Reply to post: Re: So where do their numbers come from...

Amazon takes swipe at PayPal, Square with card reader for mobes

Tom 13

Re: So where do their numbers come from...

Somebody runs through their data, runs the cost structures, runs payment structures, and calculates the best way to make money.

For small businesses it tends to be more back of the envelop calculations: I expect my typical purchase to be X. My processing fees are 0/.25/.50 per transaction plus 1/1.5/2/2.5% of the transaction. I expect x% charge backs, so that works out to ... +y% per item in costs.

Back when I first did this for a large east coast (US) fannish convention, we worked it out to about 2.3% per transaction for the vendors we chose. We decided to add a 5% processing fee and pocket the difference (additional equipment was needed beyond the vendor charges and they don't want you advertising their exact fees as that constitutes privileged competitive information). And yes, we assessed the 5% on taxes collected as well because the credit card was going to charge us for processing those taxes too.

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