How to calculate transaction fees for Singapore businesses

Key Takeaways:

• Transaction fees follow a two-part formula: Total Fee = (Transaction Amount × Percentage Rate) + Fixed Fee. On a S$200 card payment at 3.4% + S$0.50,¹ the fee is S$7.30 and your net revenue is S$192.70.

• If your business is registered for Goods and Services Tax (GST), your payment processing fees are subject to Singapore's 9% GST. Multiply the base fee by 1.09 to get the GST-inclusive cost.

• Airwallex charges 3.30% + S$0.50 for domestic card payments with no monthly fees, and settles like-for-like in 14 currencies — so international revenue lands in the original currency without forced FX conversion.

Knowing how to calculate transaction fees is one of the most practical financial skills for any Singapore business owner.

Every card payment you process costs a slice of your revenue, and across hundreds of transactions a month, those slices add up fast.

This guide gives you the core formula, step-by-step worked examples built for the Singapore market, and a section on your effective rate, which is the number that shows what you actually pay, not just what your provider advertises.

What are transaction fees?

Transaction fees are the costs you pay each time a customer makes a payment through a card or digital payment method. They are not a single charge; they are made up of several components collected by different parties in the payment chain.

When a customer pays by card, at least three parties take a cut:

1. The card issuer (your customer's bank)

2. The card network (Visa or Mastercard)

3. Your acquirer (the bank or payment provider that processes the transaction on your behalf).

Each party charges a fee, and your payment provider bundles these together into the rate you see on your statement.

In Singapore, most providers present this as a two-part charge: a percentage of the transaction value plus a small fixed fee. A typical domestic rate might be 3.4% + S$0.50.

That means for every card payment you accept, you pay 3.4% of the amount plus $0.50.

Understanding what makes up that fee is the first step to managing it. Once you know the formula, you can calculate the real cost of every payment you accept and make informed decisions about your provider, your pricing, and your payment methods.

The transaction fee formula

Most payment providers in Singapore use the same two-part structure. Once you know it, you can apply it to any transaction.

Here’s the formula:

Total Fee = (Transaction Amount × Percentage Rate) + Fixed Fee

Each part of the formula does a different job. The percentage rate scales with the transaction: the larger the payment, the larger this component. The fixed fee stays constant regardless of the amount, so it hits hardest on small transactions.

For example, on a S$200 payment at 3.4%¹ + S$0.50:

• S$200 × 0.034 = S$6.80

• S$6.80 + S$0.50 = S$7.30 total fee

• Net revenue: S$200 − S$7.30 = S$192.70

Here’s how to calculate the transaction fee on any transaction:

1. Identify the transaction amount — the amount your customer paid

2. Convert the percentage rate to a decimal — divide by 100 (e.g. 3.4% becomes 0.034)

3. Multiply the transaction amount by the decimal — this gives you the percentage component

4. Add the fixed fee — this gives you the total transaction fee

5. Subtract the total fee from the transaction amount — this is your net revenue

Run this calculation once for a typical transaction in your business. Then multiply by your monthly volume to see what you pay in fees each month.

Transaction fee calculation examples

Here are four worked examples showing how the same fee structure plays out across different business types.

Example 1: eCommerce store (low-value, high-volume)

Say an online retailer processes a S$45 domestic card payment at 3.4%¹ + S$0.50. Using the formula:

• S$45 × 0.034 = S$1.53

• S$1.53 + S$0.50 = S$2.03

• Net revenue: S$45 − S$2.03 = S$42.97

• Effective rate: S$2.03 ÷ S$45 = 4.51%

At this order value, the fixed fee carries significant weight. On a S$45 transaction, the S$0.50 alone accounts for over 1% of the sale before the percentage fee is even applied.

For high-volume stores, reducing fixed fees or increasing average order value can have a meaningful impact on margins.

Example 2: SaaS business (recurring subscription)

Say a software company charges S$29 per month per customer at 3.4%¹ + S$0.50:

• S$29 × 0.034 = S$0.99

• S$0.99 + S$0.50 = S$1.49 per subscriber per month

• Effective rate: S$1.49 ÷ S$29 = 5.14%

• 500 subscribers: S$1.49 × 500 = S$745 per month

• Annual cost: S$745 × 12 = S$8,940

The per-transaction fee looks small in isolation. But because it applies every month, the cost compounds quickly as your subscriber base grows. At lower subscription prices, the fixed fee also has a bigger impact on your effective rate than many businesses realise.

Example 3: Professional services firm (high-value invoice)

Say a Singapore consulting firm receives a S$800 card payment for a project milestone at 3.4%¹ + S$0.50:

• S$800 × 0.034 = S$27.20

• S$27.20 + S$0.50 = S$27.70

• Net revenue: S$800 − S$27.70 = S$772.30

• Effective rate: S$27.70 ÷ S$800 = 3.46%

At this ticket size, the fixed fee is negligible. The percentage fee dominates, so even a small reduction in the rate (e.g. 0.1%) can have a meaningful impact over time for businesses processing larger invoices.

Example 4: Import/export business (international payment)

Say a Singapore wholesale trader receives S$300 from an overseas buyer via Stripe. The base fee of 3.4%¹ + S$0.50 applies, plus Stripe’s international card surcharge of 0.5%¹:

• S$300 × 0.034 = S$10.20

• S$10.20 + S$0.50 = S$10.70 (base fee)

• S$300 × 0.005 = S$1.50 (international surcharge)

• Total fee: S$10.70 + S$1.50 = S$12.20

• Effective rate: S$12.20 ÷ S$300 = 4.07%

This is before any foreign exchange conversion fees. If the payment is converted into Singapore dollars, additional FX costs apply on top, increasing the total cost further.

How to calculate your effective rate

Your provider's advertised rate and your real cost are rarely the same number. The effective rate tells you what you actually pay across your entire payment volume, fixed fees included.

Here’s the effective rate formula:

Effective Rate = (Total Fees Paid ÷ Total Sales Volume) × 100

Once you have your effective rate, you can compare providers on a like-for-like basis. That makes it much easier to see what you’re actually paying in practice, beyond the headline pricing.

This also explains why two businesses on the same pricing plan can end up paying very different rates. Businesses with smaller average transaction values tend to pay a higher effective rate, because fixed fees take up a larger share of each payment.

Transaction fees and GST in Singapore

If your business is registered for Goods and Services Tax, there is an extra layer to factor into your fee calculations. Payment processing is a taxable service: your provider charges 9% GST² on top of their processing fees.

Here’s the GST formula:

GST-Inclusive Fee = Total Fee × 1.09

Using the S$200 example from earlier: the base fee is S$7.30. With 9% GST applied, the GST-inclusive fee is S$7.30 × 1.09 = S$7.96.

If your business is GST-registered with full input tax entitlement, you can claim the GST component back through your quarterly GST return. In that case, the net cost of the processing fee remains S$7.30, and GST is a cash flow consideration, not an additional cost.

If your business is not GST-registered, or you make exempt supplies, you cannot reclaim the GST. The S$7.96 is your actual cost. Factor this into your margin calculations, particularly if you are close to the GST registration threshold of S$1 million in annual turnover.²

How to calculate transaction fees for international payments

International payments carry more fee layers than domestic ones. If your business accepts payments from overseas customers, you need to account for three components: the base processing fee, an international card surcharge, and a foreign exchange (FX) conversion fee.

Here is how those components add up, using the same S$500 transaction processed through two different providers.

Example 1: S$500 international payment via Stripe

Stripe's standard Singapore rate is 3.4%¹ + S$0.50, with a +0.5%¹ surcharge for international cards and a +2%¹ currency conversion fee when Stripe converts the payment to Singapore dollars:

• Base fee: S$500 × 0.034 = S$17.00 + S$0.50 = S$17.50

• International surcharge: S$500 × 0.005 = S$2.50

• FX conversion (assuming Stripe converts the payment to SGD): S$500 × 0.02 = S$10.00

• Total fee: S$30.00

• Effective rate: 6.00%

Example 2: The same S$500 payment via Airwallex

Airwallex charges 3.60% + S$0.50 for international card payments, with an FX rate of 0.4% above interbank for major currencies:

• Base fee: S$500 × 0.036 = S$18.00 + S$0.50 = S$18.50

• FX conversion: S$500 × 0.004 = S$2.00

• Total fee: S$20.50

• Effective rate: 4.10%

On a single S$500 transaction, Airwallex saves you S$9.50 compared to Stripe, which is a 32% reduction in fees. For a business receiving S$50,000 a month in international payments, that difference compounds to S$950 a month, or S$11,400 a year.

Common mistakes when calculating transaction fees

When calculating transaction fees, be sure not to make any of these common mistakes:

1. Forgetting the fixed fee

Most merchants focus on the percentage rate and overlook the fixed fee.

On a S$15 transaction at 3.4% + S$0.50, the fixed fee alone represents more than 3% of the sale value before you apply the percentage. At low order values, the fixed fee can double your effective rate compared to the advertised rate.

2. Ignoring GST on processing fees

If your payment provider is GST-registered, their fees include 9% GST on top.

If you cannot reclaim that GST — because your business is not GST-registered or you make exempt supplies — your real cost is higher than the headline rate suggests. Always confirm your provider's GST status and your own reclaim entitlement.

3. Not accounting for refund fees

When you refund a customer, you return the full payment, but many providers do not return the processing fee. Check your provider's refund policy before assuming your fee exposure ends when the refund is issued.

4. Underestimating foreign exchange costs

International payments include more than just processing fees. A currency conversion fee — often 2% or more — applies on top. If 30% of your monthly revenue comes from overseas customers, for example, that FX cost is a significant monthly drag that won't show up in your advertised rate.

How to reduce transaction fees in Singapore

Once you know your effective rate, you have a baseline to work from. These four strategies are the most practical ways to bring that number down.

1. Promote PayNow for local customers

Make PayNow the default option at checkout and highlight it as instant and free for customers.

PayNow bypasses the card network entirely, which means no interchange fee, no scheme fee, and no acquirer markup. For example, Stripe typically charges around 1.3%¹ for PayNow payments, versus 3.4%¹ for domestic card payments.

2. Know your effective rate before you negotiate

Most flat-rate providers will negotiate once you cross a meaningful monthly volume threshold.

Your effective rate calculation is the lever — it gives you a precise number to bring to the conversation rather than a vague request for a better deal. Calculate it monthly so you always know where you stand.

3. Settle in the original currency

For international sales, accepting forced conversion to Singapore dollars adds a currency conversion fee on every transaction. If you pay overseas suppliers in the same currency you receive from customers, holding that revenue unconverted eliminates the conversion cost entirely.

Airwallex's Global Accounts let you hold and pay out in 20+ currencies without converting.

4. Avoid tiered pricing models

Tiered pricing — where transactions are classified as qualified, mid-qualified, or non-qualified — is the least transparent model available. In practice, most transactions land in the higher tiers, which carry the highest rates.

Flat-rate or interchange-plus pricing gives you better cost predictability and is usually cheaper for businesses with steady monthly volume.

Reduce your transaction fees with Airwallex

Airwallex can help you reduce what you pay in transaction fees in three ways: lower international card rates, significantly cheaper FX conversion, and like-for-like currency settlement. Here’s what you get with Airwallex:

Lower cost on international cards

Many providers charge an additional fee when a customer pays with an overseas-issued card. Stripe, for example, adds a 0.5%¹ international card surcharge on top of its standard pricing.

Airwallex does not charge a separate cross-border surcharge, helping you save on your overseas transactions.

Lower FX costs

Currency conversion is where standard providers earn the most. Airwallex charges 0.4% to 0.6% above the interbank rate. Stripe charges 2%¹. On S$50,000 of monthly international revenue, that gap goes up to S$800 every month, or nearly S$10,000 a year.

Hold revenue in the currency it arrives in

Airwallex Global Accounts let you hold balances in 20+ currencies and pay suppliers directly in the same currency. If you’re receiving USD from your US customers, you can use it to pay for your US ad spend without incurring two rounds of conversion fees.

Frequently asked questions (FAQs)

How do you calculate transaction fees with a percentage and fixed charge?

Use this formula: Total Fee = (Transaction Amount × Percentage Rate) + Fixed Fee. On a S$200 payment at 3.4% + S$0.50, the fee is S$6.80 + S$0.50 = S$7.30. Subtract that from the transaction amount to get your net revenue: S$192.70.

What are typical credit card processing fees in Singapore?

Most payment providers in Singapore charge between 2.8% and 3.4% plus a fixed fee of S$0.30 to S$0.50 per transaction for domestic card payments. International card payments attract an additional surcharge on top of the base rate.

Is there a transaction fee for PayNow in Singapore?

PayNow payments are free for individuals. Businesses pay a processing fee through their payment provider — Stripe, for example, charges 1.3%¹ per PayNow transaction, which is significantly lower than domestic card processing rates.

Does GST apply to credit card processing fees in Singapore?

Yes. If your payment provider is GST-registered, they charge 9% GST² on top of their processing fees. If your business is fully GST-registered with no exempt supplies, you can reclaim that GST as input tax. If not, it becomes an additional cost.

How do you calculate net revenue after transaction fees?

Subtract the total transaction fee from the payment amount. If a customer pays S$500 and your total fee is S$17.50, your net revenue is S$482.50. Run this across your monthly volume to see your total fee expense.

Can I pass transaction fees on to customers in Singapore?

Yes — surcharging is not prohibited in Singapore. However, you must disclose any surcharge clearly before the customer completes payment. Some businesses build fees into their pricing rather than itemising them at checkout to avoid friction.

Sources

1. stripe.com/sg/pricing

2. iras.gov.sg/taxes/goods-services-tax-(gst)/basics-of-gst/current-gst-rates

This publication does not constitute legal, tax, or professional advice from Airwallex, nor does it substitute seeking such advice, and makes no express or implied representations / warranties / guarantees regarding content accuracy, completeness, or currency. If you would like to request an update, feel free to contact us at [[email protected]]. Airwallex (Singapore) Pte. Ltd. (201626561Z) is licensed as a Major Payment Institution and regulated by the Monetary Authority of Singapore.