Learning • 4 min read

What Is An Effective Merchant Rate?

The single most useful number to know about your card processing, and how to calculate it from any UK merchant statement.

The simple definition

Your effective merchant rate is the total amount of card processing fees you paid in a period divided by the total card turnover for that period, expressed as a percentage.

Total card fees divided by total card turnover, multiplied by 100. That is your effective rate.

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Why it matters more than the headline rate

A headline rate of 0.65 percent is meaningless if recurring fees, premium card surcharges and terminal hire push the effective rate above 1.7 percent.

The effective rate is the only honest way to compare your account against any alternative quote.

Key takeaways

●Always calculate your effective rate, not just read the headline rate.
●Use the same calculation on any quote you receive.
●If two providers quote different headline rates, only the effective rate tells you who is cheaper.

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