Texas Payments Executive Says Most Business Owners Misread Card Processing Fees

Business owners across Texas who accept credit cards see a single fee on their statements, but that number is not one charge. It is three, set by three different parties, and only one of them can be negotiated. William Stapleton, President and CEO of Iron Rock Payments, a credit card processing company based in Frisco, Texas, said the confusion is not an accident of the industry but a structural feature of how pricing is presented.

"Most merchants are shown a rate, not a structure," Stapleton said. "A rate tells you almost nothing until you know what it's built from."

Stapleton breaks a typical card transaction fee into three pieces. The first is the interchange fee, which goes to the bank that issued the customer's card and is set by the card networks themselves. It is not something a processor negotiates on a merchant's behalf, and it does not change based on which processor a business chooses. The second is the assessment fee, which goes to the card network—whether Visa, Mastercard, or another network. Like interchange, it is fixed and applies no matter which processor a business uses.

The third piece is the markup. This is the portion the processor sets, and it is the only piece that is actually negotiable. "Interchange and assessments are the cost of the rails," Stapleton said. "The markup is the only line item that reflects the processor you picked."

That distinction matters because most of the confusion Stapleton sees from business owners comes from treating the total fee as one negotiable number, when only a fraction of it can move. "If a business owner doesn't know which part of the number is fixed and which part is negotiable, they can't actually tell if they're getting a good deal," he said. "They're just comparing two totals without knowing what's inside either one."

The same structure explains why two processors can quote very different headline rates while charging similar effective totals, or the reverse. A lower quoted rate built on a higher markup can cost more than a higher quoted rate with a thinner one, depending on how a business actually processes its cards.

Stapleton's approach with Iron Rock Payments starts with getting a business owner to separate the fixed costs from the markup before comparing anything else. He suggests asking a provider to show interchange and assessment costs separately from the markup, rather than accepting one blended rate. He also suggests asking how the markup is applied, since some providers apply it as a flat percentage and others build in per-transaction fees that behave differently depending on transaction size.

"A business that runs a lot of small transactions is affected very differently by a per-transaction fee than a business that runs fewer, larger ones," Stapleton said. "The right structure depends on how the business actually processes, not on which number looks smallest on a sales sheet."

Stapleton said the goal of laying this out is not to make every merchant an expert in interchange schedules. It is to give business owners a way to ask better questions before they sign anything. "You don't need to memorize the card network rules," he said. "You just need to know that not everything on your statement is negotiable, and the part that is negotiable is the part worth actually comparing."

For Texas businesses, the implication is direct: a clearer view of processing costs can free up capital for operations, hiring, and growth. Stapleton previously founded PayFacto, a payment processing company based in Montreal that was sold to Visa in 2019. He lives in Frisco, Texas.