

What is the best credit card merchant for small transactions? - snickmy

Hi everyone,
given a business model similar to app store, and expected transactions of small value (~1.5$). What&#x27;s the best credit card merchant to use? From a quick search there are a lot of 30cents+2.9% per transaction. I found a bit of overkill to drop 30cents every 1.5$.<p>I&#x27;m sure there is a lot of business out there that run through the same situation. Any suggestion ?
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patio11
Paypal Micropayments is 5% and 5 cents.

That said, _strongly consider_ anything you can do which pushes your average
transaction value up above ~$20 or so. This is partly due to decreasing the
bite of transaction fees but mostly because building a business on $1.50
transactions is really, really, really, really hard when Steve Jobs has not
already arranged a captive audience with credit cards on file.

One of the traditional solutions in e.g. social games is selling a virtual
currency in $10, $20, $50, etc increments and then using the virtual currency
to effect small-value payments. For example, $10 gets you 7 dragon eggs, $20
gets you 15 (one bonus egg!) The thing you were thinking of selling for $1.50
now costs 1 dragon egg. This both helps you get your average purchase up,
saves your processing costs, and also increases transaction volume by not
having people feel like they're being asked for $1.50 on a frequent basis.
(The fact that $10 doesn't divide evenly by 7 is not accidental.)

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taprun
As an added bonus, you also get money sooner (pulling purchases forward).

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yellow_and_gray
I'm disappointed in Stripe on this one. There should be better rates for
micropayments.

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snickmy
I agree, Stripe is one of the most advanced, easy to plugin platform with just
a completely wrong old school, bank-a-like business model.

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MalcolmDiggs
It's surprising right? I like pretty much everything else about them.

To the OP's question: for apps that facilitate micro-transactions I ended up
using Stripe, but I forced the user to add a balance to their account first.
So, rather than charge their credit card for every micro transaction, they'd
add $20.00 to their account in the beginning, and every transaction would just
draw-down from that account. Antiquated, but seemed to work alright.

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johnm89
what kind of monthly volume are you expecting? are these cardless
transactions? if they're cardless i dont really see a scenario where you can
have $1.50 transactions and make any money. too high risk for the processor.

EDIT: if you don't have a couple months of volume to show a processor it makes
it harder to get a good rate. brand new company with online transactions are
pretty much highest risk category for a processor, therefore highest rate.
fees the processor has to pay visa would be close to $0.50 probably

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snickmy
I agree about the negotiation provided the interesting volume. My curiosity
is.. thinking of apps store and music store. They do indeed process 1 time
transactions of a low value. If is true that the visa fee is 0.5$ I can't see
any revenue stream from a 0.99$ app.

There must be a completely different deal that opens up once you have that
volume

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snickmy
Just for the record PayPal does a 5% + 5p (Uk gbp) per transaction on
micropayment (<10£).

I let you do the math :)

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thevenusproject
bitcoins

