If anything, the calculation is overstating the realistically expected cost in a few ways:
- Particularly B2B SaaS will likely have some % of invoice/bank transfer payment. Assuming 100% payment via credit card is a 'worst-case' assessment.
- Even given that, the bulk of the cost are credit card processing fees, which you would pay either way. Maybe not exactly at stripe's rate, but something similar.
- Stripe Tax for example doesn't charge 0.5% of revenue flat. It only charges for revenue where you’re registered to collect taxes, which for an international business will be far from every transaction (depends on locality & customer base, of course). In addition to that, the pricing drops to 0.4% if you process more than $50k per month.
All in all, I appreciate the effort, but given that Lago is a stripe competitor, this calculation dressed up as a 'neutral assessment' on Github seems disingenuous and makes me trust them less.
For a B2B SaaS this likely represents a minuscule percentage of the revenue. For a $5/month subscription, this fee alone is more than 6%
That being said, this has nothing to do with stripe's software platform which this article focuses on, and all to do with credit card payment fees. Braintree charges "2.59% + $.49 per transaction". PayPal charges "3.49% + $.49 per transaction". Square payments charges "2.9% + $.30 per transaction".
Why are US-based payment services so fucking expensive?
I’ve found these schemes much less prevalent in Europe (with the exception of AMEX, but half of the vendors in Europe seems to not accept that anyway).
On top of that, in the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards. This prevents it from becoming the points hell of the US market.
IMO, the EU should either break up MasterCard & VISA, nationalize them, or build their own system (maybe unify Girocard, Dankort, etc?) and make that mandatory.
The difference between the MasterCard & VISA fees and e.g. Girocard fees is almost 2%. That's equivalent to paying an additional 2% tax on everything.
With that amount of money we could make all transit in the EU entirely free of charge and expand it quite a bit, yet all it's doing right now is make some rich assholes even richer.
It's clear they're trying to kill those off, and it's working.
That's why merging the national systems and making that new, merged, EU wide system mandatory is absolutely essential.
I always treat them as a system for the corruption of myself. They pay me to use their card (for a payment!!!) and therefore I get corrupted and I become part of the problem.
Depends on the card. Interchange fees are much lower for basic cards so if you get at least 2% cashback, that's break-even. Of course cards with annual fees get a lot more rewards in the form of transferable airline points and have much higher interchange fees to cover that.
The biggest variances involve non-exempt (Durbin amendment) debit cards.
I guess the lowest tier cards really do subsidize the rest.
I also think a lot about the term "puffery", which in American law is when companies make false claims about a product, but in a fashion where everybody is assumed to know that they're lying, which makes it ok: https://en.wikipedia.org/wiki/Puffery
It really says something to me that we supposedly have such a deep expectation of commercial lies that it's acceptable. I think in a healthier country someone would say, "Wait, what if they just didn't lie?"
(I grew up in France but part of my family lives in the US).
Some of the interchange fees are paid back to the customer in the form of cash back and other perks and rewards.
Nobody in your bubble. Just off the top of my head I know a couple people who don't have a single credit card, one is mid-50s, one just turned 70.
> US debit cards are basically free
I agree that they're basically free to process payments from, but there are invisible costs to the cardholder associated with using them vs credit cards (less buyer protection, overdraft storms if you accidentally zero your account).
I'm not aware of any downsides of keeping at least one or two credit cards, except for the potential to put oneself in debt. Unfortunately for some people, keeping a credit card is untenable because they're unable to stop themselves from using them.
Absolutely agree re: cardholder costs. In addition it what you said about fees and liability (although I'm lucky to have a bank that doesn't charge overdraft fees), I'm probably leaving a fair bit of money on the table that I could be making back up with credit card rewards / incentives if I wanted to spend the time on it. My comment was only about costs to the merchant, since that's what GP was talking about.
Name-and-fame them (if it wouldn't dox yourself), that's awesome! Are they more lik ea credit union or more like a bank?
> I'm probably leaving a fair bit of money on the table
I have some family who keep ~8 (rewards/travel) credit cards and maximize the incentives by keeping in mind all the categories + percentages for each card, including the couple of them that have rotating categories. It's not a whole lot but it makes my head spin.
I just have a Costco visa and I use it for everything that isn't from Amazon (for which I have a set-and-forget Amazon visa) or Apple (because I'm not going to turn down 0% financing for 24 months with the Apple card). I'm also leaving money on the table... but I don't exactly clip coupons and I even throw away produce (!) that has gone bad through neglect.
that's a bold claim. not everyone bows down to the uber robber barons of the credit companies. i have no credit cards and am surviving life just fine thank you very much. i know i'm not alone.
* 83% of adults have at least one credit card
* 41% adults actually used a credit card in 2020
While it may be a low percentage number, 5-7million people is not "nobody". Question I would stipulate would be adults vs minors in that number.
https://news.yahoo.com/number-americans-without-bank-account... (households translates to how many people?)
https://www.gao.gov/blog/more-7-million-u.-s.-households-hav... (7.1million from April 2022)
Id rather take the benefits.
There should be no difference between buying a 50k car with a bank card or a 50 cent plastic bag. Both transactions use the exact same network.
I don’t mean to defend credit card companies, but it’s not as black and white either.
It used to be a big thing in the US at gas stations where they advertised the 2 different prices. I don't know the details, but at some point that stopped happening. I was under the impression some rule change, but it is making a come back. I don't know if some consumer protection laws were made the revoked or whatnot, but it is possible to not have to automatically be charged for credit card fees if you're not using credit.
Hah, as a European that lived in California for a while this always seemed so odd to me. I just dug up a picture of my car that I took at a gas station, and there's prices in the background:
Cash $2.94, Credit $3.11, for regular gas, and the date on the picture is the 4th of July, 2017. That's quite the difference but roughly in line with credit card fees.
It makes sense that gas stations would do this, it's a pretty slim margin business.
From what I've seen it turns into a compliance mess outside of in-person retail, because many states have regulations and gimmicks on top of it, and the system will end up kicking out a rejection code if you ask for the wrong amount, or on the wrong customer. It's obviously intended that you just bake the cost in for everyone because that avoids people blaming the card networks for higher prices.
The only time I've seen it in person was when I went to make the initial payment on an auto lease; the dealer had a sign up saying that there would be a 3% credit surcharge, which exceeded the 2% cash back I expected from Citibank, so I used a debit card instead.
Another important factor that is missing is currency exchange rates. I don't know how Stripe handles them, but they always resulted in mysteriously missing money in my experience.
But driving Visa et al to be cheaper sounds like a good outcome. I think it might be hard to get them to give up their current firehose of rent they're extracting by sitting in the middle of so many transactions.
At that point, the mobile app store offering is effectively costing well under 10%.
agreed. they have a corporate blog on their site, so there's no reason that advertorial content like this couldn't be posted there. posting on github just seems like a dirty trick to add authority to marketing content. and it feels especially dirty because they don't share their own pricing to compare it to.
> “For us it was quite visceral: these products are not serving the needs of the customers, so let’s build something better,” John Collison argues. “In old-fashioned legacy companies it’s the CFO choosing the payments system. They think all systems are alike, so they just sort the bids from suppliers. But if ... you have a two-person team, both of you writing relatively complex code and solving complex infrastructural problem, you need a simple payments API that – once installed – doesn’t keep changing.”
> ... The company grew swiftly, driven largely by word-of-mouth between developers.
Why would GitHub add authority?
(To be clear, I was just casually browsing HN on a work break, not actually shopping for a payment solution and reading with diligence)
If you have to do sales, selling to a small company is also far easier than to a large company. A startup that just joined ycombinator, and is setting up a marketplace, is easy to sell to: They need something that works, and they can integrate with tomorrow. If you are instead fighting for the ebay payment contract, expect to have a long negotiation process, multiple bidders, and a very narrow profit margin. And after all that work, which every bidder put in, only one company wins, and will probably not make a lot of money. If you are big, you shrug it off. If you are a small company, you die. On top of that, the large customer will always be afraid of you going away, while they will not with your larger competitor, so all else being equal, you are probably losing! So if you are a startup doing payments, you absolutely want to aim for small targets.
Also, startups grow. Sometimes they grow a lot. Stripe didn't get the lyft contract when they were a giant. They got the contract when they were a small company with their office down the street, and rode the growth of Lyft's processing volume. This kind of plan is something Lagos should be trying too.
So it makes perfect sense to try to sell to a technical audience: You aren't going to succeed selling to almost anyone else.
Their product is an "Open Source Metering & Usage-Based Billing" solution on that Github repo, so it does seem like they're using posts on Github to drive people to use their product.
Why on earth is this person not sweeping nightly into their business bank account? Never leave money in your processor account... they are not your bank!
This is the same stuff people complain about with PayPal - failing to realize this scenario (to this extent where it's threatening your business) is almost entirely the business operator's fault due to a severe lack of understanding of how to use a processor.
My guess is this person's processor account went from small benign numbers and then suddenly had a surge of business (possibly seasonal). This sudden increase in volume can (and will) trigger anti-fraud audits from your processor if you do not already have a well established history with them. You go through it, and move on. Generally it's not an issue if you sweep nightly!
Spread the word - your payment processor is not your bank. Sweep nightly, it's almost always a free service they offer.
Reminds me of crypto exchanges too. Don't leave money in an exchange, use it to, well, exchange money, then move it to your bank account or wallet.
Best course of action I've found, is to build your initial MVP with one payment provider but as soon as you've validated there is a market and before you move on with other features, add a backup provider you can switch to at any time because chances are you will get blocked at one point. If not permanent, at least temporary.
If you're clever enough when you build the initial integration, you make sure to abstract out the specific payment provider so it's easy to plug in a new one. Shouldn't add too much complexity.
Sucks but the reality we live in...
I don't think it's a bad idea necessarily, but it's very difficult to almost impossible to make this a "flip the switch" setup, particularly for SaaS businesses which are almost always recurring payments.
We're a largish Connect user and for us the key thing is just establishing good relationships with reps in the company and maintaining those. We've had a couple of customers run into freezes and other issues and while standard support is basically a brick wall in those cases, getting someone internal to escalate can be hugely beneficial.
PCI tokenizer is pure snake oil.
"dear auditor, i do not store the credit card number, only an unique index to fetch it at any time on this rest service. i promisse it is totally not the same thing"
good luck trying to make thay avoid compliance work.
Blatant FUD. https://support.stripe.com/questions/export-customer-card-da...
I don't think the average ISO has the knowledge let alone a published set of credentials to receive card data, the ISO industry really sticks to the tooling platforms provide.
Conversely, if you’re anything but the most plain jane business, I would avoid transitioning from Stripe to Gravity like the plague. I watched them reject a candy company and a knitting goods business that were both reputable, over a decade in business each, and never had an abnormal spike in sales or questionable products on offer. Gravity either couldn’t get Stripe data transferred or properly integrated and ended up turning away both businesses (while blaming them for noncompliance).
If anyone wants to learn more about how Tilled works directly with ISO's who need a payfac solution for ISV customers email us at email@example.com
The processor has to protect themselves from being used in some sort of Carding-Farm Scheme, has to protect other merchants from the processor being cut off by issuers (for having too many fraudulent transactions/chargebacks), and protect actual Card Holder's from fraud (since the processor/merchant ultimately are responsible for the chargeback).
People are always surprised when their new account with a few hundred a day in revenue suddenly surges to thousands a day in a short period, and the processor wants to investigate why...
Use the tools freely provided by your processor to protect yourself. Sweep the balance into your business bank account every single day - it's usually automatable and free. There is never a reason to store more than 24 hours of revenue in a processor account... they are not a bank!
stripe has a lot of value for out of the box integration, but if you're running your own custom solution you will need to put the same effort to integrate stripe at a 3x cost compared to adyen.
I understand it's a silicon valley thing and most likely those who use it don't get the same public pricing other people get, but aside from branding stripe is extremely expensive compared to comparable solutions.
and 4% of your top line is a huge thing to pay
Those are all use cases we needed to cover either way and we did, but errors were part of the routine more than exceptional events. In comparison Stripe was way smoother and documentation/support a lot easier to grasp.
But yes their documentation can be a bit poor around the edges and if you don’t really know what you’re doing
Stripe provides self serve with is nice for getting started and I’m guessing once you’re big enough to jump to adyen, you can likely get a discount on the sticker price since you have bargaining power
But for a $10M SaaS startup, this would come to $350k/yr (assuming some amount of non-credit-card and non-taxed payments). I would say at least 60% of that you would pay anyway to other payments processors, even doing all the software stack yourself (nothing is free in the world of finance, after all). So that leaves you with $140k p.a. for a software stack that covers billing UI, invoicing, taxes, financial reporting. It's far from obvious how you can come up with a comparable solution yourself with a budget of at most 0.5 developers and 0.5 designers that your $140k would get you.
The real question is how much do you want to put your eggs in a single basket. The company I’m at now has a multiprocessing setup that requires more work but isn’t completely dependent on a single provider.
I switched to Wise and pay now an order of magnitude less for that.
1/ To prevent such a feeling, we've included this disclaimer at the beginning of the post, (i) to state where we stand vs Stripe, (ii) the source data is Stripe's pricing, happy to share more details about the hypothesis
"Disclaimer: This analysis is based on Stripe’s public pricing as of July 21, 2022. Some merchants may be able to negotiate fees or benefit from grandfathered plans. Lago partners with 'Stripe Payments' and can be used as a complement or replacement of 'Stripe Billing'."
2/ I think below comments (to be clear: comments from people completely unrelated to Lago) show how you can reach 4 to 8%. It's also one of the reasons why 'Paddle' is an attractive solution in Europe, it's an all-in-one solution that takes 5-6% on revenue and provides subscription management, payments, invoicing, tax management.
Let us know if you need more info, or if you have feedback on what we could have done differently. In any case, I genuinely appreciate that you took the time to comment!
Otherwise, the "no one knows exactly how much but up to 8%" framing reads like FUD to me.
You can easily get close to that if you run a B2C subscription service charging at typical consumer price points - think Netflix but small enough to pay Stripe its standard fees - and you're outside the US so you have a lot of international cards and currency conversions to deal with.
At what price point? I would imagine anything lower than... $200/mo? $500/mo? isn't worth ACH setup?
I could be wrong. Would love to hear relevant experience on what the cutoff is.
>We asked this question to dozens of SaaS founders and none of them was able to provide a precise figure. Answers ranged from 4 to 8% of their revenue.
I'm a B2B SaaS founder and paid 2.7% to stripe last month. OP, feel free to update post with new lower bound.
Stripe Radar, Stripe Identity, Stripe Sigma? It all adds up.
I challenge the authors of this blog post to provide me a Stripe product setup that would result in an $8,000 monthly cost for a $100,000 MRR SaaS company. It must be very unusual.
2.5 * 0.029 = 0.0725 + 0.3 = 0.3725 / 2.5 = 14.9%
• Cards pricing. The guide assumes a B2B SaaS business accepts 100% of payments via cards. B2B SaaS businesses on Stripe tend to encourage payments via bank transfers and other lower-cost payment method, especially for their biggest customers, and we try to make it as easy as possible for businesses to do this. Bank transfers are priced at 0.8% in the US. The guide states that “additional fees apply for bank transfers, additional payment methods”, which is not true. We encourage users to use alternative payment methods for this reason.
• Stripe Tax. The 0.5% per transaction cost is incurred only in jurisdictions where the business is obligated to collect taxes. For US-based businesses, this generally represents a very small fraction of total payment volume. (And, of course, the tax collection itself is mandatory, and so some tax provider or calculation engine presumably has to be paid for.)
• Stripe Data Pipeline. Including this as a default cost is misleading. It isn’t. While we think it’s a great product (especially if you have a sophisticated ETL pipeline), most Stripe users don’t find themselves needing it.
More broadly, I think it’s important for onlookers to know that OP is the founder of a business that runs on Stripe and positions itself as an alternative to Stripe Billing. They seem to be trying to write deliberately-provocative posts to go viral, as described in this tweet: https://twitter.com/byAnhtho/status/1601197512227885056. Competition is good, and anyone is of course very welcome to analyze Stripe’s pricing. But, in the spirit of transparency, we’d welcome a slightly more realistic analysis.
That's obscenely high compared to what we pay one of your competitors for more functionality than what Stripe Tax provides.
Your customers are easily pay a 100% premium over alternatives just to keep everything within Stripe.
Didn’t “S Dakota vs Wayfair” require sellers to charge interstate tax regardless of physical presence in the state?
I don’t see how it would be a small fraction given that.
I still would disagree on it being framed as “a very small fraction” of payments even given those stipulations.
I would say, from the consumer end, it’s been the exception rather than the rule that I don’t have to pay WA sales tax.
If you'd like to do it yourself, you can manually define rates at no cost: https://stripe.com/docs/billing/taxes/tax-rates.
So how does Stripe tax work? Can Stripe function as the 'merchant of note'? If I am based in the UK and selling to someone in the UK, Germany or the US, will it collect and remit the taxes for me? Or just tell me how much I owe?
Nobody is arguing that Stripe Tax is not a valuable product, or that the tax landscape is not extremely complicated and worth 0.5% of a transaction.
I am, explicitly, saying that your framing as taxed transactions being “a very small fraction” of US transactions seems false. You are making it sound like the Stripe Tax surcharge will generally speaking not apply to a business, and therefore shouldn’t be used when calculating the amount your company charges.
Do you have anything to back up this claim?
“ Understanding the state sales tax rules for your SaaS business is difficult due to the many different definitions and categorizations. SaaS for personal use is taxable in Louisiana, Maryland, Massachusetts. SaaS for business use is taxable in Nevada, North Dakota, Ohio.”
Meaning that you don’t have to charge tax in the majority of states. Meaning that it can be negligible. IANAL
> Alabama – SaaS is considered a taxable service. Computer software is tangible personal property. (Source)
> Alaska – SaaS is taxable in Alaska. (Source)
> Arizona – SaaS is taxable in Arizona. (Source)
> Connecticut – SaaS is taxable in Connecticut. SaaS for personal use is taxed at the full state rate, but SaaS for business use is only taxed at the rate of 1%. (Source)
> Hawaii – SaaS (and computer services) is taxable in Hawaii. Hawaii’s general excise tax applies to every good and service not tax exempt. (Source)
> Iowa – SaaS is taxable, except when being used for business purposes, then it is exempt. (Source)
> Louisiana – SaaS is taxable. (Source)
> Massachusetts – SaaS and cloud computing are taxable in Massachusetts. (Source)
> New Mexico – SaaS is taxable in New Mexico. (Source)
> New York – SaaS is taxable in New York. (Source)
> Ohio – SaaS is taxable for business use in Ohio and non-taxable for personal use. (Source)
> Pennsylvania – SaaS is taxable in Pennsylvania. (Source)
> Rhode Island – SaaS is taxable in Rhode Island. (Source)
> South Carolina – SaaS is considered a taxable service in South Carolina, as are other charges to access a website. (Source)
> South Dakota – SaaS is considered a taxable service in South Dakota, as are other charges to access software. (Source)
> Tennessee – SaaS is taxable in Tennessee. (Source)
> Texas – SaaS is considered part of a data processing service in Texas and is 80% taxable and 20% exempt from sales tax. (Source)
> Utah – SaaS is taxable in Utah. (Source)
> Washington – SaaS is taxable in Washington since all software, delivered by whatever means, is considered taxable in the state. (Source)
> Washington D.C. – SaaS is considered a taxable service in Washington D.C. (Source)
> West Virginia – SaaS is considered a taxable service in West Virginia. (Source)
SaaS is also far from the only industry Stripe serves. But even if it were, close to half the states require taxes on it in some way, shape or form. Meaning it's not nearly as negligible as you're making it seem.
I also want to reiterate the bar is "very small fraction of total payment volume". Very small really implies single or low double digit percentage. While some of the biggest states are missing, you still have around 40% of the population represented in those states. It seems very unlikely, even with tech's concentration in California, that 40% of the population results in "very small fraction of total payment volume".
OP here. I appreciate the inputs, we're big fans of Stripe at Lago. We operate in the billing space, and are alternatives to home-grown billing systems, Chargebee, Recurly, etc. and Stripe Billing.
1/ Some users use Lago as a complement of Stripe Billing, or don't even consider Stripe Billing, and we built a native integration with Stripe payments.
Out of transparency, the first lines we wrote in this post stated that:
"Disclaimer: This analysis is based on Stripe’s public pricing as of July 21, 2022. Some merchants may be able to negotiate fees or benefit from grandfathered plans. Lago partners with 'Stripe Payments' and can be used as a complement or replacement of 'Stripe Billing'."
> 'write deliberately-provocative posts to go viral'
Thanks for quoting my tweet. I actually shared 2 old articles I wrote in 2021 this week, that made the front page of HN, unrelated to Fintech:
- One on my personal blog sharing what I learnt about press relations, main message being 'don't waste money on an agency if you're early stage' because I've seen this happen too often, and too many founders asked me the same questions about this topic  I was actually surprised it was read, as HN is known for being more 'engineering oriented' than 'marketing oriented'.
- Another one about 'scouts' not being necessarily a good thing for founders, with Sifted (TC for EU) which is a position I stand for as a founder and as an investor, and I think Europe should mature towards this topic 
The TLDR is: I've been writing about a wide range of topics for a long time, things I like to share, things I stand for and want to have an impact on and was grateful it resonated within my community.
Btw I think the HN ring vote is pretty strong, and HN community very 'fierce' (at times), so I don't think we could have got attention by just 'clickbaiting' and attempting to go viral.
Like any startup, we're excited to share our vision of the world, and this is why we're writing.
Lastly, here are two other examples of content that were intended to spark a discussion in our community (and it did) and don't bring much to Lago as a business:
a/ What not to say to someone who has just been laid off 
I wrote it after my partner was laid off and too many people around him just did not know what to say, which amplified the 'grief'. It reminded me of my personal history of grief, and wrote the post. I received dozens of messages of people who have been laid off recently, or whose friend/closed ones had been fired. Founders reached out to say they would share it with their team (it's not an easy topic to discuss).
b/ I recently shared my thought process about moving to the US after YC, as it's a recurring question we have as YC founders based in Europe. This sparked a lot of discussions and helped me iterate on how I approach the question, in a scalable way. I believe other founders learned things by the discussion it sparked, some founders reached out to help me with the US visa etc. Feel free to read it here . Took me some time to write it, but the main ROI was how I've been able to connect with other founders, at the same stage, or 5 steps ahead, and learn from them. And, based on the comments/discussions, I believe other founders in the same situation benefited from this too.
My point is: not all content is written in an attempt to go viral, but I just write about what I believe brings value, and it happens to go viral (whatever you mean by that) when it does have an impact. Regarding my tweet, I think a lot of people wonder how to approach HN, and make a lot of rookie mistakes, and I could also write about what I've learned. This would (if I write it successfully) in fine help having better content on HN.
YC says 'build something people want', I also happen to (occasionally) write things people want. And there's no better gift for a writer.
For example, you chose the most expensive Billing plan (Scale), which includes things startups don’t need. Similarly assuming the most pessimistic payment mix where everyone is using international cards along with currency conversion, which will never be true. Similarly adding data pipeline.
It’s not “Stripe’s real pricing”, as you’re no doubt aware. That’s where it turns from informative to marketing.
If there’s a way that Lago, or any other Stripe competitor for any product, cuts down on fees, that’s fantastic. There are definitely ways to beat Stripe’s fees on payments, for example, though they’re as difficult as the are transformative.
A lot of founders don’t get what products they use at Stripe and that the cost adds up as a % of revenue.
% of revenue makes sense for payment processing, does it really make sense for SaaS products (billing, tax?) ? What’s the rationale?
About offering alternatives for fintech software (such as billing, tax), with a pricing that does not take a cut on revenue, this is exactly what we are building.
I work in the industry for a payment processor. It's not a silicon valley startup (it's basically run by salespeople) but we have way better pricing and you can get someone on the phone if you have an issue.
Reading HN, you might think Stripe is the only option.
Having said that, feel free to share your company becaise I m always open to evaluatin for our company (low 7 figures ARR)
That's their reputation, but it doesn't always stack up in reality.
Recent example: https://twitter.com/levelsio/status/1600316372344373249
Canonical HN example: https://news.ycombinator.com/item?id=30535572
The association of Stripe with simplicity and good dev experience could be more due to Stripe's marketing/PR than the views of devs who've used Stripe APIs, at least from the few things I've read.
Of course things change, and now Stripe's API has been rewritten to extreme complexity with scattershot documentation and unintuitive terminology. (I sell products, but in the API I have to sell prices??)
I don't think it's marketing/PR so much as a halo effect and reputation from years ago. My experience with stripe 5 years ago was/is simpler and easier than it is looking at it today. More products/services/options/requirements - it's more complicated than it was years ago.
But looking at it for a project 5 years ago, it was certainly simpler compared to authorize.net for what my project needed. Just the UI alone to go in and manage/test things was more straightforward and pleasant, even when I hit issues and roadblocks. Authorize.net looked like it hadn't changed much since 2005 or so when I'd looked at it then. May be better now - haven't looked since 2017.
For example, Stripe applies discounts prior to proration. So if a customer applies a $100 per month discount on a $1000 subscription, and signs up halfway through the month, they're charged (1000 - 100 * 0.5), not the more intuitive ((1000 * 0.5) - 100). Nitpicky, but not what I expected.
As an example, a few years ago the EU brought in Strong Customer Authentication (SCA). Stripe was one of the few companies ready for this, being ready about a year before. I used them at the time and adopted their SCA support and it worked well.
We also happened to be considering alternative payment processors at the time. Braintree had some basic support for it, not fully ready, and seemingly undocumented. Other suppliers didn’t even know about SCA despite notionally taking GBP payments.
Of course it’s fine to only sell to the US market, but Stripe is pretty good in many places and I suspect that’s a significant contributor to their popularity.
So if a customer pays us $100, we are getting $91 to our bank account which is absolutely ridiculous.
If anyone looking for next $10B-$100B business idea, work on making the transaction fees to 1% and you can take business from stripe and PayPal immediately.
Wise.com is doing this and I hope more such companies work on this.
The disruption has to come from bypassing credit card companies like Visa and Mastercard.
In India, almost every merchant is using UPI which saves them fees of credit card processing.
The world banking is getting more advanced and technical and I am sure payment gateways can bypass the credit card and currency conversion fees with direct bank to bank transfer.
For larger Amount, we are asking our customers to use Wise instead of stripe or PayPal as the saving for us is significant.
When I checked about 2 years ago, transferring bitcoin from one wallet to another was negligibly cheap, although I think it took about 20 minutes for the seller to be certain that the bitcoin had been sent to them (too slow for most website payments).
Curious to know if crypto could solve this problem though, if not now, maybe in the future. If some of the 9% fees were passed on to customers in the form of lower prices, it could be quite appealing and give a price advantage (if only a few %) over competitors.
At scale your Fx fees can be less than 2% of the conversion amount, I know that at scale the fees can get down to <0.2% if you're moving multiple millions (USD) in a month.
I know that both Adyem and Braintree will capture into local currency, so you can avoid Fx fees by the payment processor themselves.
Why Stripe isn’t partnering with them, I don’t know. My bank partners with Wise to get the best exchange rate possible (Bunq) when I’m out of the EU. It’s fantastic.
Can you add a bank account which can handle alternative currency payout and let your bank handle do conversion?
In not sure about India, but in AU, we have the option to receive USD payouts to USD accounts in Australian banks, so you can avoid Stripe's conversion fees. But now you have USD in an AU bank. What are your options? Convert to AUD at the bank's terrible exchange rate. Or send the money to a US bank (or Wise), paying horrendous international transfer fees.
I hope I'm missing something but I don't see this offering from Stripe as being very useful.
I tried that, didn't work. I opened a local USD account in my non-US country and tried to add it for payout to Stripe. Stripe only allows (at the time I checked, please correct me if that has changed) US based USD accounts with ACH routing information.
You can also get a multi currency bank account. There are some options available to Indians which provide US based ACH and IBAN. Be careful with FEMA compliance.
If you can offer subscription model and can do bank to bank transfer with 0.5% fees, you will disrupt the whole subscription industry relying on visa/Master card monopoly. Not only this, banks also charge very high currency conversion fees which you can disrupt.
You of course need to build lot of things from scratch but with most of the banking now a days going online with new APIs, it is possible.
You're right also, I live in Germany since a couple years and and businesses taking money off your bank account is definitely a thing here, I don't know for how long. But mostly it's done by your electricity utility or by the tax man, various fees e.g. the fee for public tv etc. I don't know if there are costs to it, but probably yes.
A workaround to Stripe fees for FX card payments would be to have a set of Wise accounts to receive the money in the local currency (one account or wallet for each currency)
but then you'd still need to pay Wise conversion fees, once you want to gather the money from the different wallets into a master account
If you don't mind me asking, what was your process for dissolving the corporation? I'd love to shut down mine but last time I looked it up I got bogged down in all the legalese about Notices of Dissolution and Board Approval and all that jazz.
Almost as if all the "meatspace banking" regulations had their purpose, born out of decades of experience with the many, MANY, M A N Y weird edge cases that crop up sooner or later.
Not to say that the meatspace regulations and practices are fine (from an European POV, the fact y'all still use literal paper cheques instead of bank transfers and credit cards instead of direct debit because consumer protection is way easier on CCs), but still... it's amazing none of the fintechs ever really got hit hard by regulation agencies despite the continuous complaints.
> and there’s also a transaction fee of $0.25 + 0.25% (in addition to the cost of Stripe Payments and other Stripe products)
This is not a per-transaction fee. That implies that the fee is per-payment. This fee is per-payout, which is the ACH credit (or debit rails transfer) to the account holder from their Stripe balance. It's not uncommon for the payout schedule on accounts to be at least weekly, so you have many payments worth of funds batched together into a single payout. The per-payout fee of $0.25 ends up being a lot smaller as a percentage in practice.
I would have been surprised to learn that they aren’t priced at a premium on the back end, because they certainly feel better and more trustworthy.
Did an AB test a while back and mere presence of the PayPal option boosts sales through all other options plus generates extra sales through PayPal itself. Not something that I was expecting at all, but the confidence level was over 99%.
This can become hugely problematic as your business grows since you're a sub-account of Stripe business, making you beholden to their business practices and costs.
My comments aren't intended to sound negative. There's Pro's and Con's to different business models. Getting quick access to the robust tools Stripe offers comes at the cost of you giving up some control over your companies operations.
Payment processors are low-margin. It costs interchange fees and scheme fees to reverse a transaction, it’s not free.
It’s unfortunate for the businesses that process a lot of returns, but processing fees
would go up for everyone if returns were free.
I replied that this description could be extended to include how it generated and associated unique customer IDs. The way it is built now-a-days it is trying to be the central key for SaaS user accounts. Effectively: store all your user data with us.
I thought it was some kind of oversight but it is most likely about lock in.
I am actually working on https://tier.run in part to help create a clean separation of interests between billing (and entitlement, and metering, and feature flagging) systems and how you store and access application and user data.
With Tier we have `tier whois`  which lets you get the Stripe Customer ID based on your own userId.
I'd love your feedback if you think there are improvements we could make.
Their support, on the other hand :(. ! Maybe it will get better with advances in LLMs, because I'd be shocked if I was ever talking to a human.
I wish legislators would force all payment processors to play by the same book banks have to play by; the same consumer protections.
But in terms of pricing, from what I have researched for my SaaS website, Stripe is not bad at all.
When it comes to choosing payment solutions, we need to consider the reliability/quality. You might be able to pay x% less fees with other options but 0.2% more of the down time will cost you much more.
All these companies in this realm are vultures. They add nothing - they just take their cut to do something that should be easy.
But people like to bash Apple.
Thy don’t bash other platforms or channels which charge 30% or even more
For the other fees discussed in this article, you do get additional capabilities. Distribution is not one of them, but it's not an apples to apples comparison.
For small entities Euro compliance is impossible. Say for Michigan's largest Mustang parts website. Euro's often respond this they would never bother and their targets are big tech, but illegal and not prosecuted is not the same as legal. And it is telling that the law doesn't say "this only applies to corps with more the 100 million in Euro revenue". It applies to all companies and individuals. It should be possible for such a site to "opt out of Europe" and have safe harbor.
And there is no way it makes sense for the whole world's web to be regulated by a Euro court. There is no reason for a user in the US to see GDPR banners.
Maybe a great firewall to id Europe users, and if you use a vpn to escape it US law doesn't recognize it as valid.
GDPR is based on citizenship, not location.