The economics your processor captures silently
When your payment program processes a card transaction, multiple parties receive a piece of the economics. The card network takes an assessment fee. The issuing bank takes interchange. Your processor takes its margin. What remains — if anything — flows to you.
Most platforms know they pay a processing fee. Most don't know how much of the total economics stack their processor is capturing versus passing through. The difference between these two numbers — what you pay and what you could pay in an optimized program — is the economics gap your processor owns on your behalf.
How processor economics actually work
There are two pricing models: flat rate and interchange-plus.
Flat rate (Stripe, Square, PayPal): you pay a fixed percentage regardless of the underlying interchange cost. The processor pockets the spread between your flat rate and the actual interchange. On a consumer rewards card at 2.9%, the actual interchange might be 2.0%. The processor captures 0.9% — approximately $90 per $10,000 in volume — in silent margin.
Interchange-plus: you pay the actual interchange cost plus a fixed processor markup. The markup is transparent. The processor cannot earn additional margin from card type mix, transaction size, or your customer segment. Interchange-plus programs consistently generate 30–80 basis points more for the platform at comparable volume.
The Level 2/3 gap most B2B platforms never close
Business-to-business card transactions qualify for significantly lower interchange rates when enhanced transaction data is transmitted with the authorization. Level 2 data includes purchase order number, tax amount, and customer code. Level 3 data includes line-item detail — product codes, quantities, unit prices.
Most processors don't transmit this data by default — because doing so reduces the interchange they earn on flat-rate agreements, and because configuring it requires effort they don't benefit from on interchange-plus agreements. Platforms processing significant B2B card volume that don't transmit Level 2/3 data leave 30–50 basis points of interchange on the table on every qualifying transaction.
At $5M monthly B2B card volume, that is $18,000–$30,000 per month. Annually it is $216,000–$360,000 in recoverable economics that the processor is not returning to you.
Settlement timing and float
Standard processor agreements settle funds to you on a 2–7 day lag. The processor holds your funds during this period and earns yield on the balance. At $5M monthly volume, the average daily settlement float is approximately $333,000–$1.2M depending on processing mix and settlement terms. At 4.5% annual yield, that float generates $15,000–$54,000 per year that the processor earns rather than you.
In a well-structured direct bank relationship, settlement timing and float yield are negotiable terms. Most platforms never negotiate them because they don't know they're negotiable.
Chargeback economics
Processor agreements typically include chargeback fees of $15–$25 per dispute plus representment costs. For platforms with even modest dispute rates, chargeback economics can add 5–15 basis points of effective cost to card processing. The fee structure, dispute resolution process, and representment support vary significantly between processors and are negotiable in direct agreements at meaningful volume.
What a well-designed program captures differently
Interchange-plus pricing eliminates the silent spread. Level 2/3 data transmission captures B2B interchange optimization. Negotiated settlement terms improve float timing. Direct bank relationships make float yield available. The combined effect is typically 50–120 basis points of additional economics on card volume — economics your current processor is capturing instead of you.
This is not a criticism of any specific processor. It is how processor economics are structured. The default terms favor the processor; better terms are available but require architectural changes that most platforms don't make until the economics gap becomes too visible to ignore.
Want to estimate what your processor is capturing on your volume? The leakage calculator gives you a directional number across interchange, float, and fee structure gaps. Or talk with us about your specific program.