Why a percentage markup quietly costs more as you grow
A flat-rate app feels simple, and the simplicity is the product. The cost is that your markup grows with every good month.
By The 1st Bankcard Services team
A percentage markup has one property that works against you: it scales with your success. The better your month, the more it takes, and it never has to send you a notice to do it.
Run the numbers. At a 0.30 percent markup, $50,000 in volume hands over $150. Grow to $120,000 and the same markup is now $360. You did the work to triple your volume, and the markup more than doubled for doing nothing different. A flat dime per transaction does not move like that. More sales means more dimes, but the markup per sale stays put.
The part that actually stings
The scaling is the obvious part. The part that costs you happens out of sight. Most processors also let the rate drift upward at renewal, a few basis points at a time, in a statement you already stopped reading. By the time you notice, the good rate you signed is a worse rate you kept.
A good rate today is not a good rate forever. Most processors raise the markup over time. A published, fixed dime structurally cannot.
There is a real exception worth naming. If your average ticket is high, a low percentage can beat a flat per-transaction fee once the ticket clears a few hundred dollars. We will tell you when that is your situation. A tool that always recommends itself is not worth trusting, and the math is easy enough to check.
See it on your own statement
Reading about markup is one thing. Finding yours takes about a minute.