When a business owner wants to charge their customer a 4% surcharge then they need to pay a 3.84% fee to their processing company to guarantee the charge is being properly offset.

Look at the following examples:

The merchant runs the card for a $100 sale. The cardholder is then charged a total of $104.

If we then take 4% out of the $104 transaction the business owner will pay $4.16 in fees - an effective rate of 4.16%

$104 * 4% = $4.16

$104 - $4.16 = $99.84 deposit

If we instead take 3.84% of the transaction out then the business owner pays $4.00 in fees on the $104 sale.

$104 * 3.84% = $4

$104 - $4 = $100 deposit.

This ends up being a 4% charge on the original $100 sale. The business owner is charging 4% to the client and exactly 4% is being paid to offset by the 3.84% processing charge.