Credit Card Transaction Fee Formula Explanation
Try the net effective rate method: Total credit card processing Fees from the merchant statement/Total processing Volume from the same merchant statement the fees were * 100 = Some %.
The Net Effective Rate is simply the average percentage to accept a credit or debit card. The NER includes all fees, interchange, assessments, pin debit network fees, processor fees. It's how one might compare vs a flat rate.
SIMPLIFIED: Total C/C Processing Fees/Total C/C Processing Sales * 100= a %, the Net Effective Rate
For Example: Total credit card sales $10,000 fees paid for that $10,000 to be put into the merchant bank account, $400. $400/$10,000 = .04 multiply by 100 to get into a percentage = 4%. In this scenario, 4% is what it costs to accept an electronic payment.
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