The verdict in three sentences
When a retailer's net margin sits between 8 and 15 %, a 2 % fee does not cost 2 % — it costs 13 to 25 % of profit. Passing it to the customer, absorbing it, or setting a free-fee threshold is therefore a strategic pricing decision, not an accounting detail. In Ghana in 2026, with MTN MoMo at ~1 % (E-levy suspended in 2025), the trade-off plays out in hundreds of FCFA per order.
How fees erode net margin
The effect is proportionally harsher on thin margins. Here is the impact of a 1 % then 2 % fee by product margin (2026 order of magnitude).
| Product net margin | 1 % fee | 2 % fee | Profit share eaten (2 %) |
|---|---|---|---|
| 8 % | -1 % | -2 % | 25 % |
| 10 % | -1 % | -2 % | 20 % |
| 12 % | -1 % | -2 % | 17 % |
| 15 % | -1 % | -2 % | 13 % |
| 25 % | -1 % | -2 % | 8 % |
On a 5,000 FCFA basket, 2 % = 100 FCFA in fees. If the net margin is 500 FCFA (10 %), those 100 FCFA erase 20 % of it.
Three fee-handling scenarios (100 orders/month)
Average basket 5,000 FCFA, net margin 10 % (500 FCFA/order), MTN MoMo fee 1 % (50 FCFA/order). Simulation over 100 orders.
| Scenario | Who pays | Margin/order | Monthly margin | Customer effect |
|---|---|---|---|---|
| Absorb | Merchant | 450 FCFA | 45,000 FCFA | Neutral |
| Pass on | Customer (+50 FCFA) | 500 FCFA | 50,000 FCFA | Mild friction |
| Threshold (free > 10k) | Mixed | ~475 FCFA | ~47,500 FCFA | Encourages bigger basket |
Need a professional website?
Kolonell builds websites that attract clients, optimized for the Sénégalese market. Free quote in 2 minutes.
Thresholding — waiving fees above an amount — pushes the average basket up while protecting margin on small orders.
Mini case study
Kwame sells phone accessories in Accra: 100 orders/month, 5,000 FCFA basket, 10 % net margin. Absorbing MTN MoMo fees (1 %), he earns 45,000 FCFA/month. By introducing "free delivery + fees from 10,000 FCFA", his average basket climbs to 6,500 FCFA and volume to 110 orders. New net margin: ~62,000 FCFA/month — the threshold mechanic more than offset the fees absorbed on large baskets.
FAQ
Does the E-levy still apply? In Ghana, the E-levy was suspended in 2025; local mobile transaction taxes vary. Check current regulation before setting your pricing.
Is it better to absorb or pass on fees? On small baskets and price-sensitive markets, absorbing protects conversion. On high baskets or B2B, passing on goes unnoticed. Thresholding often combines the best of both.
Does a visible fee scare customers away? An explicit "service fee" raises cart abandonment by several points. Baking the cost into the displayed price is psychologically smoother.
How does a free-fee threshold raise margin? By nudging customers to grow their basket to avoid fees, you gain more volume and absolute margin than the waived fees cost. It is a classic pricing lever.
Let's talk about your project. We model the impact of fees on your margin and configure your free-fee checkout thresholds. 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.
