When makers talk about Etsy fees, they quote the 6.5% transaction fee. Almost nobody quotes the payment processing fee — yet it is on every single order, and on small orders it can take a bigger bite than you would expect.

This fee pays for the card payment itself: the buyer pays by card, the card networks and banks take their cut for moving the money, and Etsy passes that cost to you as its payment processing fee.

The rates by country

Every rate has the same two-part shape: a percentage, plus a small fixed amount. That fixed amount is the part to watch. A percentage shrinks with the price. A fixed 25 cents does not — it is 25 cents on a $100 order and the same 25 cents on a $5 order.

Charged on the total, including sales tax

Payment processing is charged on the full order total, including sales tax. This is different from the transaction fee, which leaves sales tax out.

Why? Because the card payment really was for the full amount. The buyer's card was charged the price, the shipping, and the tax all together, and the cost of processing that payment is based on the whole charge. From the card network's side, there is no separate "tax part" that moves for free.

It still feels unfair — you never get to keep the sales tax, it passes through you to the tax authority, yet you pay a processing fee on it. Feeling that way is reasonable. Pricing as if it were not true is expensive. It is true, so build it into your numbers.

Say a US order totals $35 with no sales tax. Processing is 3% of $35, which is $1.05, plus $0.25, for a total of $1.30. Now say, for example, the same order had $3 of sales tax on top, making the card charge $38. Processing is now 3% of $38, which is $1.14, plus $0.25 — $1.39. The tax added 9 cents of fee on money that was never yours.

Per order, not per item

This fee is charged once per order, not once per item. That one detail quietly rewards some baskets and punishes others.

If a buyer buys one $15 item in one order, you pay the fixed $0.25 once, on that order. If the same buyer buys three $15 items in a single order, you still pay the fixed $0.25 once — the percentage part grows with the total, but the fixed part does not repeat. One order with three items is cheaper in fees than three separate orders of one item each.

The hard side of this falls on cheap items sold one at a time. Say you sell a $5 item on its own, in the US, with no shipping charged. The percentage part is only 15 cents, but the fixed part is the full $0.25, so processing alone is $0.40 — that is 8% of the item price, before the transaction fee and listing fee are even added. Small, single items carry the heaviest fee load on Etsy. That is math, not a mistake in your statement.

How it stacks on a real sale

Take the $30 sale: an item for $30, shipping charged $5, no sales tax, in the US. The buyer paid $35.

Payment processing on that order is $1.30, as worked out above. Alongside it sit the transaction fee of $2.28 and the listing fee of $0.20, for $3.78 in Etsy fees in all. Processing is more than a third of that total — hardly a footnote, for a fee nobody quotes.

In the UK the bite is bigger still, because the rate is higher. Say an item is £40 with £4 shipping. Processing is 4% of £44, which is £1.76, plus £0.20 — £1.96 on one order.

What you can actually do about it

You cannot turn this fee off, and there is no cheaper payment option inside Etsy to switch to. What you can do is stop being surprised by it:

• Price with the fixed part in mind, especially on items under, say, $15, where it hurts most.
• Know that bundles and multi-item orders carry the fixed fee once, so a set can be healthier than the same items sold singly.
• Check your math on the full order total including tax, not on the item price alone.

If you want to see the processing fee counted properly on a price you are considering, the free pricing calculator on mykeptmoney.com includes it on every calculation, fixed part and all.