What a Payment Processor Actually Charges You

The short version

When a customer pays you by card, you don't keep all of it. A payment processor takes a cut for moving the money.

For most small businesses that cut is around 2.6% to 3% of the sale, plus a fixed fee of roughly 30 cents per transaction. So on a $20 sale, you might see about 88 cents disappear.

Why there's a fee at all

A card payment passes through several hands: the processor you signed up with, the card networks like Visa and Mastercard, and the bank that issued your customer's card. Each takes a small piece. The processor bundles all of that into the rate they quote you.

The two common pricing shapes

Flat rate. Square, Stripe, and PayPal mostly charge one simple percentage plus a fixed fee, the same for every card. Easy to predict. This is right for most small businesses.

Interchange-plus. You pay the actual network cost plus a set markup. It can be cheaper at higher volume, but the statements are harder to read. Worth a look only once you're processing a lot.

Fees that surprise people

• The fixed fee. That 30 cents barely matters on a $200 sale. On a $4 sale it's a huge percentage. Small tickets get eaten alive.
• Chargebacks. If a customer disputes a charge, you can owe the amount back plus a fee, even if you did nothing wrong.
• Monthly and "PCI" fees. Some processors tack on monthly charges, statement fees, or compliance fees. Read the fine print.
• Instant payout fees. Getting your money today instead of in two days often costs extra.

How to actually compare

Don't just compare headline rates. Add up every fee you paid last month and divide by your total sales. That's your effective rate - the real number. It's often higher than the rate you were quoted.

Card processing is a normal cost of doing business. The fees are just easy to ignore, and you can't manage a cost you've never looked at.