The headline number every merchant sees is the processing rate — a percentage plus a few cents per transaction. It is also the least interesting number in the payments stack. What actually determines the economics of getting paid is the interplay of interchange, fraud loss, and chargebacks, and each hides in a different corner of the statement.
Interchange is the fee the card networks route to the bank that issued the customer's card. It is not one rate but hundreds, varying by card type, transaction method, and how much data the merchant passes. Rewards cards cost more to accept than basic ones; a card physically present costs less than one keyed in online. Understanding which category a transaction falls into is the first step to not overpaying for it.
Fraud is the loss that arrives disguised as revenue. A fraudulent order looks like a sale until the real cardholder notices and disputes it — at which point the merchant typically loses the goods, the transaction amount, and a dispute fee on top. Fraud tooling that scores risk, flags anomalies, and steps up verification on suspect orders pays for itself in avoided losses.
Chargebacks are where operational discipline meets financial reality. Beyond the direct cost of each disputed transaction, card networks monitor chargeback ratios, and a merchant who crosses the threshold faces higher reserves, penalties, or termination. The defenses are unglamorous: clear billing descriptors, responsive support, honest product descriptions, and prompt refunds that resolve complaints before they escalate into formal disputes.
The lesson is that the cheapest processor is not the one with the lowest headline rate but the one whose total cost — interchange optimization, fraud prevention, and dispute management combined — leaves the most revenue intact once every transaction is truly settled.