Transaction Fee

Transaction Fee is a fee charged on a financial transaction, usually by a payment processor, acquiring bank, or other payment process participants, to cover the costs of facilitating the transaction. This fee can cover pay for payment processing infrastructure, network fees, and other operational expenses.

Transaction fees are typically calculated either as a flat per transaction rate or as a percentage of the total purchase amount. The specific fee often depends on factors like the payment method used, whether the transaction is online or in-person, and the pricing agreement between the merchant and payment provider.

For merchants, being aware of transaction fees is important for managing operating costs, setting effective pricing, and optimizing the financials of electronic payments. As these fees can significantly impact margins, understanding fee structures and how to reduce them is key to efficient business operations.