Understanding Payment Processing Fees: Stripe, PayPal, and More
Payment processing fees add up. Learn how to calculate them accurately and factor them into your pricing Strategy.
Every business that accepts online payments loses money to processing fees. Understanding these fees helps you price correctly and maximize profits.
Common Payment Processors
Stripe
- Card fees: 2.9% + $0.30 per transaction
- International: Additional 1%
- ACH: 0.8% (up to $5)
- Wire: $2 (outgoing only)
PayPal
- Standard: 2.9% + $0.30 per transaction
- Micropayments: 5% + $0.05
- International: Additional 1.5%
- eCheck: 1% ($0.99 - $4.99)
Square
- In-person: 2.6% + $0.10
- Online: 2.9% + $0.30
- Keyed in: 3.5% + $0.15
Calculating Processing Fees
Simple Transaction
$100 sale × 2.9% = $2.90
+ $0.30 fixed fee
= $3.20 total fee
Monthly Volume Savings
Many processors offer volume discounts:
- Stripe: 2.9% → 2.5% at $5,000/month
- Square: Custom pricing at high volume
Hidden Fees to Watch
Chargeback Fees
- Stripe: $15 per chargeback
- PayPal: $20 per case
- Many processors: $20-25
Monthly Fees
- Some processors: $0
- Others: $10-30/month
- Premium features often require paid plans
Account Setup
- Most: Free
- Some: One-time $0-250
Refund Fees
- Stripe: No refund fee + keep the $0.30
- PayPal: Refund fee varies by original payment type
Factoring Fees Into Pricing
Option 1: Absorb the Cost
Include processing in your pricing:
Cost × 1.03 = Price (to cover 3% fees)
Option 2: Surcharge Customers
Common with B2B:
- Add 2.9% for credit cards
- Offer 2% discount for ACH/check
Option 3: Build Buffer
Price with built-in margin:
- Add 3-5% to account for fees, returns
B2B Specific Considerations
Invoice Payments
- ACH is often cheaper
- Save 2-3% vs. cards
- Takes 1-5 business days
High-Ticket Sales
- ACH or wire saves significantly
- Flat fee for large amounts
- Example: $10,000 sale = $290 (card) vs $2 (ACH)
Recurring Revenue
- ACH directly from bank
- Lowest processing fees
- Build into subscription pricing
Using the Payment Fee Calculator
Our Payment Fee Calculator helps you:
- Enter your transaction amounts
- Select your processor
- See exact fees for different scenarios
- Calculate savings with different methods
Compare Stripe vs PayPal vs Square to find the best deal.
Reducing Processing Fees
Accept ACH Payments
- Save 2%+ per transaction
- Perfect for B2B invoices
Use Invoicing
- Send payment links
- Payment terms (Net 30)
- Reduces processing costs
Require Security Deposits
- Pre-authorization holds
- Verifies ability to pay
Bundle Services
- Package add-ons
- Higher ticket = proportionally lower fees
Quick Reference
| Processor | Card Fee | Best For | |----------|---------|---------| | Stripe | 2.9% + $0.30 | Most businesses | | PayPal | 2.9% + $0.30 | Consumer sales | | Square | 2.9% + $0.30 | In-person + online | | ACH | 0.8% | High-ticket B2B |
Key Takeaways
- Factor fees into pricing
- Consider ACH for large amounts
- Track total processing costs
- Use volume discounts
With accurate calculations, you can build processing fees into your business model and maintain healthy profit margins.