Effective Rate
Your total processing cost divided by your gross card volume. It is the only honest apples-to-apples comparison across pricing models.
Effective rate = total processing fees ÷ total card volume. If you paid $2,400 in fees on $100,000 in card sales, your effective rate is 2.4%.
It is the only number that lets you compare pricing across different models. A processor quoting 1.69% + $0.10/transaction and a processor offering 2.3% flat rate both sound like different things; your effective rate at your actual transaction mix is what tells you which is cheaper.
To calculate it from your statement: add up every fee (discount, transaction fees, monthly fees, PCI fee, statement fee, everything) and divide by your total card volume for the same period.
Industry benchmarks for card-present retail: below 2.1% is competitive. 2.1–2.5% is typical but improvable. Above 2.5% indicates significant overpayment. Card-not-present merchants run 0.4–0.6% higher due to elevated interchange categories.
Most merchants have never calculated their effective rate. It usually comes as a surprise. The FT5 calculator does it automatically: enter your volume and fees to see where you stand.
See how your effective rate compares to what competitive IC+ pricing would cost you.
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