Where does your money actually go when a customer pays by card?
Most merchants know they pay a percentage on every card transaction. Fewer know what that percentage actually buys, or how many hands it passes through before the money lands in their account.
Here’s how it works — in simple terms.
When a customer taps their card at your counter, the payment doesn’t travel directly from their account to yours. It moves through a chain of intermediaries, each with a role — and a fee.
1. The issuing bank — this is the customer’s bank. The one that issued their card. When a transaction is approved, the issuing bank takes what’s called an interchange fee. In South Africa, the South African Reserve Bank sets this rate. For a standard 3D-authenticated credit card transaction, that interchange sits at 1.68%.
2. The card network — Visa or Mastercard sits in the middle, running the rails that connect the two banks. They charge a separate scheme fee for this. It’s smaller, but it’s there.
3. The acquiring bank — this is your bank. The one that processes card payments on your behalf. They add their own margin on top of the interchange and scheme fees, and that total is what you see as your Merchant Discount Rate (MDR). If your MDR is 2.5%, the bank keeps 0.82% and passes 1.68% back to the issuing bank.
4. The payment processor / POS provider — if you rent a card machine or use a payment gateway, there’s often a separate processing fee or device rental on top of everything else.
So on a R1,000 sale at a 2.5% MDR, R25 leaves before you see a cent. On R200,000 a month, that’s R5,000 gone through the chain. Every month.
Why does it cost this much?
The fees exist for real reasons. The issuing bank takes on fraud risk when it approves a transaction. The card networks maintain the global infrastructure that makes tap-to-pay work in 150 countries. The acquiring bank handles compliance, chargebacks, and settlement.
In 2006, those costs were significant. Card infrastructure was expensive to build and maintain.
In 2025, the picture is different. Digital payment infrastructure costs a fraction of what it did twenty years ago. Fraud tools are more automated. Settlement is technically instant — the delay is largely administrative.
The fees, for most merchant categories, have not moved proportionally.
What’s actually different about QR payments
A QR-based payment system like TappiPay works on different rails. Instead of routing through the four-party card network chain, a QR payment moves directly from the customer’s wallet to the merchant’s account — fewer intermediaries, fewer fees at each stop.
That’s why TappiPay can charge 0.3–0.6% per transaction instead of 2–3%. It’s not a discount. It’s a shorter chain.
Settlement is 24/7 because there’s no bank clearing cycle to wait for. Money moves when the customer pays — not two days later when the acquiring bank decides to batch it through.
What this means for your business
You don’t need to overhaul everything overnight. Card payments aren’t going anywhere, and customers will keep using them. But knowing how the fee structure works means you can start making intentional choices about which payment methods you accept — and for what.
A merchant doing high volumes on low margins feels 2.5% differently than one with 40% gross margin. A spaza shop buying stock daily feels a 48-hour settlement delay differently than a restaurant that invoices monthly.
The system was built for a certain kind of merchant. Now there’s an option built for a different one.
If you’re interested in getting more of what you’re earning, follow along as TappiPay grows and sign up to be a founding merchant.
