

We’re Switching to Balanced and Cutting Our Fee by 40% - steveklabnik
http://blog.neighbor.ly/2014/switching-to-balanced-and-cutting-our-fee

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primitivesuave
I switched to balanced from PayPal because Balanced makes payments dead
simple. Their documentation is also super straightforward- it literally took
me an hour to figure everything out. Also, they make ACH possible, which saves
us a considerable amount of money on processing fees. Also, their JS library
ensures your web servers are never touching card numbers, whereas for PayPal
your server needs to receive all of the card information in order to make a
transaction.

When you compare Balanced to PayPal's unbelievably shitty interface,
horrendous documentation, and lackluster customer service, it's a no-brainer
to switch.

The only thing that PayPal has that Balanced doesn't is a debit card with 1%
cash back, which could potentially shave a significant amount off processing
fees. However, PayPal decided that like the rest of their technology, they
would make it the most annoying debit card possible by emailing you a receipt
every time you make a purchase, and not giving you any way to unsubscribe from
receipt emails.

tl;dr: I pay more money to not have to deal with the steaming pile of shit
that is PayPal.

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yasth
Paypal actually has a couple options for having paypal's servers handle the
actual card collection so your server never need touch it.

That said their API (or rather APIs as they have one for every day of the week
with all sorts of subtle differences) is ... not fun. I know of several
implementation in fairly major open source shopping carts/ecommerce platforms
that don't properly use paypal to handle the CC data, and I only know that
because I was looking for an actual example as PayPal doesn't make it terribly
easy.

Also, the receipts filter nicely into a folder and then you never see them
again.

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thejosh
>The selection process began to balloon. We evaluated based on every
conceivable metric: features, fees, feasibility … a spreadsheet mapping around
30 criteria across six finalists became the focus of a week’s worth of work.

If a weeks worth of work is worth to save a few % per transaction, what kind
of volume are you doing that pays off that?

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yasth
Almost any volume makes it worthwhile. 40hr*$60/hr = 2400 /.02 = 120,000 . So
more or less since they saved 2% they could justify it if they had $120,000
flowing through, which is a pretty minimal transactional volume (your local
corner store almost certainly does well north of $500k a year in sales volume
through kitkat and beer sales alone) (Of course they decided to further their
competitive advantage and lower fees, but that is also perfectly rational)

This is why any business model that involves taking a percentage cut off the
top of things is great if you can get almost any adoption. It really does add
up incredibly fast.

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spydertennis
Aren't Balanced's fees 3%? How can Neighborly lower their fees to 3% and still
make money?

~~~
seanmccann
Probably just a growth play. Balanced starts at 2.9% and hits 2.7% with only
$100k/month processing. It goes to 1.9% with $5 mil/mo.

