How to read basis points
One hundred basis points make 1%, so 25 basis points are 0.25% and 150 basis points are 1.5%. A fee of 30 basis points on a payment of EUR 200 is EUR 0.60.
The unit exists for clarity. A rate that goes from 1.50% to 1.75% has risen by 25 basis points, whereas a rise of 0.25% could also be read as a quarter of one percent of the old rate.
Where payments use basis points
- Interchange and card scheme fees
- The acquirer's margin in interchange++ pricing
- Mark-ups on a foreign exchange rate
- Maker and taker fees on an exchange
- Fraud and chargeback ratios
- Interest paid on balances
Why basis points matter at volume
Small numbers add up. Ten basis points on EUR 50 million of yearly card volume are EUR 50,000, which is why pricing is negotiated to the single basis point.
Fee engines store rates as whole numbers of basis points, or finer, and fix the rounding rule per transaction. Rounding each fee differs from rounding the total, and the ledger has to match the invoice.
Basis point, percentage point or pip?
- Percentage point
- The difference between two percentages: from 2% to 3% is one percentage point, or 100 basis points.
- Pip
- In foreign exchange, the smallest standard move in a quoted price. A pip is a unit of price, where a basis point is a share of an amount.
Where a basis point shows up in a platform
Modules that do the work
- FXCurrency conversion with live rates, your margins and the liquidity provider you choose.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.
- Analytics & monitoringProduct analytics, attribution, engagement and crash reports, on a tracking plan you control.