POS and payment processing cost comparison

What you will enter

• Monthly card or processed sales ($): Sales that will go through the processor. Exclude cash.
• Monthly processed transactions (transactions): Number of card or processed payments in a month.
• Comparison months (months): How long to compare, typically the contract term.
• Offer A: effective percentage fee (%): The effective rate for your card mix, not the advertised 'from' rate. Enter 2.6 for 2.6%.
• Offer A: fee per transaction ($): The fixed amount per payment, e.g. 0.10.
• Offer A: software per month ($): POS subscription and any required add-ons.
• Offer A: other monthly fees ($): Statement, PCI, gateway or terminal rental fees. Enter 0 if none.
• Offer A: hardware and setup ($): Terminals, printers, installation and onboarding paid once.
• Offer A: exit cost within the period ($): Early-termination or equipment buy-out costs you expect to pay in the period. Enter 0 if none.
• Offer B: effective percentage fee (%): The effective rate for your card mix, not the advertised 'from' rate. Enter 2.6 for 2.6%.
• Offer B: fee per transaction ($): The fixed amount per payment, e.g. 0.10.
• Offer B: software per month ($): POS subscription and any required add-ons.
• Offer B: other monthly fees ($): Statement, PCI, gateway or terminal rental fees. Enter 0 if none.
• Offer B: hardware and setup ($): Terminals, printers, installation and onboarding paid once.
• Offer B: exit cost within the period ($): Early-termination or equipment buy-out costs you expect to pay in the period. Enter 0 if none.

The formula

Monthly cost = processed sales × percentage fee + transactions × per-transaction fee + software + other monthly fees. Cost over the period = monthly cost × months + hardware and setup + exit cost.

A worked example

Fictional example: Offer A charges 2.6% + $0.10 per transaction + $100 software. On $50,000 and 2,500 transactions that is $1,300 + $250 + $100 = $1,650 a month. Offer B charges 2.3% + $0.20 + $150: $1,150 + $500 + $150 = $1,800. Over 24 months with $1,000 of hardware each, A costs $40,600 and B $44,200. The lower headline percentage is the dearer offer at this volume.

How to use the result

Compare on the same volume and card mix

Ask each provider to quote an effective rate for your expected mix, or take it from a comparable statement. A 'from 1.9%' headline is not a rate you will pay on every card.

Fixed fees change the winner as volume changes

Per-transaction fees hurt low-ticket concepts; software fees hurt low volume. Run the comparison at half and double your forecast before signing a term.

Read the exit terms before the fee schedule

Termination fees, equipment leases and auto-renewals decide what a mistake costs. Enter the exit cost you would face inside the comparison period.

Questions owners ask

What about interchange-plus pricing?

Enter the effective total you expect (interchange plus the markup) as the percentage fee and the per-item fee separately. Your statement will show the real blended rate after the first month; compare it with the quote.

Do chargebacks and disputes matter here?

They are not modeled. Ask what a dispute costs and how refunds are handled, and test a refund on each system before opening.

Keep working on the decision

• Read: POS, insurance and the services you actually need
• Insurance quote checklist and services setup templates
• See the whole month in the projected P&L
• New to percentages? Start with restaurant math from zero.
• Add this decision to your guided opening plan

Sources and scope

• U.S. Small Business Administration: Plan your business (market research, business plan, startup costs)
• SEC: beginners' guide to financial statements

Planning estimates based on your inputs. Check the assumptions against your actual quotes, recipes and operating records. Not legal, tax or accounting advice.