In e-commerce, what are transaction fees?

Transaction fees in e-commerce refer specifically to the charges applied by payment processors for each sale made through an online platform. When a consumer makes a purchase online, the payment processor, such as PayPal, Stripe, or a credit card company, facilitates the transaction by verifying the payment details and transferring the funds from the buyer to the seller. For this service, the payment processor typically charges a fee, which can be a flat rate, a percentage of the transaction amount, or a combination of both.

This fee is integral to the operational costs of conducting business online, as it directly relates to the processing of sales transactions. Understanding transaction fees is crucial for e-commerce businesses to effectively manage their finances, set competitive pricing, and evaluate their overall profitability. The other options reference different aspects of running an online business but do not pertain specifically to the fees incurred for processing payments on transactions.