effective rate
The effective rate is the total a business paid for card acceptance in a period, including all fees and charges, divided by its card turnover in that period, expressed as a percentage. It is the one figure that lets two different pricing structures be compared honestly.
Acquiring bills are built to resist comparison: a percentage on some cards, a different one on others, pence per transaction, a monthly fee, a terminal rental, a minimum, a PCI charge, an authorisation fee. The PSR's card-acquiring review found that merchants could not compare offers because of exactly this. The effective rate collapses all of it into one number: everything paid, over everything processed.
Why it matters to a business: it is the number to ask for, and the number to calculate yourself from three months of statements before believing any quote. A quote at 1.2% with a £25 monthly fee and 3p per transaction is one effective rate at £200,000 a month of small payments and a very different one at £20,000. It is also the only fair way to compare blended pricing with interchange-plus.
For a software platform, the effective rate across its customers is what a group of customers currently pays and therefore what the platform's offer has to match or beat for that group to move. A payments review starts by estimating it customer by customer, because the spread is usually wide and the customers paying most are the first to move. Note that a lower effective rate is not the only reason customers move; payment products and moments matter as much.