Why simply adding the percentage falls short
To recover a 2.9% fee, it seems natural to add 2.9% to your invoice. But the processor charges its percentage on the larger amount, so you would still fall short. The correct method is to divide by (1 − fee rate), which is called grossing up. This calculator handles that for you.
A fixed per-transaction fee matters most on small sales. On a $10 purchase, a $0.30 fixed fee alone is 3% of the sale, so the effective rate can be far above the advertised one. Look at the effective rate at your typical sale size when comparing providers.
The formulas
Fee on a sale
Fee = Amount × Percentage ÷ 100 + Fixed fee
Amount to charge
Charge = (Amount + Fixed fee) ÷ (1 − Percentage ÷ 100)
Worked example
A freelancer sends a $1,000 invoice paid by card. In this illustration, the provider charges 2.9% plus $0.30 per transaction.
- Fee: $1,000 × 2.9% + $0.30 = $29.30, an effective rate of 2.93%.
- Net received: $970.70.
- To receive the full $1,000: ($1,000 + $0.30) ÷ 0.971 = $1,030.18.
- The fee on that charge is $30.18.
Other ways to handle fees
- Build fees into your prices. It is often the simplest and least restricted choice. The selling price calculator can include them in per-unit costs.
- Offer lower-cost payment methods such as bank transfer for large invoices.
- Check the rules before surcharging. Surcharge rules vary by card network, provider and jurisdiction, and may require disclosure.
- Read your full statement. Monthly, chargeback and currency conversion fees are not included in this calculation.
Frequently asked questions
Can I pass card fees on to my customer?
Sometimes, but not always. Card network rules, processor agreements and local laws can limit or prohibit surcharges, and these change. Check with your provider and a legal adviser. Including the cost in your prices avoids most of these questions.
Do I get the fee back when I refund a customer?
It depends on your provider. Many do not return some or all of the original fee on a refund, so check their current policy.
Where do I find my rate?
Your provider's pricing page or merchant statement. Rates can differ for in-person, online, international and premium cards, so use the rate for the payment type in question.
How much do fees really cost across a year?
Multiply your average fee rate by annual card sales. Then add that figure to the business expense calculator to see it in the context of your other costs.