When it comes to payment processing, many merchants are operating in the dark. They accept their payment fees assuming there’s little they can do—just another cost of doing business. Without clear benchmarks or insight into what peers are paying, it’s easy to mistake overspending for the norm. But what if they aren’t? 

The truth is: payment fees vary widely—and it is likely that you are overspending. This guide breaks down five areas you should constantly assess to determine if you’re overpaying and where savings may be hiding. From interchange fees to hidden processor charges, we’ll walk you through how to manage payment costs with confidence.

Compare Interchange Fees to Industry Standards

Interchange fees are typically the largest component of payment processing costs, making up around 80% of total processing costs. They are set by card networks and vary depending on factors like merchant category code (MCC), card type (debit vs. credit), and transaction method (in-person vs. online). 

But not all merchants are charged equally—even within the same industry. 

Tip: Use a payment analytics platform or industry benchmarking reports to compare your interchange rates to peers with similar MCCs. For example, McDonalds and Tiffanys will have very different rates—but if you’re a fast food restaurant being charged like a luxury brand, you’re likely overpaying.

Assess Chargeback & Fraud Costs

Disputes and fraud-related chargebacks can quickly eat into margins if left unchecked. While some level of chargebacks is normal, excessive fees or penalties are a sign that something is off. 

But how much is too much? 

Best practice: Disputes should account for less than 1% of your total transactions. Anything higher puts you at risk of being placed in chargeback monitoring programs—and facing higher penalties. 

A few warning signs to keep a look out for include: 

• An increasing trend in chargebacks over time 
• High dispute rates tied to specific payment methods or customer segments 
• Losing most disputes due to poor documentation or delayed responses 

If any of the above are true, you’re not just losing revenue—you’re also paying more than necessary in dispute-related fees. 

Evaluate Payment Routing Efficiency

For merchants that accept debit cards, how you route those transactions can impact cost. Not all debit networks are priced equally, and routing through the least-cost network can generate significant savings—especially at scale. 

But here’s the challenge: most merchants don’t know if their transactions are being routed optimally. 

So, it’s crucial that you review your debit routing configuration with your processor or acquirer. Alternatively, you can use a platform that provides debit routing analytics to spot inefficiencies. Even a small percentage of rerouted transactions can yield tens of thousands in annual savings. 

Analyze Payment Method Costs

Credit card, debit card, ACH, mobile wallets—the list of accepted payment methods continues to grow. And each comes with its own cost structure. If you’re not monitoring usage and fees closely, you may be nudging customers toward higher-cost options without realizing it. 

Some key questions to ask: 

• Are certain payment methods driving up average transaction fees? 
• Do you incentivize customers to use lower-cost methods? 
• Are you using network tokenization to lower fraud and reduce authorization costs? 

If you see your customers are using high-cost options, we encourage you to promote preferred, lower-cost methods (like debit or ACH). Consider offering small discounts or other incentives for methods that reduce your processing costs. Over time, this shift can help reduce the overall cost of payments while maintaining a seamless customer experience. 

Check for Hidden Processor & Acquirer Fees

Many payment fees aren’t labeled clearly on your statement—and they’re often buried under vague names like “authorization optimization,” “gateway passthrough,” or “monthly compliance.” 

While some of these fees are legitimate, others may be: 

• Duplicative 
• Inflated beyond industry norms 
• Unnecessary for your business model 

We recommend that you audit your monthly processing statements. Look for recurring payment fees that seem vague, unfamiliar, or have increased over time. A payment analytics tool can help flag anomalies automatically, or you can work with a consultant to do a line-by-line analysis. 

The bottom line: small hidden fees add up quickly. Identifying and eliminating them is one of the fastest ways to manage payment costs more effectively. 

Take Control of Your Payment Costs

Understanding whether your payment costs are “normal” isn’t easy—but it’s essential. 

By analyzing key areas like interchange rates, chargebacks, routing, and hidden fees, you can uncover savings opportunities that were previously invisible. The good news? You don’t need to switch processors or overhaul your tech stack to make improvements. Often, you just need better visibility. 

Ready to dive deeper into cost optimization strategies?
Download our free ebook, “The Merchants Guide to Lower Interchange Fees,” for actionable tips to help you lower one of your biggest payment expenses—without disrupting your current setup.