The True Cost of Shopify Payments (Beyond the Sticker Rate)
Payment processing is a variable cost of every order. How to model Shopify Payments, currency conversion, and chargebacks in contribution margin.
Payment fees look like a small percentage—until you multiply them by every order, every refund, and every international checkout. Treating processing as “overhead” hides a core variable cost.
Components of payment cost
Percentage fee + fixed per-transaction fee + cross-border / currency conversion + chargeback fees + cost of capital on delayed settlement.
Refunds do not always reverse the full fee structure the way merchants expect. Model net processing cost after refunds, not just the list rate.
Decision framework
Compare all-in processing cost against AOV and contribution margin. Low-AOV stores feel fixed fees harder. High international mix feels FX and cross-border harder.
Renegotiating or switching processors only helps if you measure the full stack—including fraud tools and chargeback apps that appeared to “solve” a processing problem.
FAQ
Should payment fees sit in COGS?
Accountants disagree on classification. For decision-making, treat them as variable selling costs inside contribution margin regardless of GL line.
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CostRadar tracks transaction fees alongside apps and ads so payment cost shows up in true net profit, not only in your Stripe or Shopify payout email.