Basis Point
One one-hundredth of a percent (0.01%), used as the standard unit for expressing processor markups and interchange rates.
A basis point (bps) is 0.01%, or 0.0001 in decimal form. Payment professionals quote markups in basis points because percentage fractions are awkward to compare. "25 basis points" is cleaner than "0.25 percent."
Common reference points: 10 bps = 0.10%, 25 bps = 0.25%, 50 bps = 0.50%, 100 bps = 1.00%.
At scale, basis points are meaningful dollars. On $500,000/month in card volume, 25 basis points is $1,250/month, or $15,000/year. When FT5 negotiates a 30 bps markup reduction for a mid-volume merchant, that translates directly to bottom-line savings.
When comparing processor quotes, convert everything to basis points over interchange. A quote of "1.89% + $0.10" from one processor and "interchange + 30 bps + $0.12" from another require your actual card mix to compare accurately.
See how your effective rate compares to what competitive IC+ pricing would cost you.
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