Every time a customer taps their card at your terminal, you pay a fee. But what exactly are you paying for, who gets the money, and how can you reduce your costs? This guide breaks down the anatomy of merchant fees in plain English.

The Three Components of a Card Payment Fee

When you pay a merchant fee to your payment provider (like BuzzPay, Square, or your bank), that fee is split three ways. Interchange fee: paid to the card-issuing bank (the customer’s bank). This is the largest component, typically 0.2-0.8 per cent for debit and 0.5-1.0 per cent for credit. Scheme fee: paid to the card network (Visa, Mastercard, or eftpos) for using their network infrastructure. This is typically 0.02-0.1 per cent. Acquirer margin: paid to your payment provider (BuzzPay, Square, your bank) for processing the transaction, providing the terminal, and handling settlement. This varies widely.

Why Fees Vary Between Providers

Some providers bundle all three components into a single flat rate (like Square’s 1.6 per cent or Zeller’s 1.4 per cent). Others use interchange-plus pricing, where you pay the actual interchange fee plus a fixed margin. Flat rates are simpler to understand but may be higher. Interchange-plus can be cheaper for high-volume businesses but is more complex to read on a statement.