Layer 1: Interchange
Interchange is the largest cost in your payment processing stack, and it goes directly to the bank that issued your customer's credit card — not to your processor. When your customer pays with their RBC Avion card, RBC gets the interchange fee. When they pay with their TD Aeroplan card, TD gets it.
Interchange rates in Canada vary significantly by card type:
| Card Type | Typical Interchange Rate | Notes |
|---|---|---|
| Visa consumer debit (chip/tap) | 0.00% + $0.00 | Interac Debit — flat fee, not % |
| Interac Debit (in-person) | $0.08–$0.15 per transaction | Fixed cents, not % of sale |
| Visa Classic (consumer, chip) | ~1.40% | Base consumer card |
| Visa Infinite (premium rewards) | ~1.75–2.10% | Rewards funded by interchange |
| Mastercard consumer (chip) | ~1.36% | Standard consumer card |
| Mastercard World Elite | ~2.10% | Premium rewards card |
| Visa/MC business card (keyed) | ~2.30–2.70% | Card-not-present + business |
| American Express | 2.50–3.50% | Amex sets own interchange |
This is why flat-rate pricing at 2.65% costs you the same on an Interac Debit transaction (actual interchange: ~$0.10) as on an Amex card (actual interchange: ~$2.50 on a $100 transaction). With flat-rate, Interac transactions subsidize premium card transactions. With interchange-plus, each transaction costs its actual rate.
Layer 2: Assessment Fees
Assessment fees go to the card networks — Visa, Mastercard, Amex — for the privilege of accepting their cards. In Canada, assessments are typically 0.10–0.15% per transaction for Visa and Mastercard. These are non-negotiable; your processor passes them through at cost.
You'll see these on interchange-plus statements as separate line items. On flat-rate statements, they're baked into the single rate. They're small individually but add up to hundreds or thousands per year for volume merchants.
Layer 3: Processor Markup
This is what your payment processor actually keeps. Under interchange-plus pricing, it's explicitly stated (e.g., "interchange + 0.30% + $0.10"). Under flat-rate pricing, it's embedded in the single rate.
Processor markup is the only part of your payment processing cost that's negotiable. Interchange and assessments are fixed by the card networks. Your processor's margin is their business decision — and at sufficient volume, they'll reduce it to keep you.
Monthly and Account Fees
Monthly Fee / Account Fee
A flat monthly charge for maintaining your merchant account. Square and Stripe charge nothing. Moneris charges $15–$40/month depending on plan. Helcim charges nothing. Legacy processors and many bank-affiliated processors charge $10–$50/month as a baseline.
Monthly fees matter most for low-volume merchants. If you're processing $2,000/month, a $25 monthly fee represents 1.25% of volume — adding it to your effective rate significantly. At $50,000/month, that same $25 fee is 0.05% of volume — trivial.
Gateway Fee
Charged by processors that separate gateway from acquiring (like Authorize.net). Typically $10–$25 USD/month plus $0.05–0.10 per transaction. For most modern Canadian merchants using integrated processor-gateways, this fee is eliminated.
Terminal Rental Fee
Monthly rental on physical payment terminals. Moneris charges $20–$55/month per terminal on rental plans. For most businesses with 1–2 terminals, buying outright (if available) is cheaper within 12–18 months. See our contract red flags guide on terminal rental traps.
PCI Compliance Fees
PCI DSS compliance is required for any business that processes card payments. Processors handle the compliance fee in various ways:
- Included in pricing: Some processors (Stripe, Helcim, Square) include PCI compliance assistance in their standard service. There's no separate PCI fee.
- Annual compliance fee: Many traditional processors charge $75–$149/year for PCI compliance, which typically includes access to a compliance questionnaire tool.
- Monthly PCI fee: Some processors charge $4–$25/month for "PCI compliance services." This is often just margin — the service behind it is an SAQ questionnaire available free from the PCI Security Standards Council.
- PCI non-compliance fee: The worst one. If you don't complete your annual SAQ, many processors add $15–$35/month in non-compliance fees. These can persist for months before merchants notice them. Check your statements.
Chargeback Fees
Every chargeback costs you money before the outcome is decided. Typical chargeback fees in Canada: $15–$35 per chargeback initiated. You pay this whether you win or lose the dispute.
Additional costs: representment (fighting a chargeback) may cost $15–$50 per case in some processor structures. Some processors use third-party dispute management services at $30–$75/dispute.
At high chargeback volumes, processors may also place you on a monitoring program with additional monthly fees. Visa's chargeback monitoring program triggers at 0.9% chargeback ratio. See our chargeback guide for the full breakdown.
Early Termination Fees (ETF)
Standard ETFs in Canada run $250–$750 for basic merchant agreements. Long-term contracts (3-year terms are common with Moneris, Chase Paymentech, and some ISO-sourced processors) may have ETFs of $500–$2,500 or more.
The most aggressive ETF structure is liquidated damages: your processor calculates the monthly fees you would have paid for the remaining contract term and charges that as the termination fee. On a 3-year contract with 24 months remaining at $50/month, that's $1,200.
Month-to-month processors (Stripe, Square, Helcim) charge no ETF. This flexibility has real financial value when comparing total cost.
The Sneaky Fees Most Merchants Miss
Statement Fee
A charge for receiving your monthly statement — sometimes $5–$15/month. Electronic statements are free at most processors, but some processors still charge for paper statements and default new accounts to paper. Check your agreement for statement fee disclosures.
Batch Settlement Fee
Charged when you "batch" or close out your daily transactions — typically $0.05–$0.25 per batch. For restaurants that batch once at end of day, this is trivial. For businesses that batch multiple times per day (or leave old POS systems set to auto-batch hourly), these add up.
AVS Fee (Address Verification Service)
Address Verification Service checks that the billing address on a card-not-present transaction matches the address on file with the card issuer. Charged at $0.03–$0.10 per verification. For e-commerce stores running AVS on every transaction, this is hundreds to thousands per year at volume. Stripe and Square include AVS in their flat rate. Traditional processors charge it separately.
Voice Authorization Fee
When your terminal can't connect to the network, some POS systems request "voice authorization" by calling a phone number. Fee: $0.50–$1.00 per call. Rare for most businesses, but shows up on statements and confuses merchants.
Retrieval Request Fee
When a customer's bank requests a copy of a transaction receipt (typically precedes a formal chargeback), processors charge $10–$20 per retrieval. This is separate from the chargeback fee and happens before the dispute is formally filed.
Minimum Monthly Processing Fee
If your processing volume falls below a minimum, some processors charge the difference. A processor with a $25 minimum that you pay $15 in transaction fees will charge a $10 shortfall fee. Seasonal businesses and low-volume merchants hit this regularly. Square, Stripe, and Helcim have no processing minimums.
Real Total Cost: A $100 Transaction at Different Canadian Processors
Let's calculate what a $100 Visa Infinite card transaction (in-person, chip) actually costs at different processors. Visa Infinite interchange in Canada is approximately 1.75%.
| Processor | Fee on $100 Transaction | Effective Rate | Monthly Fee Equivalent (÷ 500 txns) |
|---|---|---|---|
| Square (in-person) | $2.65 | 2.65% | $0.00 |
| Helcim (interchange-plus ~0.15% + $0.06) | $1.96 | 1.96% | $0.00 |
| Moneris (interchange-plus 0.20% + $0.10) | $2.05 + monthly fee | 2.05% | $0.05 |
| Stripe (in-person) | $2.75 | 2.75% | $0.00 |
The difference between Square (2.65%) and Helcim interchange-plus on this transaction is $0.69. Across 500 transactions/month at $100 average, that's $345/month in savings — $4,140/year — purely from pricing model choice.
Calculating Your "Effective Rate"
Effective rate is the only number that matters for comparing your actual total cost:
Effective Rate = Total Processing Fees Paid ÷ Total Volume Processed × 100
Take your last merchant statement. Find every fee: transaction fees, monthly fees, PCI fees, any statement fees, any minimum fees. Add them all together. Divide by your total processing volume for the month. Multiply by 100 for a percentage.
Example: You paid $450 in total fees on $15,000 in volume. $450 ÷ $15,000 × 100 = 3.0% effective rate. If your processor quotes you 2.65%, but your effective rate is 3.0%, there are 0.35 percentage points of hidden fees somewhere in the statement.
Do this for every month over three months to get a stable average. Then compare that number against what competing processors would actually charge on your card mix and volume. Our fee calculator can model this comparison.
When to Negotiate
Processor margins are negotiable, but only with leverage. The practical threshold: above $30,000/month in consistent processing volume, most processors will negotiate markup reduction. Above $100,000/month, you have real bargaining power.
What to ask for:
- Reduced per-transaction markup (0.05–0.10% reduction is common at $50K+/month volume)
- Elimination of statement or batch fees
- Waived PCI compliance fee
- Reduced chargeback fees
- Terminal rental-to-purchase conversion
Get any rate changes in writing as an amendment to your merchant agreement. Verbal commitments from sales reps are unenforceable.