Uh, that 3% includes the amount they are passing on to the credit card company. Which, for a little guy like me, is around 3%. It is literally no more expensive to go with Stripe than to roll my own.

Exactly. I signed up with stripe maybe 5 years ago. At that time, I was trying to find a processor, and came close to signing with a bank. The bank wanted me to sign a long-term agreement, the agreement had disadvantageous and confusing terms with unclear costs, and it was more expensive than stripe at baseline. The sales process was really sleezy: I only discovered all those terms because I read the contract carefully before signing.

Before that I used two other processors, both of which had a confusing mix of monthly and per-transaction fees.

If you are a very, very large business, maybe you can do better than stripe. But if you are small or even medium size, I am skeptical there is a better deal out there.

Even a small business can easily do better than A (when it comes to fees). The only time stripe would be a good deal is if you are processing almost exclusively high end corporate cards like Amex or corporate purchasing cards.

Stripe and others like them is also the best rate if you are processing very small annual amounts. Because every merchant account has around $10 in monthly fees, minimum. If you are not paying a monthly fee, either your processor is paying it, assuming that they will make enough on the spread to make up for it, or they are running your processing under their own merchant account and taking on the risk. Which is likely what stripe does until an account is large enough to warrant moving it under its own merchant account.

Here is an example of a relatively expensive rate for processing with a merchant account (2% plus 10 cents per transaction, with a 10 monthly fee) versus Stripe. Note how the breakeven for getting a merchant account is when you start processing more than $428 a month(assuming an average transaction is $15).

https://www.desmos.com/calculator/zuzn1lhfdg

My experience in the U.S., admittedly as a very small size merchant, is that 2% +10 cents is considerably better than I can get with a bank.

Banks have 2nd tier offerings for credit and debit processing that don't focus on gaining customers with low rates. There are a handful of platforms, First Data, Tsys, Elavon, Worldpay/Mercury & Heartland, and everyone who sells merchant services is selling you access to one of those platforms.

Yes. Years back we moved from Elavon to Stripe since 2.9% on each transaction sure beat uncertain 1.9-5% we were getting based on what card customer was using (corporate and point cards carried bigger fee).

I was casually chatting with a small business owner about five years ago and he was raving about how much money moving to Stripe saved him, especially on AMEX cards.

Stripe might be taking 30% of that 3% and passes 70% to payment networks. please look at adeyn balance sheet(https://www.adyen.com/investor-relations)

Well I would assume Stripe gets a better deal than a little business would, and I would expect them to take some significant cut, otherwise they would not be a viable long-term provider, yes? I don't want to be exploited mercilessly, but I also don't want to rely on a payment processor that makes no profit, it seems like they would not stay around for the long term.

stripe gets probably 0.8% + 5¢

1) Stripe pays around 1% give or take 25 basis points depending on card type and location.

2) I highly doubt you’re getting sub 1% rate in the US with only $2M monthly, especially if you do card not present transactions. (See sources, I won’t call you a liar, because you could be in a very tiny niche or not US based, but all signs point otherwise).

3) most folks who use Stripe aren’t doing $2M in volume and likely don’t have the business credit rating / history to get a very low take rate. Further, Stripe doesn’t nickel and dime customers with other fees, so for lower volume customers the 3% actually might be a savings. If not, it’s a low markup for ease of use.

4) was the hostile attitude really necessary?

Sources:

https://usa.visa.com/dam/VCOM/global/support-legal/documents...

https://usa.visa.com/dam/VCOM/download/merchants/interlink-i...

https://www.mastercard.us/content/dam/mccom/en-us/documents/...

This is wrong. Stripe passes 2% or more of it's 2.9% on to Visa/MC and the card issuers. And larger Stripe merchants can negotiate that down as well as enter into an "interchange plus" arrangement which would be measured in BPs.

I would love to know where you are obtaining an average sub 1% processing cost for US cards. USA has some of the highest interchange fees in the world.

I wonder how this come about. Interchange in Australia is way lower, you can get rates around 1% without too much effort and interchange plus rates even lower on average.

You would think a larger market like the US would be lower not higher because of the volume.

Is chip and pin ubiquitous in Australia? That would lower fraud rates. Also, the EU has a 0.3% cap on interchange. Average in US is 2%. My guess is Australia has a cap as well. So the answer is, lobbying.

Yeah turns out we do have a cap:

The weighted-average credit benchmark of 0.50 per cent will be maintained.

The weighted-average interchange fee benchmark for debit cards will be reduced to 8 cents per transaction, which will apply jointly to debit and prepaid cards in each scheme.

Interchange fee caps will be supplemented by ceilings on individual interchange rates: 0.80 per cent for credit; and 15 cents, or 0.20 per cent if the interchange fee is specified in percentage terms, for debit and prepaid.

To prevent interchange fees drifting upwards in the manner that they have previously, compliance with the benchmark will be observed quarterly rather than every three years. A scheme will be required to reset its interchange schedule in the event that its average interchange fee over the previous four-quarter period exceeds the benchmark.

Also chip and pin is ubiquitous.

Hey if Stripe really is reaping in the profits I have great news for you! Someone, maybe even you, can launch a competing project, offer a similarly polished API, and charge 2.5% and reap slightly less profit but still almost pure profit! Once that happens, Stripe will be forced to reduce its fee and everyone on the internet will be able to keep a little bit more of their money. Everyone wins (except Stripe and NewCo)! In the meantime, people get to choose if paying Stripe 3% is worth all the headache that it saves or if they are better off with a different approach. Hopefully not to many people will get tricked into pay Stripe outrageous fees for being a middleman while we wait for capitalism to work.

Yes, Stripe's product is literally playing the middleman, but there are a lot of contexts where a middleman is nevertheless a net positive. That said, are your numbers for just the network fees or do they include interchange fees as well?

In any case, I remember the sort of hoops I had to jump through back around 2007 to setup a gateway through Authorize.net and a merchant account for a very small service (annual transactions around 150-200k). Every step of the process, from setting up the accounts to dealing with their API was a nightmare, and recurring billing threw some additional hurdles in for fun if I'm remembering correctly. Beyond that, there are a lot of ways to screw up with billing and payment processing. In my experience, Stripe's generally competitive and easy to deal with.

That's not to say that they make sense for all scenarios. They don't. But if you're a startup looking to make it to launch, there's a strong argument for keeping the billing side of things as straightforward as possible.

Are you in the US? Because interchange fees (which are the same whether you are Walmart or a hair salon) average about 2%.

Unless stripe is processing mostly generic debit cards, then they are most certainly not pocketing that full 3%.

I would guess that the makeup of stripe customers is similar to the US average, so they are probably paying close to 2% and then pocketing the 0.9% plus most of the 30 cents per transaction.

>>> I promise that Stripe is doing very well off their 3% charge.

I will tell you a secret. Stripe is not doing very well because they have a small volume of payments, all clients combined. A percentage of peanuts is peanuts.

I looked at them when I was working at a startup 2 years ago. The volume of transactions we were processing yearly was a 2 digits percentage of what Stripe was processing yearly across all their clients.

Needless to say, they're not adequate as a payment processor for any medium or large company.

The numbers quoted here[0] are soft and from a year ago, but at that time, Stripe claimed to handled handles tens of billions of dollars in internet transactions annually. If you were doing 10+% of that, kudos to you!

[0 ]https://www.bloomberg.com/news/features/2017-08-01/how-two-b...

Thank you. We were doing rather well by some metrics. Enough for the CEO to pay his first jet and for the yearly profit to fill a swimming pool in $1 bill. Not that we did that last part.

Humor aside. A few billions is actually fairly little for many businesses, remember that a typical margin is only a few percents of revenues (customer payments). A billion dollar company with a 1% margin can only afford 100 employees. You wouldn't be impressed if I told you that we were a 100 people company, would you?

Competing payment providers and banks are dealing in orders of magnitude above Stripe.

I would be impressed if a company had 100 employees today and planned for exponential headcount growth (say, 50% growth per annum). And had taken $440 million in funding. And had a product that wiped the floor with the competition.*

* YMMV, but for this dev, Stripe was a godsend.

Ya, for any dev, stripe is amazing. But for a CFO it's a money pit.

Stripe is great for small websites in the US.

It's disappointing for global payments and for high volume. I wish all developers here to outgrow Stripe.

Hrm, we accept payments globally in over 135 currencies and have special enterprise plans, like high volume pricing—but I'd love to hear more on what we should be doing better. Feel free to email me at [email protected]