Payment processors

Why is the processor fee on a small payment so much higher than the rate?

Because almost every processor charges a percentage plus a fixed amount per transaction, and the fixed amount does not shrink with the payment. A rate quoted as "2.9% + 30¢" is 2.9% only in the limit. On a $100 payment the effective rate is about 3.2%. On a $10 payment it is about 5.9%. On a $3 payment it is over 12%. The headline rate is the number you approach from above, never the number you pay.

This single mechanism explains most of the surprise in processor pricing, and it has a practical consequence: batching matters. One $200 invoice costs less to collect than ten $20 invoices, and the gap is the fixed fee times nine. If you can consolidate billing, that is usually worth more than switching processor.

What else comes out that is not in the headline rate?

The advertised rate covers a domestic card in your own currency, presented online, that is not disputed. Step outside any of those conditions and there is usually a separate line:

• Cross-border. A card issued in another country typically carries an added percentage, applied on top of the standard rate rather than instead of it.
• Currency conversion. Charged separately from the cross-border fee, so an international sale in a foreign currency can attract both. This is the line most often missed when a seller compares a domestic quote against an international reality.
• Chargebacks and disputes. A flat fee per dispute, frequently retained even when the dispute is resolved in your favour.
• Payout and account fees. Instant payouts, and in some cases currency payouts to a foreign bank account, are priced separately from accepting the payment.

How do I charge enough to receive a specific amount?

You cannot add the fee percentage to the price and arrive at the right number. Adding 2.9% to $100 gives $102.90, and the fee is then charged on $102.90 rather than on $100 — so you land short. The correct operation is division, not addition: the gross needed is the target plus the fixed fee, all divided by one minus the rate. The charge-to-receive calculator performs exactly that inversion, which is why it exists as its own tool rather than as a note on another page.

Which of these tools should I use?

Use a single-processor calculator to see the deduction on a payment you are about to take. Use the comparison when the processor itself is the open question, and pay attention to where the lines cross rather than which is cheaper on average — at typical small-ticket values the ranking can invert. Use charge-to-receive whenever the amount you need to end up with is fixed, which is the usual case for invoicing.