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I don’t understand why fees are in percentage and not fixed. Transferring 100$ is not 10 times more expensive for them than moving 10$.
by marcopicentini 4y ago
I don’t understand why fees are in percentage and not fixed.
Transferring 100$ is not 10 times more expensive for them than moving 10$.
- freilanzer 4y agoMore money.
- neodypsis 4y agoOne reason that may influence the price is fraud management.
- iam-TJ 4y agoPossibly because the actual all-in cost including fraud set-aside is quite high and if a fixed fee were charged it would in many cases exceed the transaction value? In other words, if it costs 10 units on average to process a transaction then the payment service isn't going to be worthwhile for any transaction less than 200 units. All transactions much higher than 200 units would see a reducing percentage of the transaction as processing costs. Instead, everyone gets charged a percentage of the transaction value so that the large transactions subsidise those with a low value and this enables small value transactions to be seen as cost-effective by sellers.
- remus 4y agoRisk of fraud. Moving the money is not expensive, but if a $10k transaction turns out to be fraudulent then you're on the line for a big chunk of money. If you know your fraud rate is ~1%, then if you charge 1.5% on all transactions then over enough transactions you can cover the fraudulent ones and have some profit left over.