5 ms·

PayPal has established the absolute rock-bottom industry-floor of 2.9% + $0.30 for payment processing + fraud reduction. Fraud reduction accounts for the major

PayPal has established the absolute rock-bottom industry-floor of 2.9% + $0.30 for payment processing + fraud reduction. Fraud reduction accounts for the majority of that percentage. Patreon has established that they will completely go out of business at 5%. Steam is taking 30% and Epic is taking 12%. Salaries, servers and regulation are expensive. Microsoft offering 5% is a steal.

SkyPuncher 8y ago
> PayPal has established the absolute rock-bottom industry-floor of 2.9% + $0.30 for payment processing + fraud reduction. This is neither unique to PayPal or the actual floor. 2.9% + (roughly) $0.30 is pretty much the standard across all public facing credit card processors like PayPal (and their subsidiary Braintree), Stripe, Amazon Pay, Authorize.net, and more. I have heard rumors Stripe offers rates as low as 1.8% for large volume processors. Adyen charges $0.12 + 0.6% + interchange fee making them extremely lucrative for their customers (including Uber, Netflix, Etsy, Spotify). Given Microsoft's size and expertise, I'd anticipate they are operating close to interchange rates around $0.10 + between 0.8% and 1.6%.
- martinald 8y ago
  In Europe Stripe offers 1.4% + 25eurocent for EU cards, with the same 2.9% for non EU cards. Stripe actually charges US customers an extra 1% to process EU cards (3.9% total), plus a hefty forex fee. For a company like MS with a major EU presence the average rate will be skewed lower than what the market looks like.
- StudentStuff 8y ago
  The actual cost for credit/debit card processing is interchange itself, which averages to ~1% for grocers & about 2% for everyone else if your doing north of $200k a year in volume. High risk industries like cruises, concerts & similar will pay close to 5% (or more), as when the event doesn't pan out, all that cash will need to be refunded.
flyinglizard 8y ago
Fraud reduction is largely irrelevant on non tangible products though, especially when licenses can be revoked online.
- greglindahl 8y ago
  Fraud reduction includes having to refund money, not just revoking licenses if the payment is reversed.
  - tyingq 8y ago
    And paying exorbitant chargeback fees.
- kalleboo 8y ago
  Chargeback fees to credit cards are still massive (even if you "win" the dispute)
  - jjeaff 8y ago
    Those are negotiable and even stripe and Braintree only charge $15.
  - TheAceOfHearts 8y ago
    Microsoft is probably big enough to negotiate really good terms for themselves.

SkyPuncher 8y ago

> PayPal has established the absolute rock-bottom industry-floor of 2.9% + $0.30 for payment processing + fraud reduction. This is neither unique to PayPal or the actual floor. 2.9% + (roughly) $0.30 is pretty much the standard across all public facing credit card processors like PayPal (and their subsidiary Braintree), Stripe, Amazon Pay, Authorize.net, and more. I have heard rumors Stripe offers rates as low as 1.8% for large volume processors. Adyen charges $0.12 + 0.6% + interchange fee making them extremely lucrative for their customers (including Uber, Netflix, Etsy, Spotify). Given Microsoft's size and expertise, I'd anticipate they are operating close to interchange rates around $0.10 + between 0.8% and 1.6%.

martinald 8y ago
In Europe Stripe offers 1.4% + 25eurocent for EU cards, with the same 2.9% for non EU cards. Stripe actually charges US customers an extra 1% to process EU cards (3.9% total), plus a hefty forex fee. For a company like MS with a major EU presence the average rate will be skewed lower than what the market looks like.
StudentStuff 8y ago
The actual cost for credit/debit card processing is interchange itself, which averages to ~1% for grocers & about 2% for everyone else if your doing north of $200k a year in volume. High risk industries like cruises, concerts & similar will pay close to 5% (or more), as when the event doesn't pan out, all that cash will need to be refunded.

flyinglizard 8y ago

Fraud reduction is largely irrelevant on non tangible products though, especially when licenses can be revoked online.

greglindahl 8y ago
Fraud reduction includes having to refund money, not just revoking licenses if the payment is reversed.
- tyingq 8y ago
  And paying exorbitant chargeback fees.
kalleboo 8y ago
Chargeback fees to credit cards are still massive (even if you "win" the dispute)
- jjeaff 8y ago
  Those are negotiable and even stripe and Braintree only charge $15.
- TheAceOfHearts 8y ago
  Microsoft is probably big enough to negotiate really good terms for themselves.