Card machine fees: how they are actually built

MDR, interchange, network fees and early settlement. Understand where every cent of your fee goes and why "zero fee" is rarely what it seems.

Pagnovo Team · 2026-08-01

Every card machine negotiation revolves around one number: the fee. But almost nobody explains what it is made of — and without that it is impossible to know whether the offer on your desk is good or just makeup.

The four components of the fee

What you pay as a "fee" (the MDR — Merchant Discount Rate) is the sum of parts that go to different companies:

1. Interchange — the biggest slice

Goes to your customer's issuing bank. It compensates whoever extended the credit and takes the cardholder default risk. In Brazil, the Central Bank caps interchange for debit and prepaid.

No acquirer can reduce this part — it belongs to the issuer.

2. Network fee

Goes to Visa, Mastercard, Elo, Amex. It pays for the network connecting issuers and acquirers, setting rules and arbitrating disputes. Also a structural cost.

3. Acquirer / sub-acquirer margin

This is the negotiable part. It pays for capture, processing, settlement, support, anti-fraud and the chargeback risk being assumed.

4. Equipment cost

Monthly rental, terminal purchase, or nothing (in "free machine" models the cost is baked into the fee).

Practical takeaway: when someone offers a fee far below market, they are either cutting their own margin (unsustainable long term) or recovering it somewhere else.

Where the cost usually hides

Settlement time (D+0, D+1, D+30)

This is the most important and most ignored factor. Single-payment credit settles by default in 30 days. Getting paid sooner is early settlement, and that has a financial cost.

D+30: no early settlement cost, but your capital sits idle
D+1: you pay an embedded early settlement fee
D+0: more expensive still

A "low" fee at D+30 can be more expensive in practice than a "high" fee at D+1, if your business needs cash flow. Always compare fee and settlement time together.

Installments

For installments, cost grows with the number of instalments because early settlement is larger. The right questions are:

Is the installment fee per instalment or flat?
Who pays the interest — you (merchant-funded) or the customer (customer-funded)?

Volume-tiered rates

Several players use regressive tables: the more you bill, the lower the fee. The rate in the ad is usually the top tier, which you may never reach. Check which tier you fall into today.

One-off charges

Transfer fee to another bank's account, maintenance fee, paper roll cost, contract cancellation penalty, per-chargeback fee.

How to really compare offers

Do not compare isolated percentages. Build this calculation with your own numbers:

Real monthly cost =
    (debit volume            × debit rate)
  + (single-payment credit   × credit rate)
  + (installment volume      × average installment rate)
  + early settlement cost (if applicable)
  + rental/subscription
  + one-off fees

Run it for each provider using your real sales mix. The ranking of "who is cheapest" changes often once you do.

Questions to ask before signing

What is the rate for debit, single-payment credit and each installment tier?
What is the settlement time for each method?
Is the early settlement fee embedded or charged separately?
Is there a volume-tiered table? Which tier do I fall into today?
Is there rental, subscription or lock-in? What is the cancellation penalty?
Is there a fee to transfer to another bank?
What does a chargeback cost?
Does PIX on the machine carry a fee?

And "zero fee"?

It usually refers to PIX (where the structural cost really is much lower) or a temporary promotion limited by time or volume. Read the terms: zero fee on PIX is legitimate and common; zero fee on credit does not exist sustainably, for the simple reason that interchange and network fees must be paid.

Pagnovo's Smart Card Machine works with transparent rates that drop as volume grows, with no rental and no monthly fee. Talk to our team to simulate with your business's numbers.