Calculate Savings
How to calculate your credit card processing fees and how to lower them
What is the formula for calculating credit card processing fees?
The first step of calculating your credit card processing fees is finding your effective rate. First, you’ll need to pull out your credit card statement. Next, you’ll need to take the total amount deducted for processing and divide it by the amount of your total monthly sales that paid using credit cards.
The result is your effective rate, the total amount your credit card company is charging you.
Effective Rate % = (Total Deducted For Processing / Total Monthly Sales) * 100
How does my effective rate compare to others?
When the typical B2B organization initially looks at their effective rate, it’s usually between 2.5% and 3%. Within that effective rate are several different types of fees:
Interchange rate: Makes up the largest portion of the fee. Goes to the issuer (usually issuing banks) to fund cardholder operations and rebates.
Markup: Goes to the merchant processor which the supplier uses to accept card payments.
Assessment: Goes to the network (Visa, Mastercard, Discover, American Express) for allowing the issuer to transmit the payment from the cardholder to the merchant.
If your organization simply accepts these fees as the cost of doing business, it’s time to rethink that position.
How to lower my effective rate
You can lower your effective rate and total credit card fees by implementing our technology that will lower your monthly fees and costs associated with credit card transactions.
Our smart credit card acceptance strategy combined with innovative automation can help you reduce those fees up to 0%.