Total Payment Cost Model
- All-in payment costs run 4-6% of gross revenue, not the 2.9% headline. Chargebacks, fraud tools, reserves and working capital never show up in that headline. They add up
- The biggest hidden cost is chargebacks. Each 1% chargeback rate eats about 4% of gross revenue: reversal, fee, lost product, staff time
- Your chargeback fee isn't a fixed $15. Published US fees run $0 to $30. Most charge $15. Square and the Authorize.net gateway charge nothing. Helcim, Shopify Payments and PayPal's standard tier give it back when you win. Put your own number in this model
- Model payment costs against gross margin, not gross revenue. A 5% payment cost on a 20% margin eats a quarter of the margin
- Run this before launch, then again every quarter. Your cost profile shifts as volume and product mix change. Last quarter's numbers won't hold
Every processor rate below was read off the vendor's own pricing page on 2 August 2026, with Stripe's US rates read from a US connection on 4 August 2026. Each one is linked where it's used. The online examples use Braintree's published US card rate of 2.89% + $0.29 (source). Stripe's 2.9% + $0.30 sits one hundredth of a point and one cent away, so every example here holds for either. Substitute your own processor's published rate.
Interchange-plus examples use one blended pass-through assumption: 1.03% + $0.178 card-present and 1.50% + $0.172 online. That's interchange of 0.89% + $0.158 and 1.36% + $0.152, plus an assumed 0.14% + $0.02 of network assessments. Neither Visa nor Mastercard publishes that assessment figure. This site carries it as unverified. The card mix, sources and arithmetic are at Cost Model Assumptions. Your own statement beats the assumption every time.
Most SMBs budget 3% for "payment processing". Then the real costs land at 4-6%. Processing fees are just the start. Chargebacks, fraud tools, reserves and working capital all cost money.
This page shows you how to calculate what you're actually paying.
Why Your Payment Costs Are Higher Than You Think
What SMBs budget: 3% processing fees What SMBs actually pay: 4-6% effective all-in cost
The hidden costs:
- Chargeback fees ($0 to $30 each, depending entirely on your processor)
- Lost product on chargebacks
- Fraud prevention tools (SEON publishes $699/month for 2,500 checks; almost every other vendor won't publish a price at all)
- Chargeback alerts (quoted per merchant, not published)
- Labor (responding to disputes, reviewing fraud)
- Reserves locked up (10-30% of revenue)
- Working capital cost of 2-3 day settlement delay
At $500K/month volume, $75 average order, 0.5% CB ratio, Braintree at 2.89% + $0.29:
- Processing: $16,383 (3.28%)
- Chargebacks: $2,805 (33 disputes at $85 all-in each)
- Tools: $800
- Labor: $1,000 (20 hours/month at $50/hr)
- Working capital: $500 (interest on locked funds)
- Total: $21,488/month (4.30% effective)
That's 43% more than the 3% you budgeted.
Complete Cost Model Worksheet
Step 1: Processing Fees (Base Cost)
| Your Data | Calculation |
|---|---|
| Monthly volume: $______ | A |
| Processor rate: % + $ | B |
| Average transaction: $______ | C |
| Transaction count: ______ | D = A / C |
Processing fees = (A × B%) + (D × B$)
Example:
- Volume: $500,000
- Rate: 2.89% + $0.29 (Braintree, published, verified 2026-08-02)
- Avg transaction: $75
- Count: 6,667 transactions
- Fees: $14,450 + $1,933 = $16,383 (3.28%)
Run it again with your own processor's published rate. Square's Free-plan online rate is 3.3% + 30c. Same volume, same ticket: $16,500 + $2,000 = $18,500 (published, verified 2026-08-02).
Helcim needs more care. It's interchange-plus, and the markup steps down with monthly volume. Interchange + 0.50% + 25c is the $0-$50K entry tier. A merchant doing $500,000 a month is two bands past it. Helcim's published online schedule puts $500,000 exactly on the line between the $100K-$500K band and the $500K-$1M band. Model both, then ask Helcim which row it applies at the boundary (published, verified 2026-08-02):
| Helcim online band | Percentage markup on $500,000 | Per-transaction markup on 6,667 | Total markup |
|---|---|---|---|
| $100K-$500K: +0.35% + 20c | $1,750 | $1,333 | $3,083 |
| $500K-$1M: +0.25% + 15c | $1,250 | $1,000 | $2,250 |
Add pass-through on top of that markup to get the real bill. On the blended online assumption of 1.50% + $0.172, pass-through here is $7,500 + $1,147 = $8,647. Processing lands at $11,730 (2.35%) on the $100K-$500K band. On the $500K-$1M band it's $10,897 (2.18%). Braintree is $16,383. So the saving is $4,653 to $5,486 a month, and the band question alone is worth $833 of it.
Price a $500K merchant at the entry tier and you overstate Helcim's markup by $1,084 to $1,917 a month. That's the most common way this comparison gets run wrong. Your volume picks the band. Your card mix decides whether interchange-plus actually beats a flat rate. Pass-through is roughly three quarters of the interchange-plus bill at this ticket size. See the card-mix test and Cost Model Assumptions.
Step 2: Chargeback Costs (Often Underestimated)
| Your Data | Calculation |
|---|---|
| Chargeback ratio: ____% | E |
| Chargeback count: ______ | F = (D × E%) |
| Chargeback fee: $______ | G (look it up, see table below) |
| Product cost per CB: $______ | H (avg product value × 0.7) |
| Shipping cost per CB: $______ | I |
| Labor per CB: $______ | J ($10-30) |
Chargeback cost per incident = G + H + I + J
Total chargeback cost = F × (G + H + I + J)
G isn't $15 for everyone. It's never $100. These are the published US fees. Every one was read off the vendor's own page on 2026-08-02:
| Processor | Fee per dispute | Refunded if you win? |
|---|---|---|
| Square | $0. "There are no fees for dispute management services for chargebacks" | Nothing to refund |
| Authorize.net | $0.00 on card chargebacks. $25.00 on eCheck.Net | Nothing to refund on cards |
| Helcim | $0 if resolved in your favour, $15 if lost | Yes, by design |
| Braintree | $15.00 | Not stated |
| Shopify Payments | $15.00 in the US | Yes. "If you win the chargeback, then the fee is returned to you" |
| Stripe | $15 to receive, plus $15 to counter | Received fee never returned. Countered fee returned only on an outright win, not a partial one |
| Toast | $15.00 | No. Charged win or lose |
| PayPal standard | $15.00 dispute fee | Yes. Not charged when the case is decided in your favour |
| PayPal high volume | $30.00 dispute fee once your dispute ratio hits 1.5% with 100+ sales in the prior three months | No. The win exemption disappears at this tier |
| PayPal chargeback fee | $20.00, on card transactions only | No. Charged "regardless of whether the buyer is successful" |
| Moneris | CA$25, plus CA$80 authorization chargeback handling | Not stated |
| Stax | $25 with the optional chargeback protection add-on | Not applicable |
| Adyen | Not published | Unknown |
| Clover | Not published | Unknown |
| Worldpay | Not published | Unknown |
| Global Payments | Not published. Says only that "your processor charges you a fee for each chargeback you receive" | Unknown |
| Nuvei | Per contract, on Schedule A of your merchant application | Unknown |
Two rows need reading carefully.
Authorize.net's $0.00 and Shopify's $15 aren't the whole bill. Authorize.net is a gateway. The merchant account behind it charges its own chargeback fee. That fee isn't on Authorize.net's schedule. Shopify says the same thing: "your bank charges a processing fee." Zero at the gateway isn't zero at the merchant.
PayPal's two fees are exclusive, not additive. The $15 (or $30) dispute fee covers transactions through a PayPal account or Guest Checkout. The $20 chargeback fee covers card transactions that went through neither. No PayPal merchant pays $35 on one dispute.
It isn't on any processor's fee schedule. It traces to one undated, unsourced sentence in Adyen's own marketing article: "Every chargeback comes with a fee, typically between $20 and $100 per dispute." Adyen's actual pricing page publishes no dispute fee at all.
Square has every commercial reason to make rivals look expensive. On its own site it puts the range at "$10 to $25". Even that overshoots. The highest published US figure above is $30.
Ranges like "$0 to $35" and "$15-100" circulate for this. Both are laundered vendor marketing, and neither survives the fee schedules.
Nothing in the table goes past $30. Bigger dispute numbers do exist. The networks and the monitoring programs charge those, not your processor:
- Visa arbitration filing fee: USD 600, charged on top of the disputed amount (Adyen docs, read 2026-08-02)
- Diners and Discover arbitration filing fee: USD 500, also on top of the disputed amount (Adyen docs, read 2026-08-02)
- Up to $500 from the networks for contesting a dispute they treat as near-indisputable, meaning Visa 10.1 and 10.2 and Mastercard 4870 and 4871 (Toast, read 2026-08-02)
- $8 per CNP dispute once VAMP has you
- 30% of the disputed amount on every dispute Stripe's Smart Disputes wins for you (stripe.com/pricing, read 2026-08-02)
Rolling those into a "processor fee" range is exactly how "$15 to $100" got built. Keep them apart and both numbers stay usable.
Example (Braintree, physical goods):
- CB ratio: 0.5%
- CB count: 33 chargebacks
- Fee: $15
- Product lost: $50
- Shipping: $8
- Labor: $12 (30 min at $25/hr)
- Cost per CB: $85
- Total: $2,805/month
The same 33 disputes on PayPal cost $15 each through a PayPal account or Guest Checkout. Card transactions that went through neither cost $20 each. Not $35. The two fees don't stack. Fees run $495 or $660 a month. Total chargeback cost is $2,805 or $2,970.
Cross PayPal's high-volume line and the picture changes. Hit a 1.5% dispute ratio with 100+ sales in the prior three months and the fee doubles to $30. The win exemption goes away too. Those 33 disputes then cost $990 a month, every one of them, including the ones you win.
On Helcim, if you win two thirds of them, the fee line drops to 11 x $15 = $165 instead of $495. On Square it's $0.
Step 3: Fraud Prevention Tools
| Tool Category | Your Cost | When You Need It |
|---|---|---|
| Processor built-in | $0-100 | Under $100K/month: sufficient |
| Dispute alerts | $200-1,000 | Over $100K/month: must-have |
| Fraud detection | $500-5,000 | Over $500K or CB >0.7%: needed |
| Manual review | $1,000-3,000 | Over $1M/month: consider |
| Analytics | $0-500 | Nice-to-have at any scale |
Your tool costs: $______ /month
Of the fraud platforms checked on 2026-08-02, exactly one publishes real numbers. SEON lists Starter at $699/month for 2,500 fraud checks, ten users and fifty custom rules. Premium is quote-only. That's about 28 cents a check. It's the only public anchor you have for judging every quote-only vendor.
Signifyd publishes its pricing model but no numbers. It "charges a percentage of the order total when an order is approved," with "no charge when an order is declined due to fraud" (source). Riskified, Forter, Sardine, Sift, Kount and Accertify publish neither a model nor a rate. Treat every number in the table above as a placeholder until you've got a written quote.
Example ($500K/month):
- Stripe Radar Lite: $0, included with Stripe Payments. Radar Standard, Plus and Pro are paid subscriptions with an included screen allowance (source). US tier prices not verified on 2026-08-02
- Dispute alerts (Verifi, Ethoca): $400, quoted. Neither provider publishes alert pricing, so get your own quote
- Total: $400/month
Step 4: Labor Costs
| Task | Hours/Month | Rate | Cost |
|---|---|---|---|
| Chargeback responses | CB count × 0.5 hrs | $__/hr | $____ |
| Fraud review | Flagged orders × 0.25 hrs | $__/hr | $____ |
| Reconciliation | 4-8 hrs | $__/hr | $____ |
| Processor management | 2-4 hrs | $__/hr | $____ |
| Reporting/analysis | 2-4 hrs | $__/hr | $____ |
Total labor: $______ /month
Example ($500K/month, 0.5% CB ratio):
- 33 chargebacks × 0.5 hrs × $50/hr = $825
- 100 fraud reviews × 0.25 hrs × $50/hr = $1,250
- Reconciliation: 6 hrs × $50 = $300
- Management: 3 hrs × $50 = $150
- Total: $2,525/month
Step 5: Reserves and Working Capital
| Reserve Type | Calculation | Your Amount |
|---|---|---|
| Rolling reserve | Volume × reserve % | $______ locked |
| Fixed reserve | Flat amount | $______ locked |
| Working capital cost | Locked funds × interest rate / 12 | $______ /month |
Example:
- $500K/month × 10% rolling reserve = $50K locked
- Interest cost: $50K × 8% annual / 12 = $333/month
Step 6: Settlement Delay Impact
| Factor | Calculation |
|---|---|
| Average funds in flight | Daily volume × settlement days |
| Working capital need | Above × opportunity cost rate |
Example:
- Daily volume: $16,667 ($500K / 30 days)
- Settlement: 2 days
- Funds in flight: $33,334 average
- Opportunity cost: 8% annual
- Cost: $222/month (interest on delayed funds)
Your Total Cost Calculation
| Cost Component | Amount | % of Volume |
|---|---|---|
| Processing fees | $______ | ___% |
| Chargeback costs | $______ | ___% |
| Fraud/dispute tools | $______ | ___% |
| Labor | $______ | ___% |
| Working capital cost | $______ | ___% |
| TOTAL MONTHLY COST | $______ | ____% |
| Reserve locked up | $______ | N/A |
Worked Examples by Business Type
Example 1: $100K/Month E-Commerce (Startup)
Assumptions:
- Volume: $100K/month
- AOV: $60, so 1,667 transactions
- CB ratio: 0.6%, so 10 disputes
- Processor: Braintree at 2.89% + $0.29 (published, verified 2026-08-02). Braintree doesn't publish a monthly fee, so ask
- No paid fraud tools (under $100K)
| Cost Component | Calculation | Amount |
|---|---|---|
| Processing fees | $2,890 + (1,667 × $0.29) | $3,373 |
| Chargebacks | 10 × $85 | $850 |
| Tools | Built-in filters only | $0 |
| Labor | 10 hrs × $50 | $500 |
| Working capital | $3.3K locked × 8% / 12 | $22 |
| TOTAL | $4,745 | |
| Effective rate | 4.75% |
Budget: $4,800/month + $10K reserve locked
Check that chargeback line against your own ratio. At 1,667 transactions, 0.6% is 10 disputes.
Example 2: $500K/Month E-Commerce (Growing)
Assumptions:
- Volume: $500K/month
- AOV: $75, so 6,667 transactions
- CB ratio: 0.5%, so 33 disputes
- Processor: Braintree at 2.89% + $0.29, $15 per dispute
- Dispute alerts enabled
| Cost Component | Calculation | Amount |
|---|---|---|
| Processing fees | $14,450 + (6,667 × $0.29) | $16,383 |
| Chargebacks | 33 × $85 | $2,805 |
| Tools | Built-in fraud filters + alerts | $400 |
| Labor | 25 hrs × $50 | $1,250 |
| Reserve | $50K × 8% / 12 | $333 |
| Working capital | $33K × 8% / 12 | $222 |
| TOTAL | $21,393 | |
| Effective rate | 4.28% |
Budget: $21.4K/month + $50K reserve locked
Same business on PayPal Checkout (3.49% + $0.49, $15 dispute fee on wallet and Guest Checkout traffic). Processing is $17,450 + $3,267 = $20,717. Chargebacks are 33 × $85 = $2,805. Total $25,727, an effective 5.15%. That's most of a point of revenue for taking the same orders through a different button. Roughly $52,000 a year. The gap is the card rate, not the dispute fee.
Example 3: $1M/Month E-Commerce (Scaled)
Assumptions:
- Volume: $1M/month
- AOV: $100, so 10,000 transactions
- CB ratio: 0.4%, so 40 disputes
- Processor: assumed negotiated rate of 2.7% + $0.30. Nobody publishes negotiated pricing. It's a planning assumption, not a verified figure. At this volume you negotiate. Model your own quote
- Full tool stack
| Cost Component | Calculation | Amount |
|---|---|---|
| Processing fees | $27,000 + (10,000 × $0.30) | $30,000 |
| Chargebacks | 40 × $90 | $3,600 |
| Tools | Fraud + alerts + analytics | $3,000 |
| Labor | Full-time ops person | $6,000 |
| Reserve | $100K × 8% / 12 | $667 |
| Working capital | $67K × 8% / 12 | $445 |
| TOTAL | $43,712 | |
| Effective rate | 4.37% |
Budget: $44K/month + $100K reserve locked + $72K/year salary
At this volume, price Helcim's published bands too. Exactly $1M a month sits on the boundary between the $500K-$1M online band (interchange + 0.25% + 15c) and the $1M-$5M band (interchange + 0.15% + 15c). Take the more expensive of the two as your base case. Then ask Helcim which row applies.
Take the $500K-$1M band and the blended online pass-through of 1.50% + $0.172 (how that's derived). Pass-through is $15,000 + $1,720 = $16,720. Helcim's markup is $2,500 + $1,500 = $4,000. Processing lands at $20,720, an effective 2.07%. That's $9,280 a month under the assumed negotiated flat rate, with no monthly fee and $0 on disputes you win. On the $1M-$5M band the markup drops to $1,500 + $1,500 = $3,000. Processing lands at $19,720, an effective 1.97%.
Hold that loosely, for two reasons. The $30,000 flat rate it's compared against is assumed, not published. And $1,600 of the $16,720 pass-through is network assessments at 0.14% + $0.02. Neither network publishes that figure. This site carries it as unverified. Pull your own statement before you act on the gap. One more thing: Helcim publishes openly up to $5M a month, so nothing here needs a quote. Custom pricing starts above $5M, not above $1M.
Example 4: $250K/Month Card-Present Retail
Assumptions:
- Volume: $250K/month
- AOV: $45, so 5,556 transactions
- CB ratio: 0.3% (lower for CP), so 17 disputes
- Processor: Square Free plan at 2.6% + 15c (published, verified 2026-08-02)
- Minimal tools
| Cost Component | Calculation | Amount |
|---|---|---|
| Processing fees | $6,500 + (5,556 × $0.15) | $7,333 |
| Chargebacks | 17 × $40 (product + labour only) | $680 |
| Tools | Square built-ins | $0 |
| Labor | 8 hrs × $50 | $400 |
| Reserve | $25K × 8% / 12 | $167 |
| TOTAL | $8,580 | |
| Effective rate | 3.43% |
Budget: $8,600/month + $25K reserve locked
Two things about this example. The fixed fee is 15c, not the 10c a lot of comparison content carries. At this transaction count that's $278 a month. And the chargeback line carries no fee, because Square says outright that it charges none: "There are no fees for dispute management services for chargebacks" (Square Support, read 2026-08-02). Square's Payment Terms still reserve the right to recover associated fees. So that zero is a published policy, not a contractual guarantee.
One more thing about Square. It publishes no volume floor, but it does publish an upward threshold: "If you process over $250,000 per year, talk to our team about custom pricing." This shop does $250,000 a month. It's twelve times past that line, and the conversation is overdue. Square also publishes Plus at 2.5% + 15c and Premium at 2.4% + 15c in person. On this volume those come to $7,083 and $6,833, against the Free plan's $7,333. The monthly subscription cost of those plans wasn't part of the 2026-08-02 check. Get it before you call the lower rate a saving.
Same shop on Helcim. The band matters here too. Interchange + 0.40% + 8c is Helcim's $0-$50K entry tier. A shop doing $250,000 a month sits in the published $100K-$500K card-present band at interchange + 0.25% + 7c (published, verified 2026-08-02).
| Line | Calculation | Amount |
|---|---|---|
| Helcim percentage markup | $250,000 × 0.25% | $625 |
| Helcim per-transaction markup | 5,556 × $0.07 | $389 |
| Helcim markup total | $1,014 | |
| Pass-through at 1.03% + $0.178 | $2,575 + $989 | $3,564 |
| Processing | $4,578 |
Against Square's $7,333 that's $2,755 a month, or about $33,100 a year, for the same sales. Two caveats. The pass-through line is a blended assumption for a card-present mix, not your statement. And $461 of it is the unverified network assessment component (method and sources). Helcim's markup is the only part of that table you can trust without a statement, because Helcim publishes it. The gap also turns on ticket size, not just volume. In the $100K-$500K band, Helcim overtakes Square's Free plan above a $7.42 ticket. In Helcim's entry band the crossover is $9.23. A $45 average ticket clears both. A $6 coffee shop lands on the other side. See the card-mix test.
Hidden Costs Breakdown
The Fee Is the Smallest Part of a Chargeback
$15 is the right number for most processors. It's also the cheapest line in the list.
| Cost Component | Typical Amount |
|---|---|
| Chargeback fee | $0 to $30, see the verified table above |
| Lost product | $30-80 (if physical goods) |
| Shipping cost | $5-15 (if applicable) |
| Labor to respond | $10-30 (30-60 min) |
| Ratio impact | $5-20 (risk of monitoring program) |
| Total per chargeback | $50-185 |
For digital goods on Braintree: $15 fee + $10 labor = $25 minimum For physical goods on Braintree: $15 fee + $50 product + $10 shipping + $15 labor = $90 typical Same physical order on PayPal: $15 in fees + $50 + $10 + $15 = $90, or $95 if it's a card transaction at $20 Same physical order on PayPal, high-volume tier: $30 in fees + $50 + $10 + $15 = $105, and you pay it even when you win Same physical order on Helcim, dispute won: $0 in fees + $15 labor = $15, and you keep the sale Same physical order on Square: $0 in fees + $50 + $10 + $15 = $75
The Stripe case is worth its own line. Stripe charges $15 to receive a dispute and $15 more to counter it. The received fee never comes back. The countered fee comes back only on an outright win. On a partial win you get neither. So fight and partly win, and you're out $30 either way (source, verified 2026-08-02). Model that before you fight small disputes on Stripe.
Reserve Working Capital Cost
$50K locked in rolling reserve at 8% cost of capital:
- Annual cost: $50K × 8% = $4,000
- Monthly cost: $333
At 10% rolling reserve:
- $100K/month volume = $10K locked
- $500K/month volume = $50K locked
- $1M/month volume = $100K locked
That's real money. It can't buy inventory, payroll or growth.
Budget Planning Template
Monthly Operating Budget
For a $500K/month business, budget:
| Category | Amount | Notes |
|---|---|---|
| Processing fees | $16,400 | 3.28% effective at 2.89% + $0.29, $75 ticket |
| Chargeback costs | $2,000-3,500 | Depends on CB ratio and which processor you're on |
| Tools | $400-1,000 | Dispute alerts minimum |
| Labor | $1,000-2,500 | Part-time or contract |
| Working capital | $300-600 | Reserve + settlement |
| TOTAL | $20,100-$24,000 | 4.0-4.8% of volume |
One-Time Setup Costs
| Item | Cost | When |
|---|---|---|
| Processor integration | $2,000-10,000 | Initial setup |
| Terminal hardware | $0-2,000 | If card-present |
| Fraud tool setup | $500-2,000 | One-time |
| Legal review | $1,000-5,000 | Contracts, terms |
Reserve/Locked Capital
| Type | Amount | Duration |
|---|---|---|
| Initial reserve | $5K-50K | First 90 days |
| Rolling reserve | 10-30% of volume | Ongoing |
| Chargeback reserve | Variable | If high ratio |
Total locked: $______ (plan for this in working capital)
Cost by Business Model
Subscription SaaS
| Monthly Volume | Total Cost | Effective Rate | Reserve |
|---|---|---|---|
| $50K | $2,500-3,000 | 5.0-6.0% | $5K |
| $250K | $11,000-14,000 | 4.4-5.6% | $25K |
| $1M | $42,000-50,000 | 4.2-5.0% | $100K |
Higher costs because:
- Card-on-file rates are higher. Square bills stored cards at 3.5% + 15c, the same as keyed entry. A normal online sale is 2.9% + 30c (source, verified 2026-08-02)
- More dunning labor
- Subscription dispute risk
Physical Goods E-Commerce
| Monthly Volume | Total Cost | Effective Rate | Reserve |
|---|---|---|---|
| $100K | $4,500-5,500 | 4.5-5.5% | $10K |
| $500K | $20,000-24,000 | 4.0-4.8% | $50K |
| $2M | $82,000-96,000 | 4.1-4.8% | $200K |
Higher costs because:
- Physical chargebacks lose product + shipping
- Returns management
- More fraud risk (shipping fraud)
Digital Goods / Downloads
| Monthly Volume | Total Cost | Effective Rate | Reserve |
|---|---|---|---|
| $100K | $4,000-4,500 | 4.0-4.5% | $10K |
| $500K | $19,000-22,000 | 3.8-4.4% | $50K |
| $1M | $38,000-45,000 | 3.8-4.5% | $100K |
Lower costs because:
- No product lost on chargebacks
- Lower shipping/logistics
- But fraud risk is higher (need tools)
Card-Present Retail
| Monthly Volume | Total Cost | Effective Rate | Reserve |
|---|---|---|---|
| $100K | $3,200-3,800 | 3.2-3.8% | $10K |
| $500K | $15,000-17,000 | 3.0-3.4% | $25K |
| $1M | $30,000-35,000 | 3.0-3.5% | $50K |
Lower costs because:
- Lower processing fees. Square's Free plan is 2.6% + 15c in person against 3.3% + 30c online. Helcim's card-present markup beats its online markup at every band: 0.40% + 8c against 0.50% + 25c in the entry tier, 0.25% + 7c against 0.35% + 20c at $100K-$500K a month
- Much lower chargeback ratio (0.1-0.3%)
- Less fraud
- Minimal tools needed
Card-present is where interchange-plus pays off soonest. The fixed per-transaction cents are lowest there. Shopify Payments charges no per-transaction cents at all in person, on any plan. Stax charges 8c. Helcim starts at 8c and steps down to 7c and then 6c as volume rises. Square charges 15c.
Test to Run
Week 1: Gather data
- Pull 3 months of processor statements
- Count chargebacks, calculate average cost (fee + product + shipping)
- List all tools you pay for (fraud, disputes, analytics)
- Estimate hours spent on payment ops
Week 2: Calculate 4. Processing fees: $_______ 5. Chargeback costs: $_______ 6. Tools: $_______ 7. Labor: $_______ (hours × rate) 8. Working capital: $_______ 9. Total: $_______
Week 3: Compare 10. Effective rate: Total / Volume = ____% 11. Compare to 3% baseline 12. Difference = hidden costs
Success criteria: You've got your true all-in cost. Budget from that, not from a guess.
Scale Callout
Under $100K/month:
- Budget 4.5-5.5% all-in
- Processing = 70% of costs
- Chargebacks = 20-25%
- Tools = minimal
- Reserve = $5-15K locked
$100K-$500K/month:
- Budget 4.0-5.0% all-in
- Processing = 65-70% of costs
- Chargebacks = 15-20%
- Tools = 10-15%
- Reserve = $25-75K locked
$500K-$1M/month:
- Budget 3.8-4.5% all-in
- Processing = 70-75% of costs
- Chargebacks = 10-15%
- Tools = 8-12%
- Labor = dedicated person
- Reserve = $75-150K locked
Over $1M/month:
- Budget 3.5-4.5% all-in
- Processing = 70-80% of costs
- Chargebacks = 8-12%
- Tools = 5-10%
- Labor = full-time team
- Reserve = $150K+ locked
Where This Breaks
-
High chargeback businesses: If CB ratio >1%, double the chargeback cost estimates. You'll spend as much on chargebacks as processing fees.
-
High-risk industries: Reserves can be 30-50% of volume, not 10%. Working capital needs explode.
-
Low-margin businesses: Under a 15% margin, a 4.5% all-in payment cost is half your profit. The business may not be viable.
-
Seasonal businesses: Reserves are set on peak volume. You can have $200K locked up nine months of the year while doing $50K a month.
-
Multi-processor strategies: Running two processors doubles some costs (reconciliation, tool integrations, labor).
Next Steps
Planning a new business?
- Use this worksheet to calculate total payment costs
- Add to your business model viability analysis
- Ensure unit economics work AFTER payment costs
Existing business, surprised by costs?
- Calculate your true all-in cost
- Identify biggest cost component
- Optimize:
- High processing fees → Negotiate rates
- High chargeback costs → Reduce chargebacks
- High tool costs → Audit tool ROI
Trying to reduce costs?
- Switch processors only if saving 0.5%+ at scale
- Reduce chargebacks - bigger ROI than fee negotiation
- Optimize auth rates - declining orders is hidden cost
See Also
- Business Model Viability - Is your business model viable with payment costs?
- Processor Fees Guide - Understanding fee structures
- Holds and Reserves - Cash flow impact
- Chargeback Metrics - True cost of chargebacks
- Tool Stack by Tier - What tools to buy when
- Processor Comparison - Finding lowest cost
- Cost Model Assumptions - The blended interchange figure behind every comparison here, and how it was derived
- Reading Statements - Understanding actual costs