Question 1

How does taking card payments actually work, and what does it cost?

Accepted Answer

Money passes through several parties before reaching you, each taking a share — which is why the headline rate a provider advertises is rarely what you end up paying.

**Who is involved.** The customer's **issuing bank**; the **card scheme** that routes the transaction; the **acquirer** that holds your merchant account; and frequently a **payment service provider** sitting in front of the acquirer providing the terminal, checkout or software.

**What a transaction costs, in three parts:**

**Interchange**, paid to the customer's bank. Set by the schemes, capped for consumer cards in some jurisdictions, and **much higher for commercial, corporate and non-domestic cards** — which is why a business customer paying by company card costs you more than a consumer.

**Scheme fees**, paid to the card network.

**The acquirer or provider's margin.**

**The pricing models, and this is where the real cost hides:**

**Blended** — one rate for everything. Simple, and you overpay on cheap transactions and underpay on expensive ones.

**Interchange plus**, showing interchange and scheme fees at cost with a stated margin on top. **More transparent and usually cheaper for established businesses**, and harder to compare at a glance.

**Flat rate**, common with simple providers — highest headline cost, no monthly fees, best for low volume.

**The extras that matter more than the rate:** monthly minimums; terminal rental, frequently on a long non-cancellable lease that is a common source of complaint; PCI compliance charges; authorisation fees per transaction; chargeback fees; settlement delay, which affects cash flow; refund handling, where the original fee is frequently not returned; and currency conversion margins.

**Chargebacks** are the real risk. A customer disputes a payment and the amount is reclaimed, plus a fee, and the burden of evidence is on you. High chargeback ratios can cost you the account entirely.

**Practical points:** read the contract term and exit terms, not the rate; check whether the terminal lease is separate from the processing agreement; consider surcharging rules, which prohibit consumer card surcharges in many jurisdictions; and reconcile settlements against sales, since fees are usually deducted before payout.

General information, not financial advice.

Question 2

What is invoice finance, and what does factoring actually cost?

Accepted Answer

Borrowing against money customers already owe you — releasing cash from unpaid invoices rather than waiting for payment terms to run. It solves a genuine problem for growing businesses and is

Question 3

What is value-based pricing?

Accepted Answer

Setting a price based on what the outcome is worth to the customer, rather than on what it costs you to produce or what competitors charge. It is widely recommended, rarely implemented, and it

Question 4

What is a channel or reseller partnership, and how do they work?

Accepted Answer

Selling through someone else's sales relationships rather than your own — and the reason businesses do it is reach, while the reason it so frequently disappoints is that the partner's incentives are

Question 5

What are unit economics?

Accepted Answer

The revenue and costs attributable to a single unit — one customer, one order, one subscription — stripped of everything else. The question they answer is simple and brutal: does one of these make

Question 6

What is franchising, and what are you actually buying?

Accepted Answer

A licence to operate a business under someone else's brand and system, in a defined territory, in exchange for an initial fee and ongoing payments. You are buying a method and a name, not a business

Question 7

What is an earn-out, and why do acquisitions use them?

Accepted Answer

A structure where part of the purchase price is paid later, conditional on the business hitting agreed targets. It exists to bridge a disagreement about value: the seller believes the business will

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