Definition

Effective rate is fee divided by amount, expressed as a percentage. If a $500 payment costs $14.80, the effective rate is 2.96%, whatever combination of percentage, fixed fee, floor and cap produced it.

It collapses four numbers into one, which is exactly what you need to rank options, and it is the number to ask a provider for rather than their headline rate.

It moves with the amount

Because the effective rate depends on the amount, quoting one without the amount is meaningless. A rail can be 5.9% effective and 2.93% effective on the same day depending on whether the payment was $10 or $1,000.

Any comparison that gives a single effective rate per provider has either fixed an amount, which it should tell you, or has averaged over amounts, which hides the crossover that matters most.

Cross-currency effective rates

Comparing markets adds a trap. A hundred units of a small currency is not the same payment as a hundred units of a large one, so an effective rate computed on a flat 100 will be nonsense wherever the local unit is small. Comparisons have to be priced on the same real value, converted, not the same nominal number.