Headline rate is one number among many
When a provider quotes '1.5 percent', that is the percentage on the most favourable category — usually domestic, card-present, standard card type. The same provider's effective rate after international transactions, premium cards, and currency conversion is often 50 to 100 percent higher than the headline.
A competing provider quoting 2.5 percent might end up cheaper end-to-end on the same business if their international and FX handling is better, or if they charge no fixed fee per transaction.
Where the 'cheap' provider quietly costs more
Three patterns show up repeatedly. First, fixed fees that are higher than they look. A 0.30 fixed fee on a 5 transaction is 6 percent of the transaction — twice the headline rate. Second, FX margins on international payments that exceed the headline rate by more than the rate itself. A 1 percent headline plus 3 percent FX margin is a 4 percent effective rate. Third, retained processing fees on refunds that cumulate fast in categories with elevated refund rates.
Each of these can flip the maths against an apparently cheap provider on the wrong transaction profile.
When operational cost beats raw rate
Beyond direct fees, payment providers vary in how much operational time they cost. Slow settlement (T+5 vs T+2) means more cash sitting in transit. Poor dispute tools mean more time per chargeback. Weak fraud screening means more chargebacks. Bad accounting integration means more reconciliation work.
For a small business owner whose time is the binding constraint, a provider that is 0.2 percent more expensive but saves five hours a month of operational work is the cheaper choice in real terms. Cash savings are visible; time savings are not, but they compound the same way.
How to actually choose
The honest comparison is always: what would I have paid on the last three months of real transactions if I had been on each provider, including all fee categories. Anything less than that is a guess. Most providers publish enough rate detail to do this calculation, and the Payment Gateway Optimizer is built for exactly this comparison.
Once the financial comparison is done, weigh operational fit on top. Pick the cheapest provider whose operational profile you can live with, not the absolute cheapest.