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Also known as: take rate, transaction-based pricing

Transaction Fee Model

ConceptualStrategiesFinance

Definition

Transaction Fee Model: A transaction fee model charges a percentage or flat fee on each transaction processed through a platform. Common in marketplaces, payments, and financial services, this model aligns platform revenue with merchant success. Transaction fees typically range from 1-30% depending on value added.

Example Usage

“Our 2.9% + $0.30 transaction fee is competitive with alternatives. We process $100M monthly, generating $3.2M in revenue.”

Common Misconceptions

Higher fees mean more revenue. Excessive fees drive merchants to alternatives; optimize for volume.
Transaction fees are the only revenue. Many platforms combine transaction fees with subscriptions or advertising.
Fees should be the same for all transactions. Tiered fees by volume or transaction type optimize revenue.

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