By Kellen Liu, VP Finance & Growth — Third Wave Business Systems
There’s a $30,000 charge on your statement, and no one at your processor can explain it in plain words
Run $10 million in annual card volume and you (or your customers) are paying somewhere around $290,000 a year in payment processing fees. That cost shows up across three buckets: card network and interchange charges, processor markup, and account or service fees. The exact line items vary by provider. Given the price tag, you might ask your processor where those charges actually go, and instead of a clear breakdown you’ll likely get a word-vomit non-answer designed to confuse rather than inform. After a couple of days trying to make sense of it, most CFOs give up and vow to fight the fight another quarter.
The credit card merchant world is a black box by design. At Third Wave, we have done the work to understand the full ecosystem so we can explain it to our customers in plain English.
This post walks through every node in the payment ecosystem — the parties, their roles, and what each one earns on your transactions. More importantly, it shows why the way you have structured your payment stack is probably costing you more than the fees themselves, and what a consolidated approach looks like for SAP Business One customers.
The poker seats in every card transaction
Most CFOs see two endpoints on their monthly statement, the gateway and the processor, and assume those are the bulk of the cost. The reality is up to eight distinct entities touch every transaction, each with a role, a fee, and a margin. Some of those layers can be consolidated, but most of the time they are not.
[Figure 1: The traditional payments ecosystem — eight parties, each earning a margin on every transaction. Custom illustration to be commissioned in brand palette.]
- Cardholder — the customer paying by card. Their bank issued the card and sets the terms of their account.
- Merchant — your business. You accept the card, bear the cost of acceptance, and take on chargeback risk.
- Payment Gateway — the software layer that securely captures card data from your checkout or ERP and routes it to the processor. Examples include Authorize.net and PayFabric. Fee: a per-transaction flat rate ($0.05–$0.15) plus a monthly platform fee.¹
- Processor — the switchboard that communicates with card networks to request authorization, handles approvals and declines, and manages settlement. Fee: a per-transaction markup plus assessment pass-throughs.²
- Card Networks — Visa, Mastercard, American Express, Discover. They set the interchange rates that the issuing bank collects on every transaction, and charge their own assessment fees on top. Interchange is the single largest cost in your fee stack.³
- Issuing Bank — the customer’s bank. It approves or declines the transaction and collects interchange as compensation for the credit risk it carries on the cardholder.
- Merchant Bank (Acquirer) — holds your merchant account, receives settlement funds from the issuing bank via the processor, and deposits them into your operating account. Often bundled with the processor.
- Sponsor Bank — a licensed bank that gives the processor direct access to Visa and Mastercard networks and carries compliance and risk responsibility. This layer is invisible to most merchants but adds overhead that ultimately gets passed down.
The poker table is stacked. Player 1 and player 2 are willing participants, and when they win a hand, players 3 through 8 each take a piece of the winnings. Some take a small slice directly. Others charge in more creative ways.
Where the fees actually add up: a $10,000 B2B invoice
Here is what happens to a $10,000 B2B invoice paid by a customer using a commercial Visa card.
| Component | Recipient | Approximate amount |
|---|---|---|
| Interchange (commercial card, Level 1) | Issuing Bank (customer’s bank) | $262.00 |
| Network assessment | Visa / Mastercard | $13.00 |
| Processor markup | Processor | $10.00 |
| Gateway transaction fee | Gateway | $0.10 |
| Acquirer / sponsor bank overhead | Merchant Bank + Sponsor Bank | $8.50 |
| Total fee on the $10,000 transaction | ~$293.60 |
That is roughly $294 on a single $10,000 ticket. Annualize that across $10M in card volume and you are looking at $294,000 walking out the door, and the vast majority of it (interchange) is going to your customer’s bank, not your processor.
Here is the important nuance: interchange is not fixed. Visa and Mastercard have tiered interchange schedules based on how much data accompanies the transaction. A commercial card transaction submitted with Level 2 data (tax amount, customer code) or Level 3 data (line-item detail, commodity codes, freight) qualifies for lower interchange rates, sometimes 40–80 basis points lower than a Level 1 transaction.⁴ On $10M in B2B card volume, that delta is $40,000–$80,000 per year in interchange savings.
Most businesses never see those savings because their payment setup does not pass enriched data automatically.
The fragmentation tax: why three vendors cost more than one
The traditional payments stack of separate gateway, separate processor, and separate merchant bank charges what is effectively a fragmentation tax:
- Margin stacking. Each intermediary takes a spread. The gateway marks up. The processor marks up. The acquirer marks up. None of them can see the others’ margins on a per-transaction basis, so no one has an incentive to reduce the total cost.
- Reconciliation overhead. Three vendors, three statements, three settlement windows, three support lines.
- No leverage. Volume that could be negotiated as a single block is split across vendors. You cannot negotiate interchange optimization with a gateway provider, that is a processor conversation. And the processor may not control your acquirer rate.
- No single accountable party. When a payment fails to settle, the three-way phone tag between your gateway, processor, and bank is a real operational risk for a manufacturer or distributor running net-30 terms.
Because each player is operating in their own best interest, the combined effective rate to you and your customers ends up significantly higher than any single layer would suggest.
How Third Wave CreditCard changes the math
Global Payments is one of the few players in the industry that owns all four layers — software, gateway (PayFabric), processor, and acquirer — under one roof. Third Wave Business Systems is Global Payments’ exclusive SAP Business One partner, which means our CreditCard module runs natively inside B1 on Global Payments’ consolidated rails.
[Figure 2: Fragmented stack (left) vs. Third Wave CreditCard on Global Payments rails (right) — four vendors collapsed into one. Custom illustration to be commissioned in brand palette.]
For SAP Business One customers, that consolidation has three concrete consequences.
1. One vendor, one accountable party.
One statement. One SLA. One support line. When a settlement breaks, and they do break, you are not playing three-way phone tag between a gateway company, a processor, and a bank. You call one number, and the party on the other end has visibility into the entire transaction lifecycle from authorization to deposit.
2. A monthly rebate, automatically.
Because Third Wave’s customer base consolidates volume through the Global Payments platform, Global Payments returns a portion of that value to our customers in the form of a monthly cash rebate of up to $2,500 per $1 million in annual card volume. There is no minimum volume floor, no tiered qualification, and no enrollment form. The rebate is automatic for any customer using Third Wave CreditCard.
3. Automatic Level 2 / Level 3 data enrichment.
Third Wave CreditCard passes Level 2 and Level 3 transaction data automatically on eligible B2B card transactions, no manual entry, no middleware, no custom development. The one-time setup is a single configuration step during implementation. Once enabled, every qualifying commercial card transaction is automatically submitted with the enriched data fields that unlock lower interchange rates.
For manufacturers and distributors accepting commercial cards from business customers, the exact profile of a B1 customer, this is meaningful and recurring savings that most payment setups simply do not capture.
Four questions to ask your current processor today
If you are not on a consolidated platform, here is a short checklist for your next conversation with your processor or controller.
- Are you my gateway, processor, AND acquirer, or just one of the three? If the answer is “just one,” you have a fragmented stack and you are paying for it.
- Show me a line-item breakdown: interchange, assessments, and your markup, not a blended rate. A blended rate is a number designed to prevent exactly this analysis.
- Am I enrolled in a volume rebate program? How much did I earn last year? If they cannot answer immediately, the answer is likely zero.
- Do you support Level 2 / Level 3 data enrichment on B2B card transactions, automatically? Not as an add-on. Not with manual data entry. Automatically.
If you cannot get clean answers to all four, your processor is earning money you do not know about.
See what consolidated processing looks like inside SAP Business One
Third Wave CreditCard is natively embedded in SAP Business One, no middleware, no separate reconciliation, no manual exports. It runs on Global Payments’ consolidated gateway, processor, and acquirer infrastructure, passes L2 and L3 data automatically, and returns monthly rebates to every customer from day one.
If you are running card volume through SAP Business One and paying fees you cannot fully explain, we would like to show you the alternative.
→ Learn more about Third Wave CreditCard for SAP Business One
Frequently Asked Questions
What is interchange and why does it cost so much?
Interchange is the fee the customer’s issuing bank charges to compensate for the credit risk and operating cost of the card account. It is set by Visa and Mastercard on a tiered schedule and is the single largest line item in B2B credit card processing. Interchange typically represents 70 to 85 percent of the total fee on a B2B card transaction, more than the gateway, processor, and acquirer combined.
What is the difference between Level 1, Level 2, and Level 3 data?
Level 1 is the basic data set required for any card transaction (card number, amount, merchant ID). Level 2 adds tax amount and a customer code. Level 3 adds full line-item detail, commodity codes, freight amounts, and other invoice-level data. Visa and Mastercard discount interchange rates for Level 2 and Level 3 commercial transactions, recognizing that more data means lower fraud risk. The savings can range from 40 to 80 basis points on commercial card volume, which adds up quickly at scale.
What is a payment gateway and how is it different from a processor?
A payment gateway is the software layer that securely captures card data from your checkout, ERP, or invoicing system and transmits it to the processor for authorization. The processor is the entity that communicates with card networks, handles approvals and declines, and manages settlement of funds. They are two distinct functions, and they are often provided by different companies, which adds margin and complexity to the fee stack.
What is a merchant bank and do I need one separately?
A merchant bank, also called an acquirer, is the bank that holds your merchant account and deposits settlement funds into your operating account. Many businesses have their merchant bank bundled with their processor, but in fragmented stacks the acquirer is a separate party. A consolidated platform, like Third Wave CreditCard on Global Payments, eliminates the need to manage a separate merchant bank relationship.
How can SAP Business One customers reduce credit card processing fees?
The two highest-impact levers are (1) consolidating to a single platform that owns gateway, processor, and acquirer to eliminate margin stacking, and (2) enabling automatic Level 2 and Level 3 data enrichment on commercial card transactions to qualify for lower interchange rates. Third Wave CreditCard does both natively inside SAP Business One, and adds an automatic monthly rebate of up to $2,500 per $1 million in annual card volume on top.
References
¹ Nilson Report, 2024 Payment Gateway Market Overview. https://nilsonreport.com
² Visa USA Interchange Reimbursement Fees, April 2025. https://usa.visa.com/support/consumer/visa-fees.html
³ Mastercard Interchange Rate Guide, 2025. https://www.mastercard.us/en-us/business/overview/support/interchange.html
⁴ Visa Interchange Programs — Level II and Level III Data Requirements. https://usa.visa.com/dam/VCOM/download/merchants/visa-global-interchange-guidelines.pdf