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Often times there is transaction fee in addition to the % of processing fee. Usually .50-.75 per sale - that's why some stores have a minium of $10 or so that you need to charge in order to be able to use a credit card.
So on a $10 with a .50 transaction fee and a 3% processing fee the merchant takes a $.80 hit - it decends as a percentage with a bigger sale (obviously) but on a small sale that's pretty significant. Makes the banking industry look pretty attractive, eh?
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