Effective rate, the one number that matters
Headline rates are marketing. Effective rate is the truth. It's total fees divided by total volume — and it's the only number you should compare across processors.
✓Editorially reviewedReviewed by Sam Patel, Merchant services editorUpdated April 1, 2026How we make moneyMethodologyAdvertiser disclosure
Quick answer
If you're paying 2.0%-2.5% effective on interchange-plus or 2.6%-3.0% on flat-rate, you're in line with the market. Above 3.0% (or 3.5% on a "tiered" plan), you're overpaying.
The 3-step calculation
- Step 1 — Pull last month's statement
You want the line that says "Total fees" or "Total amount due" — not just "discount fee."
- Step 2 — Find your total card volume
Usually labeled "Total sales," "Gross processing volume," or "Submitted volume." This is the sum of all card transactions before fees.
- Step 3 — Divide and multiply by 100
Effective rate = (Total fees ÷ Total volume) × 100. Example: $850 in fees on $30,000 volume = 2.83% effective.
Effective-rate benchmarks
| Pricing model | Healthy range | Overpaying |
|---|---|---|
| Interchange-plus (Helcim, Stax) | 2.0% - 2.5% | over 2.8% |
| Flat-rate in-person (Square, Stripe) | 2.6% - 3.0% | over 3.2% |
| Flat-rate online | 2.9% - 3.3% | over 3.5% |
| Tiered (most ISO contracts) | 2.5% - 3.0% | over 3.5% |
| High-risk | 3.5% - 5.0% | over 5.5% |
FAQ
Take total fees on your monthly statement (every line — markup, PCI, statement, batch, junk fees) and divide by total card volume. Multiply by 100 for the percentage.
2.0%-2.5% on interchange-plus. 2.6%-3.0% on flat-rate (Square, Stripe). 2.5%-3.5% on a custom merchant account. Above 3.5% you're being gouged.
Usually a higher mix of rewards/corporate cards. If it persists, your processor may have raised markup — they're allowed with 30 days notice in most contracts.
Audit your effective rate
Upload a statement (or just type a few numbers) — we'll tell you in 30 seconds if you're overpaying.