4 ms·

Here's some current Stripe UK pricing, confirmed on their site today. Baseline of 2.9% + £0.20 for international card payments. (It's reduced to 1.4% + 20p for

Here's some current Stripe UK pricing, confirmed on their site today. Baseline of 2.9% + £0.20 for international card payments. (It's reduced to 1.4% + 20p for European cards.) Add 2% for currency conversion. The exchange rate used is stated as "the daily mid-market rate provided by our service providers". Add 0.5% for Billing if you're using subscriptions. Add 0.5% more if you're using this new Stripe Tax functionality. That is significantly over 5% for a typical SaaS or merchant selling digital content online, making international sales in multiple currencies. Given that merchant of record services like Paddle are providing functionality far more comprehensive than Stripe Tax appears to be, they're still going to be attractive for smaller merchants compared to the more traditional PSPs like Stripe. It's probably worth pointing out that while the EU has a long track record of making VAT difficult for everyone, plenty of other countries around the world and even some smaller regions seem to be jumping on the bandwagon lately. If all of these governments start attempting to enforce their local laws extra-territorially (leaving aside any questions about the legality and/or morality of doing so for this discussion) without also introducing reasonable de minimis thresholds to avoid grossly disproportionate compliance costs for negligible extra tax revenues in low volume situations, the situation could get very messy. If that does happen and businesses are forced to comply with all rules globally regardless of actual sales volumes, I don't see how the model uses by traditional PSPs like Stripe has any chance of surviving. Every small business will have to sell via intermediaries like Paddle to shift the tax responsibilities to a larger business with the resources to deal with it, and pay whatever premium the market decides that justifies on all affected international sales.

sudhirj 5y ago
The tipping point is the 2% for currency conversion, but keep in mind that this is happening either way on Paddle as well, just not going to Paddle. Paddle takes 5%, then the entity that converts from USD to your currency (Payoneer / wire transfer bank) takes the 2% or more. Stripe calls it out clearly and gives you your money in your own currency.
- Silhouette 5y ago
  If you're selling a B2C service (so the really horrible tax rules apply) for say £10/month, that extra £0.20 is another 2%. Stripe's total cut for an international sale with currency conversion is then nearly 8%, even if you don't use any of their other services with their own extra costs and you never have any refund or chargeback costs to amortize. Stripe is crazy expensive these days. (There are other parts in the fees charged by other services as well, but those also aren't like for like comparisons. I'm just saying that 5% as a baseline wouldn't necessarily be that high compared to services like Stripe.)
- lemming 5y ago
  Paddle uses Currency Cloud for that, which charges a true mid-market rate and a very low transaction fee. It's what Transferwise uses behind the scenes.
  - sudhirj 5y ago
    They use whatever to convert all the currencies of the world into your base currency, usually USD/EUR. Then they transfer that to you, and you pay more conversion fees if that’s not your actual base.
    - lemming 5y ago
      I sell in USD, and then once a month they transfer my sales to me using Currency Cloud. At that point it gets converted at the mid-market rate + 0.25% IIRC. Since they don't actually make international transfers using banks, that amount is what actually arrives in my bank.
gingerlime 5y ago
Stripe also offers interchange plus pricing, but you’ll have to badger them for it… if you’re selling in Europe it can work out much cheaper, but it depends (eg amex would cost you much more). Also the exchange rates can be avoided by setting up bank accounts with different currencies (eg transferwise —- now wise). This alone saved us a bundle.
- plantain 5y ago
  Only true for EU-domiciled companies - https://stripe.com/docs/payouts#supported-accounts-and-settlement-currencies https://stripe.com/docs/payouts#supported-accounts-and-settl...
  - gingerlime 5y ago
    We are. If I understand correctly also the UK, where I believe GP is based.
realityking 5y ago
I believe the currency conversion charge can be avoided by only charging your customers in your own currency or another currency you have a bank account for. I rarely see a small merchant that takes more than one or at best two currencies. That'd leave you with 20p + 3.9% (international) / 2.4% (European). Compared to Paddle's 5% + $0.50 that could be a good deal depending on how much of your volume happens in Europe.
- Silhouette 5y ago
  I believe the currency conversion charge can be avoided by only charging your customers in your own currency or another currency you have a bank account for. It can, but then your customers get hit with varying exchange rates and potentially high conversion fees on their side. This will not make you popular with your international customers, at least the ones who didn't already back out when they saw a foreign currency anyway. Depending on which research you read, the rate of lost conversions due to lack of local pricing could be as high as 50%. Within the overall landscape of payment processing options, Stripe looks trapped in an awkward middle ground now. Above them are the merchants of record. Including currency conversion, international sales using Paddle seem to cost 7% + 35p at current USD/GBP exchange rate and their standard published pricing. But for that, you get real tax compliance. Then we have Stripe, coming in at 5.9% + 20p (4.4% + 20p for European cards). Even with Stripe Tax, you're missing much of the essential functionality for global tax compliance and the reassuring liability shift, so that extra 1.1% + 15p or even 2.6% + 15p would be the easiest sale since bottled water in a desert to a lot of merchants. Further down the price spectrum, we have services like GoCardless that are offering direct payment schemes rather than cards (duh) but for a fee of only 2% + 20p including currency conversion. You don't get any built-in tax support here, so it would be fairest to compare with Stripe at 5.4% + 20p or possibly 3.9% + 20p, but that's still quite a difference. And while you have to do your own tax compliance as with all payment processors using this model, you do get other benefits, notably in much improved reliability of collecting payments via direct payment schemes compared to card payments. I wonder whether Stripe's medium-term goal might be to establish its own merchant of record service, and Stripe Tax in its current form is just the opening move. Otherwise, it doesn't really make sense to me as a strategy. But I have no inside knowledge on this and there are several Stripe people around who probably do, so no doubt if they want to elaborate at this time they will.

sudhirj 5y ago

The tipping point is the 2% for currency conversion, but keep in mind that this is happening either way on Paddle as well, just not going to Paddle. Paddle takes 5%, then the entity that converts from USD to your currency (Payoneer / wire transfer bank) takes the 2% or more. Stripe calls it out clearly and gives you your money in your own currency.

Silhouette 5y ago
If you're selling a B2C service (so the really horrible tax rules apply) for say £10/month, that extra £0.20 is another 2%. Stripe's total cut for an international sale with currency conversion is then nearly 8%, even if you don't use any of their other services with their own extra costs and you never have any refund or chargeback costs to amortize. Stripe is crazy expensive these days. (There are other parts in the fees charged by other services as well, but those also aren't like for like comparisons. I'm just saying that 5% as a baseline wouldn't necessarily be that high compared to services like Stripe.)
lemming 5y ago
Paddle uses Currency Cloud for that, which charges a true mid-market rate and a very low transaction fee. It's what Transferwise uses behind the scenes.
- sudhirj 5y ago
  They use whatever to convert all the currencies of the world into your base currency, usually USD/EUR. Then they transfer that to you, and you pay more conversion fees if that’s not your actual base.
  - lemming 5y ago
    I sell in USD, and then once a month they transfer my sales to me using Currency Cloud. At that point it gets converted at the mid-market rate + 0.25% IIRC. Since they don't actually make international transfers using banks, that amount is what actually arrives in my bank.

gingerlime 5y ago

Stripe also offers interchange plus pricing, but you’ll have to badger them for it… if you’re selling in Europe it can work out much cheaper, but it depends (eg amex would cost you much more). Also the exchange rates can be avoided by setting up bank accounts with different currencies (eg transferwise —- now wise). This alone saved us a bundle.

plantain 5y ago
Only true for EU-domiciled companies - https://stripe.com/docs/payouts#supported-accounts-and-settlement-currencies https://stripe.com/docs/payouts#supported-accounts-and-settl...
- gingerlime 5y ago
  We are. If I understand correctly also the UK, where I believe GP is based.

realityking 5y ago

I believe the currency conversion charge can be avoided by only charging your customers in your own currency or another currency you have a bank account for. I rarely see a small merchant that takes more than one or at best two currencies. That'd leave you with 20p + 3.9% (international) / 2.4% (European). Compared to Paddle's 5% + $0.50 that could be a good deal depending on how much of your volume happens in Europe.

Silhouette 5y ago
I believe the currency conversion charge can be avoided by only charging your customers in your own currency or another currency you have a bank account for. It can, but then your customers get hit with varying exchange rates and potentially high conversion fees on their side. This will not make you popular with your international customers, at least the ones who didn't already back out when they saw a foreign currency anyway. Depending on which research you read, the rate of lost conversions due to lack of local pricing could be as high as 50%. Within the overall landscape of payment processing options, Stripe looks trapped in an awkward middle ground now. Above them are the merchants of record. Including currency conversion, international sales using Paddle seem to cost 7% + 35p at current USD/GBP exchange rate and their standard published pricing. But for that, you get real tax compliance. Then we have Stripe, coming in at 5.9% + 20p (4.4% + 20p for European cards). Even with Stripe Tax, you're missing much of the essential functionality for global tax compliance and the reassuring liability shift, so that extra 1.1% + 15p or even 2.6% + 15p would be the easiest sale since bottled water in a desert to a lot of merchants. Further down the price spectrum, we have services like GoCardless that are offering direct payment schemes rather than cards (duh) but for a fee of only 2% + 20p including currency conversion. You don't get any built-in tax support here, so it would be fairest to compare with Stripe at 5.4% + 20p or possibly 3.9% + 20p, but that's still quite a difference. And while you have to do your own tax compliance as with all payment processors using this model, you do get other benefits, notably in much improved reliability of collecting payments via direct payment schemes compared to card payments. I wonder whether Stripe's medium-term goal might be to establish its own merchant of record service, and Stripe Tax in its current form is just the opening move. Otherwise, it doesn't really make sense to me as a strategy. But I have no inside knowledge on this and there are several Stripe people around who probably do, so no doubt if they want to elaborate at this time they will.