Fintech Tips:

Passing Platform Fees on to Payor

Platforms can build a feature to allow their customers (Merchants) to pass the platform fees on to their customers (the Payor) by including them in the payment amount and defining the JustiFi custom application fee value at the time of the payment. 

How to calculate the payment amount to include the platform fee

To include the platform fee in the Payment amount, calculate the gross amount, taking into consideration that increasing the final amount also increases the Platform fee when the platform fee includes a percentage component.  

Gross Payment = (Payment Amount + Fixed Fee) / (1 – Variable Fee Percent)

For example, if your defined Platform fee is 2.70% + $0.20/transaction then the calculation on a $100.00 payment would be as follows:

Gross Payment = $100 + $0.20/1 – .027

Gross Payment = $102.98

Merchant Payout = $100.00

The flat fee and the total charge percentage must be factored into the Payment amount to ensure that your customer (the merchant) receives the desired amount ($100.00 in the scenario above).

It’s important that the merchant ensure compliance with any applicable laws pertaining to their business and should be aware that charging processing fees may be prohibited by law in some jurisdictions.

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