What makes up a payment fee
A payment fee is the cost charged by a payment provider for processing a customer’s payment. The core calculation usually has two parts: a percentage charge applied to an eligible transaction value, plus a fixed charge applied once per transaction. The percentage reflects the order amount; the fixed charge applies whether the order is small or large.
The full cost can also include separate charges for currency conversion, refunds, chargebacks or payouts, depending on the provider, payment method and account terms. Keep these items distinct in your analysis because they do not apply to every order. Check whether the provider calculates its percentage on the product subtotal, the total collected, or another defined amount. Sales tax is not itself a payment fee, although it may be included in the amount used to calculate a percentage charge.
For a home decor store, the payment-fee line should therefore contain only processing charges: percentage fees, fixed transaction fees and applicable provider surcharges. Do not mix in Shopify subscription costs, shipping expenses or GST/HST remittances. Those affect profitability, but they are separate operating, fulfilment or tax costs rather than payment fees.
Why smaller orders feel the fixed charge
A fixed payment charge takes the same dollar amount from every eligible transaction, so it consumes more of a low-value home decor order. A percentage charge behaves differently: it rises as the order value rises. The following illustration assumes a $0.30 fixed charge plus a 2.9% percentage charge, using order values before tax and shipping.
On a $20 order, the percentage charge is $0.58 and the total fee is $0.88. That equals 4.4% of the order. On a $100 order, the percentage charge is $2.90, the total fee is $3.20, and the effective fee is 3.2%. The fixed $0.30 is 1.5% of the $20 order but only 0.3% of the $100 order.
For a store selling lower-priced accessories alongside larger furniture or decor pieces, compare both the dollar fee and the effective fee percentage by order value. The dollar amount shows the cash deduction; the effective percentage shows how much margin each order gives up.
| Order value | Fixed charge | Percentage charge | Total fee | Effective fee |
|---|---|---|---|---|
| $20 | $0.30 | $0.58 | $0.88 | 4.4% |
| $100 | $0.30 | $2.90 | $3.20 | 3.2% |
Worked example with sample numbers
This example is illustrative. It uses sample numbers for a home decor store selling in Canada. They are made up to show the method, they are not a benchmark, and your own figures will differ.
Formula: Payment fee = order value x percentage + fixed amount.
| Order value | Fee | Fee as share of order |
|---|---|---|
| C$38.75 | C$1.53 | 3.9% |
| C$77.50 | C$2.66 | 3.4% |
| C$154.99 | C$4.94 | 3.2% |
| C$464.97 | C$14.04 | 3.0% |
Run the same sum with your own numbers in the free calculator, or browse guides for sellers in Canada and more home decor guides.
General information only: tax, duty and import rules change and depend on your situation, so check with an accountant or the official source before acting.
Eligible Shopify stores can see these numbers for their own store through the Founding 10,000 offer.
How to read the worked example
Read the worked example as three separate layers, not as one percentage. First, identify the order value: the customer amount used as the starting point for the calculation. It is the sales base before isolating what the payment provider keeps. Do not treat this amount as profit or as the cash the store retains.
Next, find the payment cost and check how it was derived from the percentage component and fixed component shown in the example. This is the transaction expense, not a reduction in the product’s selling price. Subtract that cost from the order value to see the amount left after payment processing. Then follow the example’s remaining deductions, such as product cost if included, to reach contribution margin. Contribution margin is the dollars left to contribute toward other operating costs; its margin expresses that amount as a share of order value.
For your own orders, keep these fields separate in a spreadsheet or profit margin calculator. That makes it clear whether a margin change came from order size, payment pricing or the underlying product economics.
Refunds, chargebacks and currency conversion
Refunds and chargebacks are not the same cost. A refund is initiated by the store after a return or cancellation; whether the provider returns the original transaction fee depends on that provider’s terms, so do not assume the fee comes back. A chargeback is a payment dispute raised through the customer’s card issuer or payment network. Any dispute-related charge, and whether the original processing fee is recovered, also depends on the applicable provider terms. Review refund costs when measuring return economics; review chargebacks when investigating payment disputes and fraud.
Currency conversion can affect a Canadian sale when the customer pays in one currency and the store settles in another. The exchange rate, any conversion charge or spread, and the rate used when a refund is processed can change the Canadian amount realized. GST/HST is separate from the payment fee, but changes the amount processed: the Canada Revenue Agency lists 5% GST in Alberta, British Columbia, Manitoba, Quebec, Saskatchewan and the territories; 13% HST in Ontario; and 14% HST in Nova Scotia from April 1, 2025. Track refund value against realized revenue rather than treating every processed payment as retained sales revenue (Source: Canada Revenue Agency).
A fair comparison between payment providers
Compare providers against the same Canadian order mix, not a single example. Use identical order values, payment methods, currencies, refunds and chargeback assumptions, then calculate both the dollar cost and effective fee rate. Record the provider’s published terms and confirm whether taxes apply to the fee itself.
A useful worksheet separates the fee components so a low average order value, higher refund rate or cross-border sales do not distort the comparison. Keep payout timing separate from processing cost: it affects cash availability, not the fee charged on each order.
- Use the same order mix for every provider: for example, the same number of orders, average order values, payment methods, refunds, chargebacks and Canadian-versus-foreign currency sales.
- Calculate total fees as a dollar amount and as a percentage of processed order value. Review the result again using delivered-order revenue if returns are material.
| Measure | Provider A | Provider B | What to check |
|---|---|---|---|
| Percentage fee | ___% × eligible sales | ___% × eligible sales | Does the rate vary by payment method, card type or sales channel? |
| Fixed charge | $___ × eligible transactions | $___ × eligible transactions | Use the same transaction count and order mix. |
| Refund treatment | Original fee: ___; refund fee: ___ | Original fee: ___; refund fee: ___ | Does a refund return the percentage fee, fixed charge or neither? |
| Chargebacks | Fee: $___; reversal: ___ | Fee: $___; reversal: ___ | Record the dispute fee and any recovered amount separately. |
| Currency conversion | Rate or markup: ___ | Rate or markup: ___ | Apply only to orders requiring conversion. |
| Payout terms | Timing: ___; reserve: ___ | Timing: ___; reserve: ___ | Compare settlement timing and holds, not just price. |
Turning fee differences into margin decisions
Use the narrowest view that matches the decision. Review an individual order when checking an unusually small basket, a high-value item, or a disputed transaction. Review a product category when fee differences consistently affect collections such as furniture, wall art, or accessories. Review a sales channel when its payment methods, currencies, or order values differ from your Shopify store. Review the full payment mix when deciding whether a fee change improves the economics of the business overall.
Connect each view to gross margin, not revenue alone. For illustration only, a $200 order with $120 of product cost has $80 gross profit and a 40% gross margin. If payment fees are $6, the remaining $74 is 37% of revenue when shown as fee-adjusted gross profit. Apply the same treatment across orders and periods, and document whether fees sit inside or below your gross-margin calculation. ORVX can show product- and collection-level profitability, including gross profit and margins, so you can identify whether a fee change calls for a channel decision, a category review, or no action. Use the profit margin calculator to test the arithmetic.
For a Canadian home decor store, payment fees should be evaluated against order value, refund exposure, currency handling and the margin left after product and fulfilment costs. A fair comparison uses the same order assumptions for every provider, then identifies which fee component is creating the pressure and which operational decision can address it.
Sources
- GST/HST provincial rates table (Canada Revenue Agency, checked 26 October 2026).
How this page was made: drafted with AI from a brief, then checked by automated rules for arithmetic, sources and duplication. The sample numbers were calculated, not reported.