Cost of payments in E-commerce: Reducing overcharges and improving margins

"In e-commerce, it is not the cost you see that eats the margin - it's the cost you never see."

There is a price tag associated with every online transaction, but you usually don't see it. This hidden cost of payments in e-commerce has quietly become one of the toughest challenges facing digital retailers. While the vast majority of leaders focus on visible costs, such as interchange and payment gateway fees, the actual cost to retailers comes from the unseen revenue leakage and waste of operational inefficiencies. With global e-commerce sales expected to reach US$4.32 trillion by 2025, protecting margins is less about getting more sales - and more about stopping the invisible leak happening after the checkout button is clicked.

Understanding payment costs across regions

Globally, payment service providers (PSPs) charge merchants between 2.5% and 3.5% per transaction for bundled services covering acquiring, processing, and fraud prevention. Large-volume retailers can negotiate lower rates, but payment processing still ranks among the highest controllable costs on P&L sheets.

In the United States, credit card interchange fees average around 1.8%, while regulated debit transactions cost approximately 0.3%, based on Federal Reserve interchange data. In Australia, interchange on debit cards remains capped near 0.5% per Reserve Bank policy, reflecting ongoing global regulatory pressure to reduce fee burdens. Platforms like PayPal, which processes transactions for over 434 million active accounts valued at US$26 billion annually, symbolize the scale and infrastructure complexity required in global commerce (PayPal Annual Report 2024).

In emerging markets, however, the story takes a different turn. India's payment system exceeded US$1.6 trillion in digital payments in the second half of 2024, driven largely by the rise of UPI, which processed nearly 13 billion transactions a month by early 2025. UPI accounted for 75% of all retail digital payment volume based on NPCI data. Despite this phenomenal growth, hybrid payment behavior continues to exist: approximately 60% of overall consumer spending still happens via cash or card, which adds complexity to settlement, refund, and reconciliation processes.

Hidden margin killers: Revenue leakage

Beyond visible transaction costs, revenue leakage remains the most elusive and damaging threat to e-commerce profitability. Optimus and market studies consistently show that the scale and variety of these leaks, ranging from fraud controls to hidden provider fees silently compress margins and erode core business value.

False declines & authorization errors

Research reveals that upwards of 10% of legitimate transactions are wrongly declined due to excessive fraud filters or strict bank authorization rules, resulting in about US$443 billion in global annual losses. Every false decline not only reduces conversion rates but also chips away at customer trust, diminishing both immediate sales and long-term customer lifetime value.​

Payment failures and cart abandonment

Additional leak points include:

• Failed payments from expired cards, authentication timeouts, and issuer system errors, all of which increase cart abandonment and turn potential sales into lost opportunities.
• Often, these failures go undetected or under-addressed in reconciliation systems, perpetuating revenue loss.

Manual reconciliation errors

Manual errors in reconciliation result in:

• Duplicate payouts and untracked refunds,
• Spreadsheet-driven processes that miss fee duplicates, chargebacks, or over/underpayments,
• Unlogged remittances and revenue holding fees, creating discrepancies that persist until formal audits.​

Disjointed systems and delayed revenue recognition

When data is fragmented across multiple marketplaces and gateways, unrecognized revenue and delayed returns frequently occur. These system silos:

• Create delays in recognizing revenue,
• Lead to missed or misapplied adjustments during system handoffs,
• Slow down capital circulation and negatively affect cash flow forecasting.​

Reverse logistics & inventory write-downs

Return-related losses and inventory write-downs can quietly accumulate, only surfacing during audits. These operational inefficiencies:

• Are rarely included in ongoing margin analysis,
• Lead to unnecessary inventory write-downs and understated profits.​

Payout mismatches & unclaimed balances

According to Unicommerce, 2–3% of total revenue is typically lost through payout mismatches and unclaimed amounts, shrinking EBITDA margins by up to 10% for large-scale e-commerce enterprises. These invisible drains accumulate as transaction volume scales, transforming minor errors into serious financial liabilities.​

Improving margins through automation and AI

To counteract leakage, merchants are turning toward AI-driven payment reconciliation platforms that automate financial control and enhance transparency. Intelligent automation frameworks, such as Optimus Fintech’s enterprise-grade reconciliation platform , combine AI, machine learning, and real-time anomaly detection to ensure that every transaction is verified, settled, and matched accurately.

Automation enables organizations to:

• Detects and resolves gateway mismatches, duplicate payouts, and refund errors instantly.
• Automate journal posting across multiple systems, dramatically reducing manual intervention.
• Evaluate granular underlying causes for failure by payment channel, issuing bank or geography, to inform corrective actions.

These platforms enable finance teams with real-time visibility into payment streams, reducing reconciliation cycles from days to minutes, and removing manual bottlenecks to not only reduce operational costs but protect margins through consistent audit-ready execution.

According to McKinsey, real-time payment visibility via automation can improve working capital efficiency by up to 30%, freeing liquidity otherwise trapped in settlement lag.

The strategic edge of intelligent integration

The greater strategic value of automation is not only reducing errors. In digitally advanced e-commerce ecosystems, cutting-edge reconciliation technologies provide a platform for collaboration across functions, uniting treasury, accounting, and operations, all in one layer of control. Collaborative workflows and dashboards provide 'one truth' of timely, relevant information harnessing trust among finance teams and auditors.

Multi-gateway reconciliation is one of the platform features available within Optimus, which removes the need for multiple fragmented spreadsheets collecting settlements from Stripe, PayPal, UPI, Razorpay, Adyen, or card networks. This allows the financial close timeline to be shortened, complying with risk mitigation plans, and maintaining a continuous audit trail. Regulatory readiness becomes far easier when every transaction can be traced end-to-end in seconds.

Consequently, automated reconciliation not only saves money; it also enhances resilience, transparency, and investor confidence. E-commerce companies implementing intelligent platforms usually see a month-end closing process that is up to 60% faster and a sizable drop in refund discrepancies improving overall net margin stabilization.

Turning costs into margins with intelligent automation

Reducing the cost of payments has moved beyond simply shaving a few basis points from card fees. Instead, it is now all about preventing leaks before they erode profitability. Intelligent automation will mean every dollar has an account, every failure is detected, and every transaction is reconciled in real time.

By adopting solutions like Optimus Fintech, e-commerce CFOs gain full visibility across payment flows and can translate operational accuracy directly into financial performance. What was once a hidden operational cost becomes a controllable, strategic lever for growth.

In the end, changing payables processes using AI-driven automation is not simply defensive; it's also a competitive differentiator. In a world of eCommerce with narrow margins and elevated expectations, accuracy in payments is the basis of sustainable profitability.

eCommerce - Worldwide figures

• Revenue in the eCommerce Market is projected to reach US$3.66tn in 2025.
• Revenue is expected to show an annual growth rate (CAGR 2025-2030) of 6.29%, resulting in a projected market volume of US$4.96tn by 2030.
• With a projected market volume of US$1.17tn in 2025, most revenue is generated in the United States.
• In the eCommerce Market, the number of users is expected to amount to 4.0bn users by 2030.
• User penetration will be 54.3% in 2025 and is expected to hit 56.4% by 2030.
• The average revenue per user (ARPU) is expected to amount to US$1.13k.