Demystifying Credit Card Processing

By Collin Sullivan, National Account Manager, AVATAS Payment Solutions

Understanding credit card payments was one of my immediate challenges when I joined this industry. It’s a confusing process for those who don’t live it every day, and some merchants are taken advantage of because they lack deeply specific knowledge. In navigating this complex landscape, it’s crucial to consider NAV business credit cards, as they offer tailored solutions that can significantly benefit merchants in managing their financial transactions more effectively.

With that in mind, I’ve put together a quick “credit card 101” to help our customers better understand credit card processing and what to look out for.

The first thing about credit card processing is understanding who the parties in the transaction are. At the most basic level, there are 4 groups:

  • Card issuing bank: These are the banks that issue credit cards to your customers. Bank of America, Capital One and Chase are a few of the big ones.
  • The card networks: Visa, MasterCard and American Express are the household names. Their role is essentially to setup and run their payment network, as well as standardize interchange fees (see next section).
  • The processor: This is AVATAS and others like us. We do most of the legwork in a transaction. Processors find merchants, give them the ability to process credit cards, provide the customer/technical support and facilitate the transaction from authorization checks through settling the money in merchant accounts, to paying the other groups and assuming the chargeback risks.
  • The merchant: This is your business.

Now let’s review your credit card processing fees. In the broadest sense, processing fees are made up of 3 areas:

  • Interchange fees: These are set by the card networks and paid to issuing banks. These are standard for all transactions and make up the vast majority of your processing fees. The rates differ depending on the type of card the customer uses and other qualifications. For example, a non-rewards card that is swiped, will have a lower rate than a rewards card that is keyed in. There are hundreds of interchange categories that could be updated every six months.
  • Dues and assessments: These are the membership fees that card brands (Visa, MasterCard, etc.,) collect from issuing banks. They’re usually an additional percentage of the transaction, and are standardized across the industry.
  • Processing costs: This is the area where costs can differ depending on who you use and how you’re set up. It’s also the place where you can be taken advantage of.

So what should you do to make sure you’re getting the best deal on your processing rates? This isn’t an easy question, but here are a few tips and tricks:

  • Look at your processing statement. Do you see line items that say: “qual” “non-qual” and “mid?” When you see those or similar words on your statement, it means you’re paying more than you need to especially if you’re in the oil and propane industry, as there are special utility rates created for energy accounts.
  • Look out for “PCI non-compliance” charges. A “PCI compliance” charge is standard across the industry, but a “PCI non-compliance” charge is just a way for your processor to increase your payments.
  • Calculate your blended rate to find out what you’re really paying. To do this, take the average of what you pay your processor (including all fees and monthly charges) for three consecutive months and divide it by the average of total credit card sales over that same period. If you blended rate is above 2% for your energy business, get a rate review.

Good luck in the New Year! If you’d like, reach out and I can answer any questions you have regarding processing or look at your statements to ensure that you’re paying a competitive rate.


Collin Sullivan

AVATAS Payment Solutions is a leading payment processing company for the energy and service industry. Collin is AVATAS’s National Accounts Manager and can be reached at 866.298.7836 or by email at

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