What is a discount rate?
Yes, there is a difference between discount and discount rate. A discount is how much money you save in total and a discount rate is the percentage you saved. Now as to why you got a larger number when you calculated was because you calculated wrong. When you divide by a decimal, in a sense, you are dividing by a fraction in which the reciprocal would be switched and you would naturally end up with a larger number. You would have to multiply 20,000 by .10 in order to get the correct answer. Now to get the total price of discount, you would multiply 20,000 by .90 (90 percent) because the discount is 10 percent. If this seems confusing, feel free to email me for clarification.
Every acquirer charges a discount rate to merchants that accept credit cards. A discount rate is the percentage of each transaction that the processing company (United Payment Solutions) charges the merchant to handle the transaction. Your “discount rate” is the amount that you (the merchant) have agreed to be deducted from the total of each sale. Discount rates will vary according to the type of business, the type of transaction, and the method for delivering the transaction to the payment system.
The discount rate is the percentage of sales amount that the bankcard acquirer or travel and entertainment card issuer (i.e., American Express, etc) charges the merchant for the settlement of the transactions. Discount rates are set by the “interchange” costs imposed by the credit card company associations. Differences in discount rates charged merchants are a result of several factors such as type of business, monthly card sales volume, type of transactions and the acquiring banks overhead and profit margin. Our discount rates are extremely competitive. Please Contact Us for assistance with determining the discount rate applicable for your business.
Similar to ROI, discount rate can have several meanings. Well try to keep the answer simple. There are three common meanings of the term: 1. potential rate of return from alternative investments, 2. the rate an organization pays for borrowed money (the “cost of capital”), and 3. a “hurdle” rate that an IT project must clear before it will be considered before an organization will consider an investment. • Alternative Investments. In theory, an organization can “invest” money in your project or it can invest money in something else. Sometimes, the “discount rate” represents the assumed rate of return on alternative investments. • Cost of Capital. Many organizations borrow money to invest in capital projects. Sometimes, the discount rate used is the organizations typical interest cost on the money it borrows. • “Hurdle Rate”. IT projects can be risky investments (i.e., they may not deliver the expected benefits). Sometimes, organizations use the “discount rate” to establish a minimum rat
