A transaction fee is a charge applied to a financial transaction, typically when transferring money or making a purchase. This fee can vary based on the payment method, such as credit cards, bank transfers, or digital currencies like Bitcoin. It is often a small percentage of the total transaction amount or a fixed fee. Transaction fees are used by financial institutions and payment processors to cover the costs of processing transactions and maintaining their systems. For example, when you buy something online, the merchant may include a transaction fee to ensure they can handle payment processing efficiently.