Choosing a payment processor usually means comparing two percentages, which is the best way to get it wrong. The fixed part of the fee matters just as much, and it entirely decides the ranking as soon as your sale amounts change.
Definition
A payment processor is a service that collects payments from your customers, handles security and authentication, then pays you out after deducting its fee.
That fee nearly always has two components: a percentage of the amount, and a fixed sum per transaction. The coexistence of both is what produces counter-intuitive effects.
Why the average amount changes the winner
On small amounts the fixed fee dominates: the card with no fixed fee wins, even at a higher percentage.
Both rate cards are fictional and chosen to show the mechanism: a high fixed fee is painless on large amounts and devastating on small ones. Compare your processors with your own figures, at your real average order value.
Move the sale amount above. What appears is the important point: the cheapest processor is not the same depending on your Average order value. A high fixed fee is painless on a €300 sale and devastating on a €3 one.
On a €2 sale, a fixed fee of €0.25 already represents 12.5 percent of the amount, before the percentage even applies. That is why micro-payments go through prepaid credit systems rather than individual transactions.
What to look at beyond the rate
| Criterion | Why it matters |
|---|---|
| Payout delay | It bears directly on your Runway |
| Recurring billing handling | Retries, card updating |
| Local payment methods | A missing method is an Abandoned cart |
| Dispute handling | Fees and Chargeback process |
| Portability | Being able to export your subscriptions elsewhere |
The last row is the most neglected and the most expensive to discover late. Switching processors when your subscriptions are not transferable means asking every customer for their card again, which triggers a massive Churn rate spike.
The three costs nobody quotes
The headline rate is not the total. Three lines sit alongside it, and they surprise people who only compared percentages.
- Currency conversion. Selling in a currency other than your payout currency typically adds one to two percent, applied silently on every transaction.
- Failed payments. Some processors charge for a declined attempt, which makes an aggressive Dunning sequence quietly expensive.
- Disputes. A fixed fee per Chargeback, payable even when you win the case.
Add these to the headline rate before comparing anything. On a business selling internationally with monthly billing, they routinely exceed the difference between the two rates you were weighing up.
Frequently asked questions
Can I pass the fees on to the customer?
This is regulated and sometimes prohibited depending on the country and payment method, particularly for consumer sales. Check the applicable framework and your processor's terms before considering it.
Should I use more than one?
Not at the start, the accounting complexity is not worth it. It becomes useful above a certain volume, to negotiate and to avoid depending on a single provider in case of account suspension.
How do I negotiate fees?
Above a meaningful monthly volume, most processors will discuss. Half a point on steady volume shows up directly in your Gross margin, and all it takes is asking.
What happens if my account is suspended?
Funds are generally held pending review, which can take weeks. It is the most underestimated risk here: keep a cash reserve and read your processor's list of prohibited activities before launching an unusual offer.