Presumably you mean gross margin, calculated as revenue less cost of goods and excluding payment fees. For a $100 sale that costs $75 (a 25% gross margin, typi

Presumably you mean gross margin, calculated as revenue less cost of goods and excluding payment fees. For a $100 sale that costs $75 (a 25% gross margin, typical for internet sales), and a payment fee of 5%, the fee is $5, or 20% of the $25 gross margin. Each 1% of fees represents 4% of gross margin. That fee will represent a much higher percentage of net profit, after deducting other business costs. This effect increases dramatically as gross margin decreases. At 20% gross margin, 5% represents 25% of margin. For a low margin business, say 10% gross margin, a 5% fee represents 50% of the $10 margin on a $100 sale. If other business costs average $3 on that sale, the payment fee takes out $5 from the $7 margin, or 71%. A 1% decrease in payment fees increases net profit by 50%, from $2 to $3 on that sale. So you can see on low margin business, payment fees have an enormous effect on margins and profitability.