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Pricing models · Glossary

Effective rate

Effective rate is the total payment-processing cost expressed as a percent of card volume. Calculated as total monthly fees divided by total monthly card volume. The most useful single metric for comparing processor cost across pricing models.

Example

$2,950 in total fees on $100,000 of monthly volume = 2.95% effective rate.

Why this matters to merchants

Effective ratesits inside the broader system of U.S. payment processing economics that determine a merchant’s effective rate. Most operators encounter this term on their merchant statement without understanding what it controls, which is how the four hidden fees covered by our methodology slip past unnoticed.

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