If your average ticket is under $15, your real processing cost is much higher than the rate your processor quoted you. Here's why.
The Math Behind Small-Ticket Processing
Most processing models charge a percentage plus a per-transaction fee (e.g., 2.6% + $0.10). On a $50 purchase, the $0.10 is negligible. On a $5 purchase, it's massive.
| Transaction Size | Fee (2.6% + $0.10) | Effective Rate |
|---|---|---|
| $3.00 | $0.18 | **5.9%** |
| $5.00 | $0.23 | **4.6%** |
| $7.00 | $0.28 | **4.0%** |
| $10.00 | $0.36 | **3.6%** |
| $15.00 | $0.49 | **3.3%** |
| $25.00 | $0.75 | **3.0%** |
| $50.00 | $1.40 | **2.8%** |
Your processor quoted you 2.6%. On a $5 transaction, you're actually paying 4.6%. On a $3 transaction, 5.9%.
Businesses Most Affected
- Coffee shops (avg ticket $5–$7): effective rate 3.8%–4.6%
- Convenience stores (avg ticket $7–$12): effective rate 3.2%–4.0%
- Quick-service restaurants (avg ticket $8–$15): effective rate 3.1%–3.9%
- Laundromats (avg ticket $4–$8): effective rate 3.5%–5.1%
- Bakeries (avg ticket $4–$10): effective rate 3.4%–4.9%
Network Offset Pricing Solves the Small-Ticket Problem
Network Offset Pricing displays a cash price and a card price. The card price includes an offset that covers the entire processing cost — percentage AND per-transaction fee. The merchant's effective rate on every transaction, regardless of size, approaches zero.
The math doesn't change based on ticket size. A $3 cookie and a $50 cake both cost you approximately nothing to process.
Robert T. writes about the financial impact of payment processing on small business profitability. With an MBA and experience in small business lending, he quantifies how processing fee structures affect margins, tax deductions, and bottom-line performance.
$10,000+
in potential annual savings with optimized payment processing.
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The first step to reducing your processing costs is understanding exactly what you are paying today. Request a free statement analysis and we will show you a side-by-side comparison of your current costs versus what you could save with Network Offset Pricing.