Payments rarely appear on an implementation's critical path. Consequently they rarely get audited either. Yet for a client processing meaningful volume, cost of acceptance sits among the larger controllable expenses on the P&L — frequently ahead of software licensing.
When a finance leader asks a partner whether they are paying too much, the honest first answer is that nobody can tell from the quoted rate. So this is a practical method for finding out, and for identifying which lever actually applies.
Start with the effective rate, not the contract
In practice, the quoted rate describes one component of one transaction type. It is not what the client pays.
So calculate this instead, over a full month:
Effective rate = total payment costs ÷ total processed volume
First, include everything: interchange, network assessments, processor markup, per-transaction fees, monthly and gateway fees, chargeback fees, PCI fees, and anything else invoiced.
Merchants quoted "2.4%" routinely discover an effective rate near 3%. Therefore the first output of any audit is that single number, tracked over time.
Understand which costs are even negotiable
Three components make up a card transaction's cost, and only one is open to negotiation.
First, interchange goes to the card-issuing bank at rates the networks publish. It is typically the largest share, and nobody negotiates it.
Second, assessments go to the card network. Also fixed.
Third, processor markup is what the processor keeps. This is negotiable, and usually the smallest of the three.
So a renegotiation addresses perhaps a fifth of the total. Meanwhile card mix, downgrades and payment method choice move the other four-fifths — which is why the audit matters more than the negotiation.
Where the money actually leaks
Six patterns account for most avoidable cost, so check each one.
Downgrades on commercial cards. Commercial and purchasing cards qualify for lower interchange when transactions carry line-item detail. Visa now requires Level 3 data under its Commercial Enhanced Data Program, having retired the intermediate Level 2 tier; Mastercard still uses Level 2 and Level 3. Clients who do not pass this data pay a premium for nothing. Ask the processor what proportion of commercial card transactions currently qualify — that figure sizes the opportunity immediately.
Next, percentage fees on large invoices. Card costs scale with ticket size. Bank rails do not. For a distributor invoicing in the tens of thousands, moving even part of that volume to ACH or pay-by-bank changes the cost line materially.
Card mix drift. Rewards and commercial cards carry higher interchange. Therefore an effective rate can rise year over year with no contractual change at all.
Cross-border fees. International cards attract extra interchange and network fees, and a foreign acquirer often approves them less reliably too. Regional acquiring addresses both.
Also, redundant gateway subscriptions. Clients who accumulated payment integrations over the years frequently still pay for gateways nobody uses.
Finally, per-transaction fees on low tickets. A flat fee is negligible at $500 and painful at $6. Retail clients should examine this line specifically.
The lever depends on the diagnosis
So once the audit is done, the response follows from what it found.
| What the audit shows | The lever that applies |
|---|---|
| High commercial card volume, low qualification rate | Enhanced Level 3 data |
| High-value invoices paid by card | ACH and pay-by-bank steering |
| High markup relative to interchange | Processor choice or renegotiation |
| Significant cross-border volume | Regional acquiring and routing |
| Thin margins in a market where it is accepted | Compliant surcharging |
| Multiple legacy gateways | Consolidation |
Note that most of these have nothing to do with the rate the client negotiated.
The architectural constraint partners should flag
Finally, here is the part that concerns implementation directly.
Most native Dynamics 365 payment connectors bind the client to a single acquiring bank. Consequently four of the six levers above are unavailable. The client cannot compare processors without re-integrating, cannot route by region or cost, cannot easily add cheaper payment rails, and cannot move stored cards if they do change processor.
That last point deserves emphasis at scoping. Stored card credentials are usually tokenised by the processor, so leaving means customers re-enter every saved card. Therefore a client who has not asked who owns their tokens has effectively pre-committed to their current rate.
A removes the constraint. Dynamics 365 integrates once, and the connector holds the processor relationships and the vault. works this way across , and , with 50+ processors and 112 payment methods available through the same integration.
Practically, that means the client can pass on commercial transactions, offer alongside cards and , route across processors, and apply where the rules permit — without a separate project for each.
Running the audit
In short, here is a workable sequence for a client engagement:
- Collect twelve months of processing statements. One month shows a snapshot; a year shows drift.
- Calculate the effective rate per month and plot it. A rising line with a static contract indicates card mix drift.
- Break out the components — interchange, assessments, markup, incidental fees.
- Request the qualification report from the processor, showing downgrade rates and reasons.
- Segment volume by ticket size. Large-invoice card volume is the clearest ACH opportunity.
- Segment by card type. Commercial card share sizes the enhanced-data opportunity.
- Check approval rates, particularly on international traffic. Declines cost more than fees.
- List every payment-related subscription and confirm each is still used.
- Establish token ownership. This determines whether any processor change is even feasible.
Steps four, six and nine are the ones most often skipped, and they carry most of the value.
What to tell the finance team
In practice, two messages usually land.
First, the rate is not the cost. An effective-rate calculation reframes the conversation away from an annual negotiation and toward the components that actually move.
Second, most of the levers require an architecture that permits them. Consequently the payment integration decision — made quickly during implementation — sets the client's cost ceiling for years afterward.
Asking who owns the tokens takes one sentence at scoping. It is the highest-value question a partner can ask about payments.
Frequently asked questions
What is an effective rate? Total payment costs divided by total processed volume over a period. It reflects actual cost, unlike a quoted rate.
Can interchange be negotiated? No. Interchange goes to the card-issuing bank at network-published rates. Only processor markup is negotiable.
What causes a downgrade? A transaction failing to qualify for the best interchange category, commonly through missing data, delayed settlement, or manual entry. On commercial cards, absent line-item detail is a frequent cause.
How much can ACH save versus cards? It depends on ticket size. Because ACH is typically flat-fee and cards are percentage-based, the saving grows with invoice value.
Does Dynamics 365 support multiple payment processors? Not through most native connectors, which bind to a single acquirer. A processor-agnostic connector allows several at once.
Why does token ownership affect cost? Because a client who cannot move stored cards cannot realistically change processor. Therefore they lose negotiating leverage at every renewal.
How often should payment costs be reviewed? Quarterly is reasonable, since card mix drifts even when contracts do not change.
SensePass is a payment gateway and connector for Microsoft Dynamics 365. It links Business Central, Finance & Operations, and Commerce to 112 payment methods and through a single integration, with merchant-owned tokens, enhanced data support and surcharging built in. or
Payments rarely appear on an implementation's critical path. Consequently they rarely get audited either. Yet for a client processing meaningful volume, cost of acceptance sits among the larger controllable expenses on the P&L — frequently ahead of software licensing.
When a finance leader asks a partner whether they are paying too much, the honest first answer is that nobody can tell from the quoted rate. So this is a practical method for finding out, and for identifying which lever actually applies.
Start with the effective rate, not the contract
In practice, the quoted rate describes one component of one transaction type. It is not what the client pays.
So calculate this instead, over a full month:
Effective rate = total payment costs ÷ total processed volume
First, include everything: interchange, network assessments, processor markup, per-transaction fees, monthly and gateway fees, chargeback fees, PCI fees, and anything else invoiced.
Merchants quoted "2.4%" routinely discover an effective rate near 3%. Therefore the first output of any audit is that single number, tracked over time.
Understand which costs are even negotiable
Three components make up a card transaction's cost, and only one is open to negotiation.
First, interchange goes to the card-issuing bank at rates the networks publish. It is typically the largest share, and nobody negotiates it.
Second, assessments go to the card network. Also fixed.
Third, processor markup is what the processor keeps. This is negotiable, and usually the smallest of the three.
So a renegotiation addresses perhaps a fifth of the total. Meanwhile card mix, downgrades and payment method choice move the other four-fifths — which is why the audit matters more than the negotiation.
Where the money actually leaks
Six patterns account for most avoidable cost, so check each one.
Downgrades on commercial cards. Commercial and purchasing cards qualify for lower interchange when transactions carry line-item detail. Visa now requires Level 3 data under its Commercial Enhanced Data Program, having retired the intermediate Level 2 tier; Mastercard still uses Level 2 and Level 3. Clients who do not pass this data pay a premium for nothing. Ask the processor what proportion of commercial card transactions currently qualify — that figure sizes the opportunity immediately.
Next, percentage fees on large invoices. Card costs scale with ticket size. Bank rails do not. For a distributor invoicing in the tens of thousands, moving even part of that volume to ACH or pay-by-bank changes the cost line materially.
Card mix drift. Rewards and commercial cards carry higher interchange. Therefore an effective rate can rise year over year with no contractual change at all.
Cross-border fees. International cards attract extra interchange and network fees, and a foreign acquirer often approves them less reliably too. Regional acquiring addresses both.
Also, redundant gateway subscriptions. Clients who accumulated payment integrations over the years frequently still pay for gateways nobody uses.
Finally, per-transaction fees on low tickets. A flat fee is negligible at $500 and painful at $6. Retail clients should examine this line specifically.
The lever depends on the diagnosis
So once the audit is done, the response follows from what it found.
| What the audit shows | The lever that applies |
|---|---|
| High commercial card volume, low qualification rate | Enhanced Level 3 data |
| High-value invoices paid by card | ACH and pay-by-bank steering |
| High markup relative to interchange | Processor choice or renegotiation |
| Significant cross-border volume | Regional acquiring and routing |
| Thin margins in a market where it is accepted | Compliant surcharging |
| Multiple legacy gateways | Consolidation |
Note that most of these have nothing to do with the rate the client negotiated.
The architectural constraint partners should flag
Finally, here is the part that concerns implementation directly.
Most native Dynamics 365 payment connectors bind the client to a single acquiring bank. Consequently four of the six levers above are unavailable. The client cannot compare processors without re-integrating, cannot route by region or cost, cannot easily add cheaper payment rails, and cannot move stored cards if they do change processor.
That last point deserves emphasis at scoping. Stored card credentials are usually tokenised by the processor, so leaving means customers re-enter every saved card. Therefore a client who has not asked who owns their tokens has effectively pre-committed to their current rate.
A removes the constraint. Dynamics 365 integrates once, and the connector holds the processor relationships and the vault. works this way across , and , with 50+ processors and 112 payment methods available through the same integration.
Practically, that means the client can pass on commercial transactions, offer alongside cards and , route across processors, and apply where the rules permit — without a separate project for each.
Running the audit
In short, here is a workable sequence for a client engagement:
- Collect twelve months of processing statements. One month shows a snapshot; a year shows drift.
- Calculate the effective rate per month and plot it. A rising line with a static contract indicates card mix drift.
- Break out the components — interchange, assessments, markup, incidental fees.
- Request the qualification report from the processor, showing downgrade rates and reasons.
- Segment volume by ticket size. Large-invoice card volume is the clearest ACH opportunity.
- Segment by card type. Commercial card share sizes the enhanced-data opportunity.
- Check approval rates, particularly on international traffic. Declines cost more than fees.
- List every payment-related subscription and confirm each is still used.
- Establish token ownership. This determines whether any processor change is even feasible.
Steps four, six and nine are the ones most often skipped, and they carry most of the value.
What to tell the finance team
In practice, two messages usually land.
First, the rate is not the cost. An effective-rate calculation reframes the conversation away from an annual negotiation and toward the components that actually move.
Second, most of the levers require an architecture that permits them. Consequently the payment integration decision — made quickly during implementation — sets the client's cost ceiling for years afterward.
Asking who owns the tokens takes one sentence at scoping. It is the highest-value question a partner can ask about payments.
Frequently asked questions
What is an effective rate? Total payment costs divided by total processed volume over a period. It reflects actual cost, unlike a quoted rate.
Can interchange be negotiated? No. Interchange goes to the card-issuing bank at network-published rates. Only processor markup is negotiable.
What causes a downgrade? A transaction failing to qualify for the best interchange category, commonly through missing data, delayed settlement, or manual entry. On commercial cards, absent line-item detail is a frequent cause.
How much can ACH save versus cards? It depends on ticket size. Because ACH is typically flat-fee and cards are percentage-based, the saving grows with invoice value.
Does Dynamics 365 support multiple payment processors? Not through most native connectors, which bind to a single acquirer. A processor-agnostic connector allows several at once.
Why does token ownership affect cost? Because a client who cannot move stored cards cannot realistically change processor. Therefore they lose negotiating leverage at every renewal.
How often should payment costs be reviewed? Quarterly is reasonable, since card mix drifts even when contracts do not change.
SensePass is a payment gateway and connector for Microsoft Dynamics 365. It links Business Central, Finance & Operations, and Commerce to 112 payment methods and through a single integration, with merchant-owned tokens, enhanced data support and surcharging built in. or .