Merchant services credit card processing is four separate businesses sharing one name, and a single sale touches all of them before the money is yours. The fastest way to understand what you are paying for, and who to hold responsible when something breaks, is to follow one transaction the whole way through.
Second one: the card is presented
A customer taps at your counter or submits a checkout form. Your terminal or gateway builds an authorisation request containing the amount, your merchant identification number, and a code describing what kind of business you are.
That code matters more than owners expect. It travels with every transaction you originate and it is one of the things a card network can look at later. Mismatched coding is the reason cashless ATM schemes fell apart: transactions from retail sales were dressed up as cash withdrawals, the networks acted against the practice, and merchants using them were left exposed. We do not sell them, and our cashless ATM page explains why nobody should.
Second two: the issuing bank decides
The request reaches the cardholder’s issuing bank, which checks the account, the balance and its own fraud rules, then returns an approval or a decline. Nothing about your provider changes this answer. A decline here is between your customer and their bank.
The card networks route this message and publish the interchange schedules that determine much of what the sale will cost. Visa, Mastercard, Amex and Discover each publish their own, and they are public documents. Anyone quoting you a rate is quoting a mark-up on top of a schedule they did not set.
Merchant services credit card processing: where each cost is added
Three layers, and honest providers will separate them for you.
Interchange goes to the issuing bank and is set by the card network. Network assessments go to the network itself. The remaining layer is your provider’s mark-up, and that is the only part anyone is competing on.
Ask for the schedule split that way. A provider that will only show you a single blended number is not necessarily overcharging, but it is choosing to make comparison harder. What actually moves your cost is your average ticket, your card-present versus card-not-present mix, your dispute history and your product category, which is what our pricing page walks through. We publish no rate here, because a number invented for a web page would be worthless to you at signature.
Hours later: settlement and the deposit
At the end of your batch, the approved authorisations are submitted for clearing. Funds move to the acquiring bank that sponsors your merchant account, then to your business checking account, usually a day or two later depending on your batch cut-off and your bank.
If your account carries a reserve, a portion is withheld here. A reserve is not a fine. It is the acquirer holding back against disputes it may have to cover later, and it is the ordinary answer when an account has little history yet. What you should insist on is a written statement of how it is calculated and what releases it.
Weeks later: the part that decides everything
A customer disputes the charge. The issuing bank pulls the funds back, and the acquiring bank that sponsors your account is on the hook if you cannot cover it. That single sentence explains almost every underwriting decision you will ever encounter.
It is why your website copy gets read closely, why product documentation is requested, and why a category with elevated dispute or regulatory risk is underwritten differently. It is not a moral judgement about hemp. It is a bank pricing the possibility that it will be paying, and it is why high risk processing exists as a distinct discipline rather than a slur.
Where a restricted category changes the path
Nowhere technical. The wires are identical. The difference sits entirely in the underwriting layer, and it decides whether the wires keep working next quarter.
An aggregator boards you as a sub-merchant under its master agreement, which is why signup is quick, and equally why a category review can end it quickly. A dedicated account is opened in your own name after somebody read your file, which is slower to obtain and considerably harder to lose. For hemp and CBD sellers that difference is the whole decision, and our CBD merchant account page sets out what it involves.
Cannabis is not in this conversation. It remains federally scheduled, and card acceptance for licensed dispensary retail is a separate problem covered in can dispensaries take credit cards.
Frequently asked questions
Why did an approved sale still not fund? Approval and funding are different events. A transaction can authorise and then be held at settlement by risk review, or withheld under a reserve. Ask your provider which of the two happened, and ask for the answer in writing so you have a record if it recurs.
Who sets interchange? The card networks publish their own interchange schedules, and those rates go to the cardholder’s issuing bank rather than to your processor. It is the one part of your cost that no provider can discount, whatever the sales pitch suggests.
Does taking cards online cost more than in person? Generally card-not-present transactions carry more risk of dispute and are priced accordingly. If you sell both ways, ask how each is treated in your schedule rather than accepting a single blended figure.
Can I keep my existing checkout? Often yes. A gateway can sit behind most storefronts while the underlying account changes underneath, which is covered on our CBD payment gateway page.
How do I know which company I actually contract with? Read the agreement for the named acquiring bank and the named processor. If you cannot find both, ask before signing, and get in touch if the answer is vague.