Effective rate is the only honest way to compare processing offers. It takes ALL fees from a statement — interchange, assessments, markup, monthly fees, PCI fees, batch fees, statement fees, surcharges, downgrades — and divides by total card volume. The result is what you actually pay per dollar processed.
A business processing $50,000/month and paying $1,400 in total fees has an effective rate of 2.80%. The advertised rate might say 2.5%, but after monthly fees and downgrades, the truth is 2.80%. Always compare effective rate, not advertised rate.
For most SMBs, an effective rate above 2.6% suggests room to save. Above 3.0%, you're almost certainly being overcharged. A clean interchange-plus account on retail/contractor MCCs typically lands at 2.20%–2.50% effective.