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Every card sale takes a slice off the till, and by the end of the year it is 3,384.00 currency.

How much do I actually pay in card fees every year, and from what amount is cash cheaper for me?

Your yearly card cost is your monthly card takings times your percentage fee, plus your fixed fee per sale times the number of card sales, plus your monthly terminal cost, all multiplied by 12. Cash only works out cheaper on small sales: below the point where the fixed part of the card fee costs you more than counting, keeping and banking the notes. Above that amount, cards win, because the cost of handling cash grows with the size of the sale.

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What card payments cost you in a year
3,384.00 currency

This is money that leaves the business before you pay for stock, rent or your own time.

Your real cost on every unit taken by card3.13 %This is the true rate you pay, once the monthly charges are shared across your sales, not the rate in the offer.
Below this sale amount, cash is cheaper than card4.17 currencyUnder this amount the fixed part of the card fee bites harder than handling notes; above it, cards cost you less.

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How it is calculated

  1. Take the money you receive by card in a normal month and apply the percentage fee: that is the first slice.
  2. Multiply the fixed fee by the number of card sales in the month: that is the second slice.
  3. Add the monthly cost of the terminal, the software and the account.
  4. Multiply the monthly total by 12 to see the cost for a full year.
  5. Divide the yearly cost by a year of card takings to get your real rate, which is almost always higher than the advertised one.
  6. Spread the monthly charges over your card sales to get the true fixed cost per sale, then divide it by the gap between your cash handling share and your card percentage: that is the amount below which cash is cheaper.

An example

Money taken by card in a normal month: 9,000 currency · Number of card sales in a normal month: 400 sales · Percentage fee your provider charges on each sale: 1.80 % · Fixed fee your provider charges on each sale: 0.20 currency · Terminal, software and account cost per month: 40 currency · What handling cash costs you, as a share of the cash you take: 9 %.

Result: What card payments cost you in a year: 3,384.00 currency · Your real cost on every unit taken by card: 3.13 % · Below this sale amount, cash is cheaper than card: 4.17 currency.

Worth keeping in mind

Sources

Text drafted with the assistance of artificial intelligence, from the sources listed, and checked against the worked example. It is a tool for orientation: for tax or contractual decisions, your accountant has the last word.

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