Tools
What the cheaper offer actually costs.
A merchant once took an offer about 10% below ours. Its approval rate fell about 22%. The fee saving was a rounding error against the revenue that stopped arriving. This calculator shows that arithmetic for your numbers.
Offer A current
Offer B the cheaper one
All-in fee = interchange + scheme + markup + gateway, as a share of settled volume. Use your real decline data for approval rates; a number a provider quoted before seeing your data does not belong here.
- Offer B saves $4,320 in fees and loses $60,000 in approved volume.
- For offer B to break even it needs an approval rate of at least 85.73%.
- At offer A's terms, one point of approval is worth about 1.13 points of fee. A 10% discount on a 3.2% fee is 0.32% of volume; six points of approval is 6%.
Simplified on purpose: ignores reserves, chargeback fees, FX and downtime, all of which make the cheap offer worse, not better.
Fees are the part that is easy to compare and least important.
Net revenue is volume × approval × (1 − fee). At typical fee levels, a single point of approval rate is worth several points of fee rate. Merchants spend months negotiating basis points and never look at the decline file.
Our own record is on price: in 97% of ~200 reviews, the offer we brought was cheaper than the incumbent. We still treat that as the entry ticket. The work is approvals and the second path.