When you process a sale, your processor routes the transaction to the appropriate card association network (Visa, MasterCard, Discover or American Express), which sends the transaction to the issuing bank for authorization. The processor handles a number of other important duties such as providing technical and customer support, handling chargebacks, depositing transaction proceeds into your merchant account and issuing your monthly statement.

That statement lays out each month's credit card processing fees and charges. Some, like the discount rate, are controlled by the how to start a payment processing company processor while others are dictated by the card associations and issuing banks. For example, the associations and banks set the interchange fees, which are basically the wholesale price for processing a specific card type (credit, debit or rewards card, for instance).

The processor incurs expenses for the merchant services it provides that are passed along to the merchant. Some of the most common fees are an annual membership fee, a terminal support fee, a monthly minimum fee (usually charged to low-volume merchants), a monthly gateway fee and per-transaction fee for eCommerce merchants, a monthly service fee and a statement fee. Another charge that you may have recently noticed on your statement - an IRS report fee - covers the new requirement that processors must report their merchants' processing information to the federal government.