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Merchant services: what is a discount rate?

Each time a merchant processes a credit card transaction, two immediate charges apply: the first and most visible is the discount rate.

The discount rate is a percentage of the sale subtracted (discounted) from the total order amount.

This discount rate can vary from 1.5% to over 6% depending on the type of business (retail, mail order, internet, high-risk, etc) and the processor the merchant has selected to use.

EXAMPLES:

You (the merchant) process a $49 sale
Your discount rate is 1.55%
$0.76 is discounted from the sale leaving you $48.24

You (the merchant) process a $100 sale
Your discount rate is 2.29%
$2.29 is discounted from the sale leaving you $97.71

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