Whilst interchange is indeed the largest part of processing costs, there are still assessments (0.13%) and brand fees (FANF, cross border fees (1.25% for Visa), etc) that increase the cost of processing over interchange.<p>Square can only hope to make a decent margin on its 2.75% pricing by 1. seeing a preferred distribution mix on card types (such as, high debit card usage; less Amex; less expensive rewards cards; high cards qualifying at card present rates &amp; no downgrades) and&#x2F;or 2. special interchange discounts with the networks based on growth initiatives and&#x2F;or fraud tools.<p>If they can&#x27;t generate enough $$ from processing revenue, they&#x27;ll need to use card processing as a loss leader for other services (loans, analytics, marketing)...