The Payment Breakdown
Interchange fees do not actually go to Visa or Mastercard. Instead, the vast majority (about 86%) goes to the card-issuing bank (e.g., Chase, Citi, Bank of America). These funds compensate the bank for transaction risks, processing costs, and to fund credit card reward and loyalty programs.
The breakdown of how the money flows includes:
The Card Issuer (The Issuing Bank)
Receives the interchange fee to cover fraud liability, processing costs, and consumer reward programs.
The Acquirer (Merchant’s Bank / Processor
Initially pays the interchange fee on behalf of the merchant, but passes these costs directly to the merchant (as part of the Merchant Discount Rate).
Visa / Mastercard
They set the baseline rates to balance the payment ecosystem. However, they do not pocket the interchange revenue; they instead earn separate smaller network assessment fees for operating and routing transactions through their respective network.
A chargeback is a forced, bank-initiated reversal of a credit or debit card transaction. It allows consumers to get their money back directly from their card issuer when a purchase goes wrong or involves fraud.
Chargeback VS Refund
While both return money to the consumer, they operate very differently:
Refund
Initiated voluntarily by the merchant. You ask the seller for your money back, and they process it directly.
Chargeback
Initiated forcibly by the buyer's bank. The bank pulls the funds directly from the merchant's account while they investigate the dispute.
Common Reasons for a Chargeback
Chargebacks are typically filed when resolving the issue directly with the merchant is unsuccessful. Common triggers include:
RATE CHECKER
Monthly processing fees divided by monthly processing volume equals effective rate
$500 / $20,000 = 2.5%
Processing Solutions
Gateways
Equipment
POS
Most of our customers are existing businesses looking for better a processor
PCI Compliance
https://www.pcisecuritystandards.org/
PCI compliance (Payment Card Industry Data Security Standard) is a set of global security requirements created by major card brands to ensure all businesses process, store, and transmit credit card data safely, preventing fraud and data breaches. Any business accepting card payments must comply.
Why It Matters
The 12 Core Requirements
The PCI Data Security Standard (PCI DSS) is built on baseline security goals:
Install and maintain firewalls and multi-factor authentication.
Never use vendor-supplied default passwords and system parameters.
Encrypt stored cardholder data.
Securely send cardholder data across public networks.
Use and regularly update antivirus software.
Develop and maintain secure systems and applications.
Limit cardholder data access strictly to those who need to know.
Assign a unique ID to each person with computer access.
Restrict physical access to environments with cardholder data.
Track and monitor all access to network resources and cardholder data.
Regularly test security systems and processes.
Document and maintain an information security policy.
Compliance Levels
Requirements vary based on your annual transaction volume. The highest levels require independent audits, while smaller businesses typically use Self-Assessment Questionnaires (SAQ):
- Level 1: Process 6 million+ transactions per year.
- Level 2: Process 1 million to 6 million transactions per year.
- Level 3: Process 20,000 to 1 million e-commerce transactions per year.
- Level 4: Process fewer than 20,000 e-commerce transactions or up to 1 million total transactions per year