flagged by the card networks for any reason

None of these necessarily mean you’ve done anything wrong. A business that lands a big contract, runs a successful promotion, or starts selling a new product line can trigger a hold simply by processing more than usual.

Be proactive. If you know a large transaction is coming, notify your processor in advance. The same goes if you’re launching a digital marketing campaign, running a promotion, or doing anything else that could drive a sudden spike in sales. A successful campaign that goes viral is genuinely great news, but it can look like suspicious activity to an automated risk system if your processor isn’t expecting it. Keep your stated monthly volume and average ticket size current and accurate. If a hold does happen, respond quickly and provide documentation: invoices, contracts, shipping confirmations, whatever supports the legitimacy of the transactions. Holds that go unresponded-to tend to last longer.

This is another area where having a real relationship with someone who knows the industry matters more than having an 800 number.

Refunds and How They Affect Your Fees

Most business owners assume that if they issue a refund, they get their processing fees back. In most cases, they don’t.

When you refund a transaction, the sale amount goes back to the customer. But the percentage and per-transaction fees you paid to process the original charge typically stay with the processor. A refunded sale costs you twice: you give back the revenue, and you absorb the fee. On high-value refunds, this can be a meaningful number.

Some processors will refund the per-transaction fee but not the percentage. Others keep both. Read your agreement and factor this into how you think about your refund policy, particularly if you operate in an industry with frequent returns. Whatever your policy is, it needs to be clearly spelled out in your terms of service — customers should know before they buy what happens if they want a refund, and vague or missing refund terms are a fast path to chargebacks from people who felt blindsided. If you don’t have a terms of service or yours hasn’t been reviewed in a while, Glimmernet offers an automated privacy policy and terms solution that can get you covered quickly.

Recurring Billing and Subscriptions

If your business charges customers on a recurring basis, whether that’s monthly memberships, annual subscriptions, retainer fees, or installment plans, you’re in a category with its own compliance requirements, risk profile, and processing considerations.

A few things that work differently for recurring billing:

Stored credentials. To charge a card on file, you need explicit authorization from the cardholder, documented in a specific way. The card networks have tightened these requirements significantly in recent years. Doing this wrong, even unintentionally, can result in chargebacks and compliance violations.

Retry logic. When a recurring charge fails due to an expired card or insufficient funds, how and when you retry matters. The card networks have rules about retry frequency and timing. Automated systems that ignore these rules can get flagged.

Cancellation and dispute risk. Subscription businesses tend to have higher chargeback rates because customers sometimes dispute charges rather than canceling. Processors know this, and some are cautious about onboarding subscription models as a result. This is also where your terms of service earn their keep. If your cancellation policy, billing cycle, and refund terms aren’t clearly spelled out before a customer subscribes, you’re giving them grounds for a chargeback every time they feel surprised by a charge. Glimmernet’s automated privacy policy and terms solution covers this — subscription billing terms, cancellation rights, and refund language included.

Dunning. Managing failed payments, notifying customers, and recovering revenue from lapsed cards is a discipline in itself. The right gateway or billing platform can handle much of this automatically, but it needs to be set up intentionally.

If subscriptions are part of your model, make sure your processor and gateway explicitly support recurring billing. Not all do, and those that do have varying levels of capability.

Choosing and Managing Your Setup

Bundled vs. Separate Services: What Merchants Won’t Always Tell You

Most merchant services providers talk about their offering as if it’s one seamless solution. And in a sense it is. But what they’re actually selling you is a bundle: processor, gateway, maybe a virtual terminal, maybe an ecommerce integration, all wrapped up in one contract and one monthly statement.

This arrangement works very well for them. Bundling means they capture fees at multiple points in the transaction, stacking small percentages and per-transaction amounts that individually seem minor but add up across your full volume. It also makes it harder for you to leave. When your processor, gateway, and platform are all the same company, switching any one piece means potentially disrupting all of them. That stickiness is not accidental.

To be fair, there’s a genuine upside for the merchant too. One vendor means one support call, one contract to manage, and one integration to maintain. For a business that doesn’t want to think about payment infrastructure, that simplicity has real value, and there’s nothing wrong with choosing it deliberately.

The problem is when merchants don’t realize they have a choice. Many business owners assume that whatever their processor offers is just how payments work, that the bundle is the product rather than a packaging decision. It isn’t. You can often source the components separately: a processor with better rates for your transaction type, a gateway that integrates more cleanly with your platform, and an ecommerce solution that doesn’t lock you into anyone’s preferred payment stack.

Glimmernet operates as an Authorize.net reseller, which means we provide gateway services without dictating which processor you have to use alongside it. That separation can mean better rates, better fit, or simply more negotiating leverage when it’s time to renegotiate.

Whether a bundle or a custom stack is right for you depends on your volume, your transaction types, and how much optimization is worth to you. The point is that you should be making that choice consciously, not having it made for you by default.

Ecommerce Platforms and Payment Processing: What the Fine Print Says

Not all ecommerce platforms give you equal freedom when it comes to payment processing, and the differences can have a significant impact on your costs and flexibility over time.

Shopify is the most widely used platform, but also one of the most restrictive when it comes to payments. Shopify has its own payment processing product (Shopify Payments), and if you use a third-party processor instead, Shopify charges an additional transaction fee on top of whatever your processor charges, currently ranging from 0.5% to 2% depending on your plan. For high-volume merchants, this fee can be substantial and is often not understood until it shows up on a statement.

WooCommerce, which runs on WordPress, is considerably more open. You can connect virtually any processor or gateway you choose with no platform-level surcharge for doing so. This flexibility is one of the primary reasons many businesses, particularly those with specific integration needs or higher volumes, choose WooCommerce over Shopify. Glimmernet builds and hosts WooCommerce sites. See our ecommerce services here.

BigCommerce takes a similar open approach to payments, with no additional transaction fees for using third-party processors.

Squarespace and Wix have improved their ecommerce capabilities in recent years but are generally more limited in payment integration options, and both lean toward their preferred payment partners.

Magento / Adobe Commerce is a fully open platform with maximum flexibility, but it requires significantly more technical expertise to set up and maintain.

If payment processing flexibility or cost matters to your business, and it should, the choice of ecommerce platform is not separate from the choice of payment setup. They need to be evaluated together. This is one of the most common places we see businesses get locked into a poor arrangement because they chose a platform first and figured out payments second.

The Mistake That Costs Businesses the Most

Here’s a situation that comes up more often than it should.

A business owner signs up for a merchant account with one company, a payment gateway with another, and an ecommerce platform with a third, all separately, without checking compatibility. Then they call someone and say: “I have Bank A and Gateway 1 and want to use Ecommerce Platform Gamma. Just connect them.”

This often doesn’t work. It’s a bit like pairing a Ford engine with a Chevy transmission in a Nissan body. Could someone make it run? Maybe. But it’s going to be expensive, complicated, and so non-standard that there’s no warranty, no guarantee, and no clean path to support when something goes wrong. And that is not what you want in a system handling real customer money.

Processors, gateways, and ecommerce platforms are not universally compatible. Some combinations don’t integrate at all. Others technically work but require expensive custom development. By the time you discover the problem, you may already be locked into contracts.

Call before you choose. Before signing up for any processor, gateway, or ecommerce platform, talk to someone who understands how these systems fit together. Make sure the pieces are compatible before you commit to any of them. We’re happy to be that first call. It costs nothing and can save a lot. Reach out here.

When You’ve Outgrown Your Processor: Renegotiating vs. Switching

At some point, many businesses find themselves in a merchant account that no longer fits: rates that made sense at lower volume, a gateway that doesn’t support new features, or a processor that’s been quietly raising fees for years.

When to renegotiate. If your volume has grown substantially since you signed, you have real leverage. Processors value accounts that generate consistent revenue and would rather keep you at a lower rate than lose you to a competitor. Come to the conversation with your current effective rate, your monthly volume, and a competing quote if you have one. Be specific about what you want to change.

When to switch. If your processor isn’t willing to negotiate meaningfully, if the platform has genuine capability gaps, or if the relationship has deteriorated through poor support, opaque billing, or unresolved disputes, switching may be the right move. The friction involved, new application, new integration, potential equipment changes, and a transition period, is real but usually manageable with planning.

What switching actually involves. You’ll need to apply to the new processor, which means going through underwriting again. If you’re changing gateways, your developer or platform will need to update the integration. There’s typically a parallel running period where both accounts are active. If you have a term contract with your current processor, check the early termination terms before you initiate anything.

The best time to evaluate your setup is before you urgently need to change it. A rate review every year or two is a reasonable practice.

Digital Wallets: Apple Pay, Google Pay, and Others

Customers increasingly pay using digital wallets like Apple Pay, Google Pay, Garmin Pay, and Samsung Pay. These still run through the standard card networks; they’re not a separate financial system. But they add a layer of technical complexity to your payment setup. Your gateway and processor need to support them, and your ecommerce platform or point-of-sale system needs to be configured to accept them.

This matters when you’re choosing systems, because not all processors, gateways, and platforms work well together when digital wallets are involved.

Are These Fees Negotiable?

Some of them, yes. Here’s why: many merchant services salespeople don’t work on a fixed salary. They earn their income on the spread between what the processor charges at its base rate and what they sell to you. The wider that spread, the more they make. This is why the same processor can quote two very different businesses two very different rates.

Rates are often negotiable, particularly for businesses with higher processing volumes or lower-risk transaction types. Monthly fees, transaction rates, and some gateway fees may all have room to move depending on the provider and your situation.

One more thing worth knowing about support: because salespeople are often compensated on commission structures that wind down after one to three years, many of them need to keep finding new customers to maintain their income. Once you’re signed up and the commissions taper off, their financial incentive to help you diminishes. In practice this means ongoing support often gets routed to an 800 number and a general call center rather than the person who sold you the account. This isn’t true everywhere, but it’s common enough that you should ask directly how support works, and who you’ll actually be talking to, before you sign.

How to Read Your Merchant Statement

Most business owners glance at the total and move on. Merchant statements are not designed to be easy to read, and that’s not an accident. But a few minutes of attention each month can catch errors, spot fee creep, and tell you whether you’re actually on the rate you think you’re on.

Here’s what to look for:

Effective rate. This is the most useful number on your statement, and it’s often not printed anywhere. Calculate it yourself: total fees charged divided by total volume processed. If you processed $50,000 and paid $1,250 in fees, your effective rate is 2.5%. Compare this month to month. If it’s creeping up without a change in your sales mix, something has changed in how your transactions are being classified, or your processor has quietly adjusted a fee.

Transaction detail. Look for how your transactions are being bucketed. Are they hitting qualified, mid-qualified, or non-qualified tiers? If most of your transactions are landing in non-qualified, you’re paying more than the advertised rate on almost everything you process.

Line items you didn’t expect. Statement fees, regulatory fees, network access fees, annual fees: these can appear with little notice. If you see something you don’t recognize, ask for an explanation in writing. “Miscellaneous fees” is not an acceptable description.

Batch count vs. transaction count. These should make sense relative to each other. If you’re being charged for more batches than you ran, that’s an error worth disputing.

PCI status. Your statement will usually indicate whether you’re compliant or non-compliant. If you see a non-compliance fee, address it before next month.

If your statement doesn’t break things down clearly enough to do this analysis, that’s worth noting when you next evaluate your processor.

Summary

• Your processor moves money and connects you to card networks. They charge monthly fees, percentage fees, per-transaction fees, batch fees, and potentially equipment rental or annual gateway fees.
• Qualified vs. non-qualified rates mean your actual rate depends on the type of card used. Rewards and corporate cards often trigger higher tiers.
• “Discount rate” is industry jargon for the processor’s percentage fee, not a savings.
• Your gateway securely connects your website to your processor. They charge monthly and per-transaction fees.
• All ecommerce is card-not-present and always falls into the highest rate tier, regardless of processor. The advertised rate is never the rate you’ll actually pay online.
• eCheck and ACH transactions are usually cheaper than credit card transactions but have different rules and timelines.
• Batch fees are charged per day of processing, not per transaction. They add up for businesses that process daily.
• Monthly minimums can cost you money during slow periods.
• PCI compliance is required annually, sometimes quarterly. Complete it, watch for the emails, and don’t let non-compliance fees pile up.
• Digital wallets add technical complexity your systems need to support.
• Interchange-plus pricing is usually better for higher-volume businesses. Flat-rate is simpler but typically more expensive at scale.
• Refunds don’t return your processing fees. Factor this into your refund policy and spell it out in your terms of service.
• Account holds are real. Notify your processor in advance of unusual volume spikes, including marketing campaigns.
• Read your merchant statement monthly. Calculate your effective rate and watch for line items that shouldn’t be there.
• Recurring billing has its own compliance rules. Make sure your setup explicitly supports it, and that your cancellation and refund terms are documented.
• Your ecommerce platform affects your payment options. Shopify charges extra for third-party processors. WooCommerce and BigCommerce do not.
• Some fees are negotiable. Salespeople earn on the spread between base rates and what they charge you.
• Ongoing support may not come from your salesperson. Ask before you sign who handles support once you’re a customer.
• Bundled services are convenient but not always the best financial choice. You may get better rates or a better fit by sourcing components separately.
• The right rate depends on your transaction size. A lower percentage may be worth a higher flat fee if your sales are large. The opposite is true for small, frequent sales.
• Don’t assemble a stack of disconnected systems without confirming compatibility first. Always call before you choose.

We no longer operate as a merchant services provider directly, but over the years we’ve built relationships with some of the best processors and gateway providers in the industry, and we know which ones are the right fit for which kinds of businesses. Think of us as the first call in your ecommerce journey. We can help you understand what you actually need, connect you with the right partners, and make sure the pieces fit together before you sign anything.

That conversation costs nothing. Untangling the wrong setup later often costs a great deal.

Get in touch or schedule a call whenever you’re ready.