The rate you were quoted and the rate you pay are rarely the same number. Here's how to find the real one.
The calculation
- Add up every processing fee on last month's statement. Not just the discount rate. Include the per-transaction fee on every sale, assessments, monthly minimums, PCI fees, statement fees, batch fees, gateway fees, and any annual fee divided by twelve.
- Find your total card volume for the same month.
- Divide fees by volume. That's your effective rate.
Then do it again, separately, for credit and for debit.
Don't skip the per-transaction line
The per-item fee, usually $0.10 to $0.25, is charged on every sale regardless of size. A restaurant running 2,000 transactions a month pays $2,400 to $6,000 a year on that line alone, and it never appears as a percentage anywhere on the statement.
It also falls unevenly. A quarter on a $6 coffee is over 4% of the ticket on its own, before the discount rate is applied at all. If a meaningful share of your covers are small (takeaway, counter service, coffee, sides), this line is costing you more than your rate suggests.
Why the credit/debit split matters
In Canada especially, blending the two hides the picture. Credit is charged as a percentage of the transaction. Interac debit is typically a small flat fee, often a few cents. A restaurant where a quarter of card volume runs on Interac has a very different cost structure from one that's almost entirely credit, and a blended figure makes both look the same.
A worked example. A restaurant doing $50,000 a month in card volume, split roughly 78% credit and 22% Interac, pays around $11,160 a year on the credit discount rate. Add per-transaction fees, 2,000 transactions a month at $0.10 to $0.25, and that's another $2,400 to $6,000. Call the total somewhere near $15,000. Applying an American 2.9% blended rate to the whole $600,000 would suggest $17,400, which is wrong in both directions: too high on the debit side, and it ignores the per-item line entirely.
What you're entitled to see
Under the Code of Conduct for the Payment Card Industry in Canada, your processor must provide a monthly statement showing the effective merchant discount rate for each card type from each network, the interchange and other rates charged, and the number and volume of transactions by type. You're also entitled to advance notice of new fees or rate increases.
If your statement doesn't give you that breakdown clearly, ask your processor for it. It's not a favour.
What to do with the number
Compare it to what you were told you'd be paying when you signed. Most operators find a gap of 30 to 60 basis points, accumulated through fee additions and rate adjustments over the life of the contract that individually looked too small to chase.
On $600,000 of annual card volume, 40 basis points is $2,400 a year.
Know your number before anything changes.
Send us one recent processing statement and we'll return your true effective rate, broken out for credit and debit, within one business day. No cost, no obligation. If you're already in a good deal, we'll tell you that too.
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