Understanding your effective real rate is the key to identifying the most cost-effective payment services provider. Your effective real rate measures the total cost of all processing fees and can be calculated by dividing the total merchant charges and fees over a given amount of time by the total bank card sales volume over that same amount of time. The only way to ensure you have the best effective real rate is to understand what factors into determining this rate.

Here are the top five factors impacting real rate:

Your industry: Merchants have different real rates depending on their industry. For example, retail, hospitality, education, the restaurant industry and B2B sales all have different real rates. 

Card types accepted: There are a growing number of card types in the payments sphere, and those who buy and pay online or in person are increasingly shifting to card payments. Different card types have different real rates, and it's important to know how each card type impacts your real rate.

Your method of acceptance: Do you follow industry best practices? If you don't, or don't even know what those best practices are, you may be paying a higher real rate. Ultimately, there is a right and a wrong way to accept card payments, so make sure you understand how your actions can influence your real rate.

Transaction size: Depending on the type of industry you work in, you could be closing million dollar deals on high-end products and services. Although this certainly wouldn't happen in a traditional retail environment, it's still important to understand how large transactions can impact your real rate.

Sales volume: It's important to note the difference between transaction size and sales volume, and the fees that are affected by both. For example, interchange is charged at the transaction level, meaning the value of each transaction impacts that fee. However, there are other fees that play into real rate that get charged on a monthly basis, so the volume of your monthly sales may be a large factor in determining how much you are charged.

All of this goes into your real rate, and understanding how these factors impact your rates and learning how to keep them to a minimum will allow you to maximize the value of your sales. Working with a merchant account provider will go a long way towards learning how to lower your effective real rate.