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April 22, 2024
by David Goodale

How To Figure Out What Your Discount Rate Actually Is?

(Slightly edited from video transcript for greater readability)

Key Takeaways

Discount Rate
The discount rate is the percentage that you pay for each transaction that you process.
Calculating your discount rate
(Total dollars paid to your credit card processor - Monthly fee ÷ Total dollars processed) * 100 = Discount rate (%)
Total fees paid
- Monthly fee
Total processed
× 100

= Discount rate (%)
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Hello, David here at with a really short, quick but awesome tip for business owners and it's how to figure out what your discount rate is. Stay tuned. We'll dig in in one second.

Discount rates

Discount rates are confusing and I have other content about different pricing models, flat pricing, interchange plus pricing, and qualified and non-qualified pricing. Forget all of it for one moment because to figure out your discount rate, all you need to know is this.

The discount rate is the percentage that you pay for each transaction that you process.

Calculating discount rates

Obtain at your statement for last month. Look at the total dollars that you paid to your credit card processor. Now, subtract away your monthly fee and with what you're left with, divide that number into the total dollars you processed.

(Total dollars paid to your credit card processor - Monthly fee ÷ Total dollars processed) * 100 = Discount rate (%)
Total fees paid
- Monthly fee
Total processed
× 100

= Discount rate (%)

If you had, say a hundred dollars in fees and twenty of it was a monthly fee, you take that away, now you're left with 80, and let's say that you processed $4,000 that month, you divide 80 into 4,000 and you multiply the result by a hundred, it turns it into a percentage.

Total fees paid to your credit card processor = $100
Monthly fee = $20
Total dollars processed = $4000
(100-20 ÷ 4000) × 100 = 2% Discount rate
100 - 20 4000 × 100
= 2% Discount rate
3DSecure benefits

This is your actual effective discount rate, meaning the average discount rate that you pay for every single transaction that you process per month.

It's great because it shines lights in those dark corners. There's no way to hide from it if your processor is not treating you right. You'll know if you're paying a high rate. It'll be really obvious if you're paying a pretty good rate, say two percentage points or something. That's a pretty good deal and this is a way for you to know that you're getting a good deal. I'm not going to go on any further.


This was a super quick video. If you have any other questions though, reach out to us at I would be happy to try to tackle them here on the channel. Thanks for watching. Have a nice day. Bye now.

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How much are credit card processing fees in Canada? Use our interchange chart and fee calculator to determine your exact processing costs.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

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