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I'm more interested in micropayments but this interchange stuff seems a bit complicated. How would a $2 payment work out with interchange included ? I mean, wha

by ashray 13y ago

I'm more interested in micropayments but this interchange stuff seems a bit complicated. How would a $2 payment work out with interchange included ? I mean, what fees would apply for a $2 credit card payment ?

deleted 13y ago
[deleted]
jeffasinger 13y ago
So you'd have to pay interchange, plus whatever your processor charges on top of that, which will depend on them, and volume. You can definitely shop around a little bit, there's probably several local people who can talk you through it and bring you some offers to the table from various processors, but also get a quote from people like TSYS, First Data, and Chase Paymentech directly. I'm remembering fees varying from $.05 to $0.10 and 0.10% to 0.15% on top of interchange. The visa interchange rates are available at (1) to give you an idea. You're mostly interested in the eCommerce categories probably, so you'll be paying 1.80 to 1.95% plus $0.10 on top of whatever you're paying from you're processor for credit cards, debit cards are cheaper. Many people that do micropayments will try to combine some transactions together, in order to save money. That said, you might be interested in paypal micropayments (2), as they only charge $0.05 + 5%, which for a $2 transaction, is a big savings. 1: http://usa.visa.com/download/merchants/visa-usa-interchange-reimbursement-fees-april2013.pdf http://usa.visa.com/download/merchants/visa-usa-interchange-... 2: https://www.paypalobjects.com/IntegrationCenter/ic_micropayments.html https://www.paypalobjects.com/IntegrationCenter/ic_micropaym...
- ashray 13y ago
  Thanks for the detailed information. That certainly clears things up a bit. I've been using Paypal micropayments for the past year or so and it's been the best bet for $2 transactions (I pay 6%+$0.05 for cross border payments). Ends up being $0.17 per transaction. I haven't come across anything that beats that by a large enough margin so as to replace Paypal yet. The only downside is that Paypal is applying the standard 6% fee to $20 transactions as well (as opposed to the lower 2.9% fee), so I either need to route these transactions to a non-micropayments Paypal account or do something else with them... this is what I am currently working on solving. The difference doesn't come out to be much for a $20 transaction but with higher transaction volume it will certainly stick out as a sore point.
pbreit 13y ago
If you want customers to be able to pay with a credit card, it will be difficult to get individual charge fees under $0.30. If you expect repeat purchasing, best to aggregate charges either ahead of time (aka "pre-pay") or post.
- WildUtah 13y ago
  How does iTunes do it? They're doing $0.99 payments all the time.
  - notatoad 13y ago
    probably some combination of - charging a 30% processing fee - taking a loss on small payments - bundling charges whenever possible - encouraging people to buy itunes gift cards - being big enough to negotiate better rates than normal people can.
  - deleted 13y ago
    [deleted]
  - pbreit 13y ago
    Apple aggregates to a great extent but I think could go much further. It only bundles up purchases over several days or perhaps a week. Since it's minimum fee is $0.30 (30% of $0.99) it just about breaks even on single song purchases. But Apple would be fine with the whole App/iTunes Store being a break-even proposition since it has consistently stated that its interest is in the hardware sales.

by ashray 13y ago

deleted 13y ago

[deleted]

jeffasinger 13y ago

So you'd have to pay interchange, plus whatever your processor charges on top of that, which will depend on them, and volume. You can definitely shop around a little bit, there's probably several local people who can talk you through it and bring you some offers to the table from various processors, but also get a quote from people like TSYS, First Data, and Chase Paymentech directly. I'm remembering fees varying from $.05 to $0.10 and 0.10% to 0.15% on top of interchange. The visa interchange rates are available at (1) to give you an idea. You're mostly interested in the eCommerce categories probably, so you'll be paying 1.80 to 1.95% plus $0.10 on top of whatever you're paying from you're processor for credit cards, debit cards are cheaper. Many people that do micropayments will try to combine some transactions together, in order to save money. That said, you might be interested in paypal micropayments (2), as they only charge $0.05 + 5%, which for a $2 transaction, is a big savings. 1: http://usa.visa.com/download/merchants/visa-usa-interchange-reimbursement-fees-april2013.pdf http://usa.visa.com/download/merchants/visa-usa-interchange-... 2: https://www.paypalobjects.com/IntegrationCenter/ic_micropayments.html https://www.paypalobjects.com/IntegrationCenter/ic_micropaym...

ashray 13y ago
Thanks for the detailed information. That certainly clears things up a bit. I've been using Paypal micropayments for the past year or so and it's been the best bet for $2 transactions (I pay 6%+$0.05 for cross border payments). Ends up being $0.17 per transaction. I haven't come across anything that beats that by a large enough margin so as to replace Paypal yet. The only downside is that Paypal is applying the standard 6% fee to $20 transactions as well (as opposed to the lower 2.9% fee), so I either need to route these transactions to a non-micropayments Paypal account or do something else with them... this is what I am currently working on solving. The difference doesn't come out to be much for a $20 transaction but with higher transaction volume it will certainly stick out as a sore point.

pbreit 13y ago

If you want customers to be able to pay with a credit card, it will be difficult to get individual charge fees under $0.30. If you expect repeat purchasing, best to aggregate charges either ahead of time (aka "pre-pay") or post.

WildUtah 13y ago
How does iTunes do it? They're doing $0.99 payments all the time.
- notatoad 13y ago
  probably some combination of - charging a 30% processing fee - taking a loss on small payments - bundling charges whenever possible - encouraging people to buy itunes gift cards - being big enough to negotiate better rates than normal people can.
- deleted 13y ago
  [deleted]
- pbreit 13y ago
  Apple aggregates to a great extent but I think could go much further. It only bundles up purchases over several days or perhaps a week. Since it's minimum fee is $0.30 (30% of $0.99) it just about breaks even on single song purchases. But Apple would be fine with the whole App/iTunes Store being a break-even proposition since it has consistently stated that its interest is in the hardware sales.