Payment gateway fees explained: what you pay and how to pay less

We earn a commission if you buy through some links on this page, at no extra cost to you. It never affects the order. How we make money.

Payment gateway fees are what a business pays each time a customer pays online: usually a percentage of the transaction, sometimes plus a fixed amount, with extra charges for international cards, currency conversion, refunds and disputes. Small differences in the fee structure can mean large differences in cost depending on your order sizes and customers. This guide explains every part of gateway pricing, shows worked examples with real published rates, and gives a method to compare providers and reduce what you pay.

Where the money goes

When a customer pays by card, several parties take a share. The customer's bank (the issuer) receives interchange, the card network (Visa, Mastercard, local schemes) charges scheme fees, and the merchant's acquiring bank and the gateway add their own markup. Most small-business gateways bundle all of this into one simple price. Larger merchants sometimes negotiate interchange-plus pricing, where they pay the actual interchange and scheme fees plus a fixed markup.

For bank transfers, mobile money and real-time payment systems, the cost structure is different, often lower, which is why gateways price methods differently.

Percentage fees

Most gateways charge a percentage of each transaction. Examples from providers' own pages, as we last checked them: Razorpay lists 2% for most domestic methods in India; Flutterwave lists 2% for local payments in Nigeria; Paystack lists 1.95% for cards and mobile money in Ghana. Percentage fees scale with order size, which is simple for small orders but expensive on large ones.

Fixed fees

Many gateways add a fixed amount per transaction. Stripe in the UK lists 1.5% plus 20p for standard UK cards; Paystack lists 1.5% plus NGN 100 in Nigeria and 2.9% plus R1 in South Africa. Fixed fees hurt most on small transactions: a 20p fixed fee on a £2 sale adds ten percentage points of cost, while on a £200 sale it is negligible. Some gateways waive the fixed fee below a threshold, as Paystack does for transactions under NGN 2,500 in Nigeria and under R10 in South Africa.

Fee caps

A few gateways cap the fee per transaction. Paystack caps local Nigerian fees at NGN 2,000, so very large payments cost much less than the headline percentage suggests. Stripe India caps domestic debit card fees at ₹200 on its listed 0.4% rate. Caps make a big difference for high-value sales, so check for them when you sell expensive items or large B2B orders.

International card fees

Cards issued abroad usually cost more. Stripe UK lists 3.15% plus 20p for international cards compared with 1.5% plus 20p for standard UK cards; Paystack lists 3.9% plus NGN 100 for international payments in Nigeria; Stripe India lists 3%. The higher fee reflects higher interchange, cross-border scheme fees and fraud risk. If many of your customers are abroad, compare international rates carefully, since they may outweigh domestic rates in your total bill.

Currency conversion fees

When a customer pays in one currency and you are settled in another, a conversion fee or margin applies. Stripe lists an extra 2% in the UK and in India when conversion is needed, and an extra 1% in the UAE. Some gateways build the margin into the exchange rate instead. Pricing in your customers' currency and holding balances in that currency can reduce conversions; see what a multi-currency business account is and how to cut international payment fees.

Fees by payment method

Gateways often charge different rates by method. Paystack in South Africa lists 2% for Capitec Pay and Ozow EFT compared with 2.9% plus R1 for cards; Stripe in Malaysia lists FPX online banking at 3% plus RM1. Bank transfers, UPI and mobile money are often cheaper than cards in their home markets, while premium cards such as corporate or charge cards can cost more. Guiding customers towards cheaper methods for large orders, without removing card options, can lower your average fee.

Taxes on fees

In many countries, VAT or GST is charged on gateway fees. Flutterwave's Nigerian page states 7.5% VAT on fees; Paystack's South African fees exclude VAT; Razorpay and Indian gateways add GST. If you are registered for VAT or GST, you can usually reclaim it, but it still affects cash flow and should be included when comparing providers that quote prices differently.

Other fees to look for

• Monthly or setup fees, which many modern gateways have dropped but some still charge.
• Payout or settlement fees for transferring funds to your bank, or for instant payouts.
• Refund fees, or keeping the original fee when you refund.
• Chargeback or dispute fees, charged when a customer disputes a payment, often whether or not you win.
• Minimum monthly fees on some merchant accounts.
• Add-ons such as advanced fraud tools, recurring billing or invoicing.

Worked example: small orders

A shop with average orders of £10 pays, on Stripe's listed UK standard card rate, 1.5% plus 20p: 15p plus 20p, 35p, or 3.5% of the order. On a gateway charging a flat 2.5% with no fixed fee, the fee would be 25p. For businesses with many small orders, a lower fixed fee matters more than a lower percentage.

Worked example: large orders

A Nigerian business with average orders of NGN 400,000 pays, on Paystack's listed local rate, 1.5% plus NGN 100 capped at NGN 2,000, so NGN 2,000. On Flutterwave's listed 2% rate, the fee would be NGN 8,000 plus VAT on the fee. For large orders, caps and low percentages matter most. Use our country calculators to run these numbers for your own orders: Nigeria, Ghana, South Africa, India, UK, Malaysia and UAE.

Flat-rate vs interchange-plus pricing

Flat-rate or blended pricing charges the same rate for most cards, which is simple and predictable. Interchange-plus pricing passes through the actual interchange and scheme fees, which vary by card type, plus a fixed markup. It can be cheaper for businesses with many low-interchange cards, such as domestic debit cards, and with high volume, but statements are more complex. Most small businesses start on flat-rate pricing and consider interchange-plus once volume grows enough to negotiate.

How to compare gateways properly

1. Export three to six months of transactions, or estimate your order mix.
2. Group by size, payment method and domestic or international.
3. Apply each gateway's published rates, including fixed fees, caps and taxes.
4. Add monthly, payout, refund and chargeback fees based on your history.
5. Compare total annual cost, then weigh features, settlement time and support.

Compare providers in the payment gateways ranking, and if you send money abroad as well as receive it, the international payment calculator helps.

Ways to pay less

• Encourage cheaper methods for large orders, such as bank transfer or local real-time payments.
• Price in customers' currencies and hold balances to reduce conversion fees.
• Reduce disputes with clear policies and delivery tracking, avoiding chargeback fees.
• Negotiate once your volume is meaningful; many gateways offer custom pricing.
• Review annually, since new providers and pricing changes appear often. Our software price tracker notes changes we see.
• Avoid unnecessary instant payouts if they carry fees.

Should you pass fees to customers?

Some businesses add a surcharge for card payments. Rules differ by country: surcharging consumer card payments is banned in the UK and EU, allowed with limits in some other markets, and may be restricted by card network and gateway terms. Even where allowed, surcharges can reduce conversions. Most businesses build payment costs into their prices instead. Our profit margin calculator helps you check that prices cover fees.

Fees and your pricing

Payment fees are a cost of sale, like packaging or delivery. Include them in your margin calculations, especially for low-margin products. A 3% fee on a product with a 15% margin takes one fifth of your profit. If fees are significant, review your pricing, minimum order values and preferred payment methods. See margin vs markup for how to set prices that cover costs.

Country guides

Our country guides explain local payment methods and providers in detail: Nigeria, Kenya, Ghana, South Africa and India.

Common mistakes

• Comparing headline percentages and ignoring fixed fees and caps.
• Forgetting international and conversion fees.
• Leaving taxes on fees out of comparisons.
• Ignoring dispute fees until chargebacks pile up.
• Never renegotiating as volume grows.
• Not including payment fees in product margins.

Example: one business, three gateways

Imagine an online store with 1,000 orders a month: 600 small orders, 350 medium orders and 50 large orders, with 10% of customers paying from abroad. Gateway A charges a low percentage plus a fixed fee; Gateway B charges a higher flat percentage with no fixed fee; Gateway C charges a percentage with a cap per transaction.

Gateway B may win on the 600 small orders, because there is no fixed fee. Gateway C may win on the 50 large orders, because of the cap. Gateway A may win on medium orders. International fees could change the result again. The only way to know is to apply each gateway's published rates to your real order mix, as described above. The answer is often different from what headline rates suggest.

Hidden costs beyond fees

Not every cost appears on the pricing page. Slow settlement ties up cash. Low payment success rates lose sales. Weak fraud tools increase chargebacks. Poor support costs time when something goes wrong. Integration effort costs developer time. When comparing gateways, weigh these alongside fees. A gateway that costs slightly more but has better success rates for your customers' payment methods can earn you more overall.

Fees for marketplaces and platforms

If you sell through a marketplace or platform, such as an online store builder with its own payments, the platform may charge transaction fees in addition to, or instead of, gateway fees. Some store builders charge extra if you use a third-party gateway instead of their own. Check the full fee picture before choosing a platform; see Shopify vs Wix and the cost to start an online store.

Fees on payouts and receiving money

Receiving money from clients abroad by bank transfer can carry its own costs: sending bank fees, intermediary bank fees, receiving bank fees and exchange rate margins. International payment accounts often reduce these. For freelancers and agencies, the cost of receiving payments can matter more than gateway fees. See how to get paid by international clients and how to receive USD payments in Africa.

Reading your gateway statement

Each month, look at your gateway statement for total volume, total fees, effective rate (fees divided by volume), fees by payment method and card type, refunds, chargebacks and any one-off charges. A rising effective rate may mean more international customers, more premium cards or new fees. Spotting changes early lets you act, whether by adjusting your checkout, renegotiating or switching.

Questions