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I never understood credit card fees interaction with small transactions (eg shops with $10 min); if its a perfentage fee, what does it matter how small the indi

• Bartweiss 8y ago
  You're right about the general case; a restaurant running two $50 payments or one $100 payment usually won't see any difference. But a thousand $1 micropayments produce more overhead (and more risk) than one $1000 payment, so below some threshold it's not worth handling them. As a result, most card processors have rules to either block that payment pattern or raise costs on it. Common approaches include: - Caps on monthly transaction counts - Caps on monthly payment amounts, with usage monthly fees - Flat costs added to percentage fees - Percentage fees with a minimum charge Similarly businesses which know they'll see numerous small payments mostly just charge enormously high fees. The Apple Store and Google Play both take 30% transaction costs, and I suspect they pay their processors noticeably more than the common ~%2 rate despite their size.
• runako 8y ago
  Credit card transactions typically have a percentage component and a fixed-fee "swipe" component. So on a $10 charge, the vendor might pay 2.9% ($0.29) plus a $0.30 swipe fee. Crucially, the swipe fee is the same if the transaction is $10, $1,000, or $1. Micropayments are hard to make work on top of this infrastructure because the payment network eats up 60% of a $1 transaction and nearly all of a $.50 transaction.