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The Effective Rate Worksheet

Work out your effective rate

One month of statements. Nothing you type leaves your browser — this runs entirely on your device, and there is nothing to submit.

From your statement
From the quote you were given (optional)

Enter your volume and total fees to see your effective rate.

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The Effective Rate Worksheet

Work out what you actually pay per $100 of card sales — then compare that against the rate you were quoted.

Published rates tell you what a processor charges per transaction. Your statement tells you what you paid. Those two numbers are rarely the same, and the gap between them is where a switching decision usually gets made or abandoned.

This worksheet takes about twenty minutes and one month of statements. Nothing here asks you to trust a number you didn't pull yourself.

The one number

effective rate = total fees for the month / total card volume for the month

That's it. Every fee, including the ones that aren't per-transaction. If you processed card sales all month and your processor took anything from you for any reason, it goes in the numerator.

The reason this is worth twenty minutes: the quoted rate is a per-transaction price, and your bill is not a per-transaction bill. Monthly charges, per-batch charges, and anything assessed once a year land on the same statement and are paid out of the same margin.

Step 1 — pull one month

Use a complete month, not a partial one, and not your best month. If your business is seasonal, use an ordinary month; a December statement will flatter a per-transaction rate and hide a fixed monthly charge, because the fixed charge is spread over more volume.

You need two totals and one count:

Pull thisWhere it usually is
Total card volume for the monthThe deposit summary, or the sum of gross sales before fees
Total fees for the monthThe fee summary; on some statements this is split across several sections
Number of card transactionsThe transaction count, or the line item count

If total fees appear in more than one place on the statement, add them. A statement that separates "processing fees" from "other fees" is not showing you two things — it is showing you one thing in two places.

Step 2 — the fees that aren't in the headline rate

Go line by line and tick what you actually see. This list is the reason your effective rate is usually higher than your quoted rate.

Two of these deserve a note. Monthly minimums invert the usual logic — a low-volume month costs you more per dollar, not less. Downgrades are the line most merchants have never looked at: a keyed-in card, a missing address check, or a corporate card can settle at a higher rate than the one on the quote, and the difference shows up as a separate line rather than a changed rate.

Step 3 — compute

Fill this in. Round to the cent; don't round the percentage until the last step.

Your number
A. Total card volume
B. Total fees (every line from Step 2, added)
C. Transaction count
D. Effective rate = B / A, as a percentage
E. Effective cost per transaction = B / C
F. Cost per $100 of sales = D

Row F is the one to write down somewhere you'll see it again. A rate expressed per $100 is directly comparable across processors, across years, and across the quotes you're about to be given.

Step 4 — compare against what you were quoted

Number
G. Quoted percentage rate
H. Quoted fixed fee per transaction
I. Quoted cost this month = (G × A) + (H × C)
J. Gap = B − I
K. Gap as a share of fees = J / B

J is the answer. It is the amount you paid last month that the quoted rate does not explain.

A worked example, using a made-up merchant so nothing here depends on a rate you'd have to trust: suppose A is 42,000.00 USD across 610 transactions, and B is 1,498.00 USD. Then D is 3.57% and E is 2.46 USD. If the quote was 2.90% plus 0.30 USD, then I is 1,401.00 USD and J is 97.00 USD — about 6% of the bill sitting outside the headline rate. Whether 97.00 USD a month is worth acting on is a question about your margin, not about the processor.

Step 5 — what the gap tells you

Read J and K together, not separately.

Step 6 — before you switch

Three checks that are cheaper to do now than to regret later.

  1. Re-quote your own processor first. You now have a number they will recognise, and a specific gap to ask about. Ask what the gap is made of before you ask for a discount — the answer usually names a line you can change without moving.
  2. Price the new one on your own statement, not on their calculator. Take your A and C from Step 1, apply the new published rate, and then ask which of your Step 2 lines the new processor also charges. A quote that only answers the percentage question has not answered your question.
  3. Count the switching cost once, honestly. Terminal replacement, contract exit, the checkout integration, and the hours. Then divide it by the monthly saving. If that's more than about a year, you're making a bet on staying, not a saving.

The blank worksheet

Copy this for each month you want to track. Three consecutive months is enough to see whether a gap is structural or was one bad statement.

MonthA. VolumeB. FeesC. CountD. Effective rateE. Per transactionJ. Gap vs quote

If D moves more than a few tenths of a point between ordinary months, something in the numerator is not volume-linked — go back to Step 2 and find it.


No email is required to use any of this. If you'd like the occasional teardown of how a business actually prices something, the newsletter link is below; the worksheet is yours either way.