How do I calculate my effective rate?
Take the total of every fee on the statement, including per-transaction fees, monthly fees, PCI fees, batch fees and chargeback fees. Divide that by your total processing volume for the same month, then multiply by 100.
Do it for three consecutive months. A single month carrying an unusual chargeback or an annual fee will distort the picture.
Why is my effective rate higher than my quoted rate?
A quoted rate normally describes one card type under ideal conditions, usually a swiped consumer debit card. Your real mix includes rewards cards, corporate cards and keyed or online transactions, all of which carry higher interchange. Flat monthly fees also spread across your volume, so a business with lower volume carries a higher effective rate from the same fee schedule.
What counts as a normal effective rate?
It depends almost entirely on how you take payments and what your customers pay with. A card-present retail business with a low average ticket sits in a very different range from a subscription business billing corporate cards online. Comparing your rate against another business's rate is less useful than comparing your markup against what you were told it would be.
What should I do once I know my effective rate?
Separate it into its parts. Interchange and assessments are fixed for everyone. What remains is your processor's markup, and that is the only figure a conversation can move. Ask for your markup as a specific number rather than accepting a comparison against your current total.