Rightfully so, as fees for card processing services can be the third highest expense many small and mid-sized businesses incur, following right behind labor and product costs. Yet, many businesspeople are confused by the complexity of what they are being charged for card processing services – and who they are actually paying.

Most merchants are aware of Visa/MasterCard interchange rates – set fees that are charged for every transaction. The same rate is charged regardless of the size of the merchant. (Click here to see set interchange rates.) However, what many small and mid-sized merchants don’t realize is that they may be paying significantly more than just the interchange rate on each transaction.

That’s because many merchant acquirers – contracted by the merchant to handle its card transactions – significantly mark up interchange rates to generate extra revenue. With automatic debits from their bank accounts, small and mid-sized merchants are often not aware of how high these markups can actually be.

And, often, what initially looks like a “good deal” is not what it appears to be. A merchant acquirer may quote a low rate for a specific type of card transaction to “make the sale” – but deliberately neglect to point out that only a small percentage of transactions qualify for that low rate… and the remainder are charged at a fee that could be as much as double or triple the low rate.

It’s critical that merchants identify all of the costs they are paying so they know the total cost of processing. Once they know what goes to the card issuing bank and Visa/MasterCard versus the merchant acquirer, they can begin reducing costs that are unnecessarily being paid.

All businesspeople have the right to know exactly who is getting the money that is automatically taken from their bank account – and the total amount.