Hearing about wholesale credit card processing might be a little confusing for people who are not accustomed to banking terms. The fees associated with card processing and merchant accounts fall into two categories: wholesale fees and markups. The essential difference between these two types of fees is that, while wholesale fees cannot be negotiated, markups can.
“Wholesale” is a suggestive term used for this type of fees, but they could also be called “pre-markups” or “base fees”. Wholesale fees are just what they sound like – the total cost of a merchant’s sales transactions. They are determined by the bank that issues the credit card and the credit card associations like Visa, MasterCard and others. The fees are consistent, no matter the provider you have chosen, or, to put it in other words, a merchant should not try to find lower wholesale fees from different card processors, for the simple reason that this is impossible.
On the contrary, the markup fees show how the credit card processor plans to profit from the merchant’s business. With a right processor, markup fees are modest, but with a wrong one, the merchant may be in trouble. This is why, unlike wholesale credit card processing, a merchant should be very careful when choosing his card processor, because markups could make a difference.