Transaction Fee
Definition
A transaction fee is the per-transaction charge a payment processor adds on top of the percentage rate when a customer pays with a credit or debit card.
What Transaction Fee Means for Your Business
What it means
When a customer runs a $500 card payment, the processor might charge 2.6% plus $0.30 per transaction. The $0.30 is the transaction fee. It is separate from the percentage and quietly adds up on small tickets.
Why it matters
Transaction fees hit small-ticket businesses harder than big-ticket ones. A $25 service fee paying $0.30 per transaction is giving up 1.2% before the percentage rate even applies.
How contractors use it
Shops doing many small transactions negotiate transaction fees down or bundle small invoices into monthly statements. Shops doing fewer, larger transactions ignore transaction fees and focus on percentage rate.
Real-World Example
An appliance repair shop running 2,800 card transactions per year at $0.30 per transaction paid $840 per year in transaction fees alone. Negotiating to $0.15 saved $420 per year on top of percentage savings.
Related Terms
Interchange Fee
An interchange fee is the portion of a credit card processing fee that the merchant pays to the card-issuing bank on every transaction.
Merchant Account
A merchant account is a specialized bank account that allows a business to accept credit and debit card payments from customers.
Chargeback
A chargeback is a forced reversal of a credit card payment initiated by the customer's bank, usually because the customer disputes the charge.
Customer Financing
Customer financing offers homeowners a loan or payment plan to cover a large repair or replacement, turning a single big invoice into monthly payments.
Accounts Receivable
Accounts receivable is the total amount of money owed to a business by customers for services already delivered but not yet paid.
Put This Into Practice with Free Software
Kaldr Tech handles transaction fee and everything else you need to run your shop. $0/month, 3.5% + 30¢ per transaction.