Before I get into the nitty-gritty of how to calculate the effective rate, I need to clarify an important point. Calculating the effective rate of a merchant how to become a payment processing company account for an existing business is easier and more accurate than calculating the rate for a new business because figures are based on real processing history rather than forecasts and estimates.
That's not to say that a new business should ignore the effective rate of a proposed account. It is still the most important cost factor, but in the case of a new business the effective rate should be interpreted as a conservative estimate.
It's pretty simple to calculate the effective rate for an existing merchant account. All you need to do is figure out the percentage of expenses over gross credit and debit card sales. To do this, divide your gross sales by your total processing costs for a given month and then multiply that number by 100. For example:
$10,000 in sales / $329 in fees * 100 = 3.29%
If the effective rate ends up being substantially greater than your qualified discount rate, it's time to examine your account and make money-saving adjustments. Using the example above, let's say the qualified discount rate for this account is 1.69%. That would mean the effective rate of 3.29% is more than double the qualified discount rate. In a situation like this, the chances are very good that there are a lot of mid and non-qualified surcharges being applied.