When fees go wrong: How overcharges become a merchant’s margin killer

Every transaction tells two stories: the revenue merchants earn and the fees they surrender. In 2024 alone, U.S. merchants paid a staggering $187.2 billion in card processing fees — an unavoidable cost of doing business in the digital age. Yet buried within this figure lies a hidden margin killer: overcharges, misapplied rates, and opaque billing structures that quietly siphon profits without leaving a trace on the balance sheet.

The cost is already very real

Recent data confirms: in 2024, U.S. merchants paid a record US$187.20 billion in processing fees for credit, debit, and prepaid card transactions.

• That’s an average of $1.57 in fees for every $100 spent via plastic
  
• Compared to 2023, the total fees rose from ~$172 billion.
  

These are legitimate fees — interchange, network, acquirer, processor charges etc. But within this enormous total, there lies substantial overcharge risk: misclassifications, hidden markups, misapplied tiers, opaque billing practices, redundant or duplicated fees. For a merchant operating at scale, even 0.2–0.5% leakage due to overcharges can quickly add up to tens of millions of dollars annually. Optimus estimates this kind of leakage when invoices/statements are not constantly reconciled.

Why CFOs often miss overcharges

From my experience, there are several recurring reasons why overcharges go undetected:

1. Complexity of fee structures Processing fees are multi-component: interchange, network assessments, acquirer/processor markups. Different PSPs or acquirers might have varying contracts, and one statement may bundle multiple charges in opaque ways. Comparing “what was promised” vs. “what was charged” is rarely simple.

2. Multiple PSPs / Acquirers / Payment methods As businesses scale, many adopt multiple PSPs or accept payments via many channels. Each may have its own contractual rates, hidden fees, gears. When volume is spread, ribbon-cutting opportunities for overcharge increase, but visibility diminishes.

3. Infrequent audits & reconciliation gaps Most finance teams reconcile overall payment volume vs fees, but many don’t drill into each PSP’s detailed fee-breakdown. Subtle misclassifications (e.g. transactions placed in a higher “risk” or “premium” bucket improperly) often pass unnoticed.

4. Opaqueness & Contract renewal inertia Once a vendor/PSP contract is in place, terms rarely change unless forced. Hidden or newly introduced fees may creep in (annual fees, gateway fees, PCI compliance, etc.), and many merchants just accept them on faith or because renegotiation is costly in time and relationships.

The actual impact: Margin, Pricing & Profitability

Here’s what these overcharges do to financial health:

• Margin drain: A 0.5% fee overcharge on $1B in card volume is $5M lost to the bottom line. That’s money that could have funded growth, product development, or simply improved profit margins.
  
• Pricing misalignment: CFOs often model product pricing based on assumed cost of payments. If actual fee costs are higher than those expectations (due to overcharges), then pricing is too low — which costs the company profits — or customer margins shrink.
  
• CAPEX/OPEX distortion: Unexpected or recurring overcharges impact budgets, especially variable cost forecasts. They can also lead to over-spending elsewhere to compensate.
  
• Competitive disadvantage: Those who monitor fees, audit aggressively, and reclaim or avoid overcharges gain leaner cost structures. Others bleed margin.

Why Optimus.tech is CFOs’ single source of truth

At Optimus, we built our product to address precisely these blind spots. For CFOs who want to protect margins:

• Our fee-overcharge detection capabilities automatically parse detailed statements to flag misapplied fee tiers, duplicated charges, unexpected new fees, and opaque mark-ups. (See our blog “Fee Overcharges: The Silent Margin Killer in Payment Operations” for use-cases.)
  
• We offer dashboards for comparing effective fee rates across PSPs, payment methods, or regions – enabling quick benchmarking.
  
• Reconciliation workflows ensure every dollar processed is matched with the fees paid — enabling reclaim or correction if errors are found.
  
• Because Optimus centralises data, CFOs gain both the sensitivity to see small leaks (0.2-0.5%) and the scale to understand their financial impact.
  
  

Bottom line

For merchants paying tens or hundreds of billions yearly in payment processing fees, the question isn’t if overcharges exist — it’s how much they cost, and how persistently those costs erode profit. As CFOs, our role includes shining light into those shadows.