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Other payment processors that do not use a 'freemium' model charge less for their processing fees (and varying rates across cards). The reason it seems freemiu
by jly 11y ago
Other payment processors that do not use a 'freemium' model charge less for their processing fees (and varying rates across cards). The reason it seems freemium for Stripe and other competitors is that they charge higher processing fees for the convenience than other traditional processors do.
- dangrossman 11y agoIt's a nice spread too. They take a 2.9% fee for charging a debit/check card, but pay Visa as little as 0.05% + $0.21.
- onetallnerd 11y agoNice? 2.9% sounds horrible. Why do we pay that much again?
- deleted 11y ago[deleted]
- vonklaus 11y agoI think the comment meant it was a nice spread for Stripe. It then pointed out the delta.
- jkestner 11y agoWhy do we pay that much again? Assuming risk.
- dangrossman 11y agoI'm paying 0.15% + $0.26 for those transactions through another MSP. I think many people are paying the 2.9% for the convenience Stripe and PayPal offer over applying for and integrating a merchant account and gateway, not because they're a huge risk and nobody else would take their business at lower rates.
- jkestner 11y agoBut that doesn't include the credit card association's 2.10% or whatever, does it? Stripe does. Yes, collapsing the confusing levels of this process is certainly worth something.
- dangrossman 11y agoNo, it does include that fee. That 0.05% + $0.21 I referenced is the interchange fee charged by Visa. That fee was capped at that low level by the Durbin Amendment of the Dodd-Frank financial reform legislation in 2010. Stripe's pricing has been 95%+ markup when it comes to debit/check cards since then. Other card types don't have such an enormous fee spread, but unless all your customers are paying with corporate cards and AmEx, 2.9% flat rate is a real nice margin.
- jkestner 11y agoAt the risk of being dense, are you sure you're not talking about debit cards? I've never seen interchange fees lower than about 1% for credit cards. In what I read from the Durbin Amendment, I've only found the specific numbers you mentioned in reference to debit cards. If I'm wrong, I want the name of your merchant processor!
- dangrossman 11y agoI am most definitely talking about debit cards. I said "fee for charging a debit/check card". They make up 25% of my online processing volume despite being a mostly B2B business. They're probably more than 25% of Stripe's volume. Visa interchange fees: http://usa.visa.com/download/merchants/Visa-USA-Interchange-Reimbursement-Fees-2015-April-18.pdf http://usa.visa.com/download/merchants/Visa-USA-Interchange-... A screenshot of a transaction report at my processor: http://i.imgur.com/fSycwUS.png http://i.imgur.com/fSycwUS.png Feel free to e-mail me if you'd like any other clarification or information. It's in my profile.
- 11y ago
- hahamrfunnyguy 11y agoWhich service are you using?
- Silhouette 11y agoHow nice that spread is does depend dramatically on the size of the transaction, though. I'm guessing a service like Stripe has plenty of customers in B2C markets, where selling something for $10 is hardly unusual. At that price, they are only making a few cents on the transaction in revenues (not profits). Obviously on a $100 transaction the figures work out much better for them. I think Stripe also still charge the same rate for all card types, but behind the scenes they are probably paying significantly higher rates to some card networks than others.