OnlineCalculatorThe gross-up problem
If you want to net exactly AED 1,000 and the fee is 2.9% plus AED 1, you cannot simply add 2.9% — the fee applies to the larger amount you charge, not the amount you wanted. The correct formula is (target plus fixed fee) divided by (1 minus the percentage rate).
Adding 2.9% to AED 1,000 gives AED 1,029, which nets AED 998.16. The correct gross-up is AED 1,030.90.
Fees are not uniform
- International cards typically carry a surcharge over domestic rates
- Currency conversion adds a separate percentage on top
- Disputes and chargebacks carry a fixed fee that is not refunded even if you win
- Some payment methods price differently from card transactions
Whether to pass fees on
Absorbing the fee is simpler and generally better for conversion. Passing it on is common in business-to-business invoicing but tends to create friction in consumer checkouts. Some jurisdictions restrict surcharging — check what applies where your customers are.