The verdict in three sentences
A PSP's headline rate (1 to 2.9 %) never reflects the real cost: FX markup, payout fees, chargeback fees and failed-payment leakage push the all-in effective cost to 2.4-4.5 %. Worse, the cheapest provider isn't always the one that converts best at checkout — a 10-point conversion gap weighs more than 1 % in fees. You must weigh effective cost AND conversion rate together.
Headline rate vs effective cost
Merchants often compare PSPs on the nominal rate alone. That's a mistake: the FX markup on foreign-currency payments, flat payout fees, chargeback fees and lost revenue from declined payments completely reshuffle the ranking. Here's the typical breakdown.
| Cost item | MoMo | Paystack | Stripe |
|---|---|---|---|
| Nominal rate | 1.0-2.0 % | 1.5-2.9 % | 2.9 % + $0.30 |
| FX markup | 0 % (local) | 0-2 % | 1.5-3.5 % |
| Payout fee | Low/none | Low | Flat per payout |
| Chargeback fee | Rare | Rare | 3,000-5,000 FCFA |
| Failed-payment leakage | Medium | Low | Medium |
| Estimated effective cost | 1.5-2.5 % | 2.0-3.2 % | 3.5-4.5 % |
Locally, mobile money and Paystack beat Stripe on cost. Stripe only justifies itself for international cards, where its card conversion stays unbeatable.
Checkout conversion matters more than the rate
A cheaper PSP that converts poorly destroys more value than it saves. The right trade-off pairs effective cost with per-method conversion by buyer profile.
| Method | Nominal rate | Effective cost | Checkout conversion | Buyer profile |
|---|---|---|---|---|
| MoMo | 1.0-2.0 % | 1.5-2.5 % | 88-93 % | Local, mobile |
| Paystack | 1.5-2.9 % | 2.0-3.2 % | 86-93 % | Regional |
| Flutterwave | 1.4-3.0 % | 2.0-3.4 % | 84-91 % | Regional |
| Stripe (card) | 2.9 % + $0.30 | 3.5-4.5 % | 85-90 % | International |
| Wave | 1.0-1.5 % | 1.2-1.8 % | 88-94 % | Franco. local |
Offering local mobile money and card side by side maximizes conversion: each buyer pays with the wallet they already own.
Mini case study
Moussa sells electronics online in Dakar: 40,000,000 FCFA/month in volume. Relying only on Stripe (effective cost 4.0 %), he pays 1,600,000 FCFA/month in fees. By routing local traffic to mobile money (effective cost 1.5 %) for 80 % of volume and Stripe for the 20 % international, his blended cost drops to 2.0 %, i.e. 800,000 FCFA/month.
Savings: 800,000 FCFA/month, or 9,600,000 FCFA/year. And because local wallets convert +5 points better than cards for his local audience, he also recovers sales that were failing at card checkout.
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FAQ
Why is the headline rate misleading?
Because it ignores FX markup (1.5-3.5 % on foreign currency), payout fees, chargeback fees (3,000-5,000 FCFA) and failed-payment leakage. The real effective cost often reaches 2.4 to 4.5 %.
Which PSP is cheapest locally?
Mobile money, with an estimated effective cost of 1.5-2.5 % in 2026, ahead of card gateways. Stripe stays pricier locally but is essential for international cards.
Does conversion matter more than fees?
Often yes: a 10-point conversion gap weighs more than 1 % in fees. A 1.5 % PSP converting at 80 % earns less than a 2 % PSP converting at 92 %.
How much does a chargeback cost?
Between 3,000 and 5,000 FCFA per card dispute, on top of the potentially refunded amount. On local mobile money, disputes are far rarer.
Should I offer several methods at checkout?
Yes: showing local mobile money and card side by side lets each buyer pay with their usual wallet, which maximizes conversion and cuts abandonment.
Let's talk about your project. We compute your real effective cost and optimize your payment mix for conversion. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
