[HN Gopher] Stripe's real pricing: a primer
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Stripe's real pricing: a primer
Author : AnhTho_FR
Score : 355 points
Date : 2022-12-09 11:01 UTC (11 hours ago)
(HTM) web link (github.com)
(TXT) w3m dump (github.com)
| OmegaPG wrote:
| We are paying roughly 9% fees to stripe which includes currency
| conversion charges.
|
| 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.
| [deleted]
| nomilk wrote:
| Could crypto help here, at least for customers who have some in
| a wallet ready to use?
|
| 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.
| withinboredom wrote:
| Crypto is too volatile to really make day-to-day purchases
| realistic.
| mattdesl wrote:
| USDC + L2 would be a suitable protocol for day-to-day
| purchases and nearly 0% fee, at least for those already in
| the system. But most of this tech is still basically in
| beta.
| searchableguy wrote:
| Does stripe restrict payout currency to INR in India?
|
| Can you add a bank account which can handle alternative
| currency payout and let your bank handle do conversion?
| merek wrote:
| I'm not an expert, I think by default they payout in the
| currency of the country that your business is located in.
|
| 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.
| etothepii wrote:
| Not sure about wise's offering in AU but CA and UK you
| could just receive the USD into your AU Wise account and
| pay basically nothing <.5% for FX when compared to spot.
| searchableguy wrote:
| I don't know about AU banks but in India, most big banks
| allow you to convert at 0.3-0.4% + FIRA and interbank
| charge which is around $10. Not great but it's better than
| stripe for bigger amount.
|
| 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.
| chinathrow wrote:
| > 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.
|
| 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.
| [deleted]
| locallost wrote:
| But wise.com is not a card processor?
| OmegaPG wrote:
| Yes. They only do bank to bank. But there is definitely a
| business model here.
|
| 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.
| locallost wrote:
| Thanks, I don't doubt that, just wanted to know more
| wise.com or if I misunderstood something.
|
| 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.
| AnhTho_FR wrote:
| From my understanding, they are not. They provide _payment
| cards_ but _don 't process payment by cards._
| AnhTho_FR wrote:
| I think what Merek meant is:
|
| 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
| Aeolun wrote:
| Problem being that the credit card processor already takes 1%,
| so that won't happen.
| OmegaPG wrote:
| Yes.
|
| 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.
| koblas wrote:
| Depending on where you're located you should potentially
| consider a solution that looks more like Payment Processor ->
| Hold in Currency -> Bulk Fx to Local currency. Typically
| business level Fx processing is 2% - with 3% for credit card
| fees.
|
| 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.
| whichquestion wrote:
| Are there any companies arbitraging this % difference by
| collating lots of different businesses transactions into
| larger sums to then move into a particular currency for
| business owners who transact in non local currencies?
| [deleted]
| withinboredom wrote:
| I'm pretty sure Wise does something like this. Protip, you
| can get a Wise business account and collect stripe payments
| in a local currency, then bulk fx it to your local
| currency.
|
| 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.
| tiffanyh wrote:
| Most people also don't understand that with Stripe, you don't
| actually have your own merchant account (this is why they can
| setup your account so fast).
|
| 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.
| heipei wrote:
| Been using Stripe for years but now I realise that I don't even
| know what plan I'm on and can't see what Stripe is charging me. I
| get a monthly "tax invoice" which includes all charges done
| through Stripe and comes out at ~ 2.9% of the volume, but I don't
| see any line items for Billing or anything else. Where do I find
| this stuff?
| ezekg wrote:
| Reports > Financial Reports > under "Fees" in the report.
| heipei wrote:
| Those are the same numbers as on the tax invoice, and in that
| section it just says "Fees for all charges, including card
| charges and other payment methods." Curious if that number
| already includes charges for things like Subscriptions.
| bredren wrote:
| This came up two months ago, the pricing was described as
| "insidious." [1]
|
| 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.
|
| [1] https://news.ycombinator.com/item?id=33269824
| jmacd wrote:
| I am the original commenter you had replied to.
|
| 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` [1] 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.
|
| 1: https://www.tier.run/docs/cli/whois/
| chasebank wrote:
| When did stripe start charging extra 0.8% for recurring billing?
| I remember building my first online business with stripe api
| right when it came out and recurring billing was a feature, not
| an add on.
| corentin88 wrote:
| In 2018: https://news.ycombinator.com/item?id=16766846
| ryanackley wrote:
| In the USA, there is a huge payment processing API industry.
| Stripe is a great company and it has this family of products that
| work great together but it has lots of competitors that have
| better pricing and better service.
|
| 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.
| codegeek wrote:
| Sure but the reason Stripe became Stripe is due to the fact
| that they have an excellent API and dev experience. Most old
| school processors are too difficult to setup and manage and
| have horrendous APIs.e.g: authorize.net
|
| Having said that, feel free to share your company becaise I m
| always open to evaluatin for our company (low 7 figures ARR)
| jrs235 wrote:
| His email is in his profile.
| nomilk wrote:
| > the reason Stripe became Stripe is due to the fact that
| they have an excellent API and dev experience.
|
| 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.
| mgkimsal wrote:
| >The association of Stripe with simplicity and good dev
| experience could be more due to Stripe's marketing/PR ...
|
| 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.
| jobs_throwaway wrote:
| my recent experience working with the Stripe API lines up
| with this. Based on the reputation I was expecting a lot
| less complexity and strange default behavior when it comes
| to subscriptions/invoicing. Still a good dev experience,
| but not the greatest, most straightforward API ever like
| its reputation.
|
| 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.
| acabal wrote:
| Stripe did actually have a great API at one point, when
| they just appeared. Their basics of charging a card and
| managing subscriptions was incredibly simple and developer-
| friendly compared to their competition at the time, like
| Authorize.net or PayPal. I don't think PayPal even had a
| real API back then - you had to use a `<form>` element with
| hidden fields.
|
| 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??)
| danpalmer wrote:
| A common problem with payment processors is international
| support. Stripe isn't perfect by any means, but they support
| much more than than most of the US focused competitors.
|
| 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.
| abuehrle wrote:
| It's funny to observe the tide shift against Stripe on HN in
| recent years. I think they are a phenomenal, once in a generation
| company. Their APIs are beautiful (still, even though fewer
| people agree these days) and the use cases that can be built upon
| those APIs are endless and amazing. I always felt the pricing was
| a steal for what the product delivered.
|
| 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.
| anonymouse008 wrote:
| So does this effectively mean Apple charges 25.2% in the base
| case, and potentially teens-low twenties in low price point apps
| ($10 and below)? PayPal, BrainTree and others seem to also be in
| this range - so backing out market payment rates, the App Store
| is not as egregious?
| jbverschoor wrote:
| Yup. For that 30% you get everything. Payment processing,
| reports, coverage in all countries, vat handling.
|
| But people like to bash Apple.
|
| Thy don't bash other platforms or channels which charge 30% or
| even more
| Mystery-Machine wrote:
| So it's 30% charged by Apple with monopoly and no possibility
| to use something else vs 8% charged by Stripe. And you can
| also switch to anything else. Sure, it's more work than
| Apple, but freedom is also more work than being told what to
| do and how to live.
| sasoon wrote:
| Apple is not just charging for payment processing, you get
| access to the App Store marketplace with more than billion
| devices. With Stripe you only get payment processing.
| jmacd wrote:
| Stripe payment processing fee is 2.9% + C$0.30
|
| 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.
| [deleted]
| jbverschoor wrote:
| But stripe doesn't give you a distribution channel or any
| other type of platform to build on. And it doesn't give me
| access to x billion people with payment details on file,
| one double click away, without any fraud
| calme_toi wrote:
| Totally agree on diversifying payment solution part.
|
| 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.
| poxrud wrote:
| My biggest issue is that they keep all the fees in case of a
| refund. Sometimes customers just change their mind, and this will
| cost you. It will cost you a lot if you're selling high value
| items.
| solokhind wrote:
| Same. We're losing thousands of dollars because customers
| change their mind or made a mistake in their purchase, mostly
| because we're dealing with high value items.
| waylandsmithers wrote:
| As a developer it's easy to forget how insanely hard it can be to
| run a business. After all the time, effort, and energy that goes
| into actually making and selling something, you still have to go
| through all this additional nonsense just to get the customer's
| money from their hands into yours.
| edwinwee wrote:
| There is no company (that we're at least aware of) on Stripe that
| is using this combo of Stripe products and paying the "total
| cost" outlined in the post. Our pricing scales with the size (and
| needs) of the business. If a business on Stripe is large enough
| to use our highest billing tier, quotes, revenue recognition, and
| data pipeline together, then Stripe would've bundled the products
| together. (And then we charge for them at the end of the month
| with a volume-based rate of bundled products + payments.) These
| products are built for the companies who've asked us for these
| enterprise features and aren't necessarily meant to be used one-
| off, as the post implies.
| xhevahir wrote:
| Seems like "A Breakdown of Stripe's Pricing" would be a clearer
| title.
| AnhTho_FR wrote:
| Probably yes! Will think about this structure for next title,
| thanks for the feedback!
| ryanmccullagh wrote:
| This is a native advertising piece. The author is associated with
| a Stripe competitor.
| joshe wrote:
| It does seem that long term Europe should be segregated from the
| www.
|
| 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.
| bastawhiz wrote:
| I used to work at Stripe, specifically on Connect, and I want to
| point out one thing that's not quite accurate:
|
| > 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.
| cutenewt wrote:
| This is really clever marketing by Lago. Good inspiration for
| other startups.
| imchillyb wrote:
| This is one of the _many_ reasons that banks will remain an
| institution for a long time to come. Automatic Clearing House
| (ACH, or Auto debit) comes with a host of consumer protections
| that are completely lacking from payment processors.
|
| I wish legislators would force all payment processors to play by
| the same book banks have to play by; the same consumer
| protections.
| smca_ wrote:
| [I work at Stripe] As a practical matter, this guide is somewhat
| misleading in the sense that it very substantially overestimates
| what a typical B2B SaaS business pays for Stripe.
|
| For example:
|
| * 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.
| AnhTho_FR wrote:
| Hi Sam,
|
| 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'."
|
| 2/ > '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 [1] 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 [2]
|
| 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 [3] 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 [4]. 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.
|
| [1] https://anhtho.substack.com/p/pr-for-startups-is-it-only-
| for... [2] https://sifted.eu/articles/vc-scout-programme-
| problems/ [3] https://sifted.eu/articles/what-not-to-say-
| layoff/ [4] https://github.com/getlago/lago/wiki/Moving-to-the-
| US-after-...
| tyre wrote:
| I think the point here is that this post _was_ optimized to
| try to go viral. Most startups won't have 4% as a minimum
| revenue cost.
|
| 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.
| AnhTho_FR wrote:
| The point was showing how the pricing and costs adds up.
|
| 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.
| AnhTho_FR wrote:
| Also the point of my initial comment was that even if you
| consider this post optimised for vitality, pointing that
| we are optimising on only that in our content seemed a
| bit extreme, hence the examples.
| hitekker wrote:
| gamblor956 wrote:
| _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.)_
|
| 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.
| mynameisvlad wrote:
| > For US-based businesses, this generally represents a very
| small fraction of total payment volume.
|
| 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.
| mperham wrote:
| Sort of. You need to do a minimum of business in the state,
| usually $100,000/yr or 200 transactions. I don't have enough
| customers in Utah to require tax payments.
| mynameisvlad wrote:
| That's fair. I'm guessing it's also state-dependent with
| each state having its own rules.
|
| 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.
| smca_ wrote:
| To clarify, Stripe Tax is our product that helps you
| _automatically_ calculate taxes.
|
| If you'd like to do it yourself, you can manually define
| rates at no cost:
| https://stripe.com/docs/billing/taxes/tax-rates.
| hermitcrab wrote:
| I use a 'full-service' payment provider. I send the
| customer to their shopping cart page. The customer buys
| the software license from them. And they buy the license
| from me. They are the 'merchant of note' and collect and
| remit the VAT/sales tax. They pay me once a month, minus
| fees.
|
| 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?
| mynameisvlad wrote:
| Who said anything different or implied they didn't
| understand this?
|
| 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?
| motoxpro wrote:
| From google:
|
| " 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
| khuey wrote:
| That's not a complete list (e.g. SaaS is taxed in New
| York) but there are also large states where it is not
| taxed (e.g. California).
| mynameisvlad wrote:
| From TaxJar, Stripe's own subsidiary, and also the first
| result on Google:
|
| > 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)
|
| https://www.taxjar.com/sales-tax/saas-sales-tax
|
| 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".
| [deleted]
| s17n wrote:
| Not exactly on topic but Lago has been killing it when it comes
| to making the HN front page, nice job.
| AnhTho_FR wrote:
| Thanks
| stevehawk wrote:
| I know that I started and _shutdown_ a company through Stripe
| Atlas a year and a half ago and they 're still charging me
| recurring fees for it. I'm not convinced that Atlas was ever
| fully thought out on their end and I regret using it.
| mkaic wrote:
| Fellow Stripe Atlas-er here. I have no experience with
| corporate _anything_ and started my C Corp because I won the
| Pioneer Tournament and they said I had to to give them a 1%
| SAFE to claim my winnings, even though I 'd made it clear I did
| not intend to try to monetize my project at all. The company
| has literally done zero things since inception except cost me
| money for my registered agent, Delaware corporation tax, and
| having to pay someone to file taxes for $0 of income because I
| am too terrified of the tax legal system to do it myself.
|
| 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.
| edwinwee wrote:
| There's no charge to use Stripe after the $500 Atlas fee to
| form a company. What fees are you seeing? If you've maintained
| a presence in Delaware, perhaps you're still paying for your
| registered agent? (You can also email me at edwin@stripe.com
| and we can look into this.)
| Aeolun wrote:
| Why are they charging you for something that doesn't exist? Is
| it a mistake on their end?
| lvl102 wrote:
| Yeah Stripe is a joke considering its size. I much rather use
| Square which is saying a lot because that is also a poorly run
| company. Fintech space is a big joke. They were selling more
| fluid payment platforms with less fees/cost to consumers.
| Instead all-in prices have actually gone up.
| mschuster91 wrote:
| > Fintech space is a big joke.
|
| 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.
| gilrain wrote:
| As a retail customer, there are three payment processors which I
| notice "convert" me into a sale more often purely because I'm
| confident the process will be fast, safe, convenient, and
| familiar: Apple Pay, Stripe, and Square.
|
| 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.
| apankrat wrote:
| As a retail online vendor - PayPal is the fourth.
|
| 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%.
| noasaservice wrote:
| What I would love is a USPS money solution. Extremely low fees,
| just works, hooked up with USPS. Fraud would be under bank AND
| mail fraud.
|
| All these companies in this realm are vultures. They add nothing
| - they just take their cut to do something that should be easy.
| dkyc wrote:
| Working at a company that is currently making this decision, I
| appreciate the blog post. That being said, I absolutely don't see
| how they arrive at their numbers. They state that SaaS founders
| routinely pay "4-8% of revenue" to stripe. Then their own
| calculation ends up at 4.2% of revenue using a combination of
| _all_ Stripe services possible (Billing, Payments, Tax, Data
| Pipeline). Where are the other ~4% supposed to come from?
|
| 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.
| croes wrote:
| They state that SaaS founders said it's 4-8%. It's not their
| statement but the SaaS founders
|
| >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.
| dkyc wrote:
| Well, for reasons stated I don't believe it was a fair and
| representative sample then, and that 4% is closer to the
| upper bound than the lower. Also no idea how "no one was able
| to give a precise figure" - go into stripe dashboard, open
| most recent invoice, divide amount paid through payments
| processed (which are both stated right there on the invoice!)
|
| I'm a B2B SaaS founder and paid 2.7% to stripe last month.
| OP, feel free to update post with new lower bound.
| pattrn wrote:
| I'm a B2C SAAS founder and paid 7.1% to Stripe last month.
| notatoad wrote:
| >this calculation dressed up as a 'neutral assessment' on
| Github seems disingenuous and makes me trust them less
|
| 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.
| that_guy_iain wrote:
| Why would GitHub add authority? It only really helps when
| your target audience is technical. But choosing payment
| providers is not a technical decision for lots of companies.
| lolinder wrote:
| Stripe's initial success was largely driven by technical
| people pushing for it because of how easy their API was.
| Don't underestimate the impact of technical leadership on
| decisions like this:
|
| > "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.
|
| https://www.wired.co.uk/article/stripe-payments-apple-
| amazon...
| lcnPylGDnU4H9OF wrote:
| I might understand the reasoning that it could have reduced
| authority if hosted on their blog. Their branding makes
| them more recognizable, which makes them more likely to be
| noticed as a competitor, which removes neutrality.
| notatoad wrote:
| elsewhere in this thread, there's a tweet where OP is
| bragging about getting three articles onto the front page
| of HN this week. Whatever this audience is, we are
| apparently the target.
| JohnBooty wrote:
| Why would GitHub add authority?
|
| Well, there's no real reason it would. But I'll admit: it
| did fool me into thinking it was some neutral source.
|
| (To be clear, I was just casually browsing HN on a work
| break, not actually shopping for a payment solution and
| reading with diligence)
| satvikpendem wrote:
| > _It only really helps when your target audience is
| technical._
|
| 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.
| plantain wrote:
| Forced currency conversion. International fees versus local.
| Low average charge (so the per tx fee is more significant)
| ecedeno wrote:
| "+33c per transaction"
|
| 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%
| dkyc wrote:
| You are right, and I see how that would push up the bill as %
| of revenue.
|
| 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".
| GeneralTspoon wrote:
| PayPal offers a micropayments option (5% + $0.05) - which
| reduces overall cost for businesses where the fixed fee
| eats a major part of their revenue.
| SXX wrote:
| Is PayPal work for small SaaS at all especially one with
| micropayments? I fear such business would generate more
| refunds than usually and PayPal is much worse when it's
| come to blocking your account and freezing your funds.
| kuschku wrote:
| Girocard (in person) is 0.25%. GiroPay is 0.09EUR per
| transaction, no matter how large. PayDirekt is 0.35EUR per
| transaction, no matter how large. SEPA Debit is about
| 0.10EUR as well.
|
| Why are US-based payment services so fucking expensive?
| mardifoufs wrote:
| Debit card transactions are basically free in the US too.
| astura wrote:
| The EU has a cap on interchange fees, by law. The US has
| no such law, so they charge more, because they can.
|
| Some of the interchange fees are paid back to the
| customer in the form of cash back and other perks and
| rewards.
| blntechie wrote:
| I assume because the US credit card customers are
| obsessed with reward points and miles and it need to be
| paid by someone. It's usually the merchants through high
| MDR. The merchants pass on the costs to the card
| customers or debit card/cash payers.
| SeripisChad wrote:
| Prior to those gimmicks the rates where higher than now.
| I hoped Google to follow through with their pricing cuts,
| but yielded rather quickly.
| fredophile wrote:
| As a consumer in the US I always pay with a credit card
| when I can. The businesses have already baked the credit
| card fees into their pricing so I might as well get a few
| percent back from my card plus the extra purchase
| protection, etc.
| dylan604 wrote:
| There are companies that offer lower prices when paying
| cash/debit specifically to only charge the credit card
| fees to those using credit cards.
|
| 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.
| jonasdegendt wrote:
| > It used to be a big thing in the US at gas stations
|
| 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.
| ghaff wrote:
| You still sometimes see this. My understanding is that
| it's usually against merchant credit card contracts
| however. You also used to see cash only stations but
| that's almost certainly vanishingly rare these days.
| dylan604 wrote:
| based on experiences with vending machines, could you
| imagine the nightmare of cash only pay-at-the-pump?
| <shudder> we'd have gas lines like the 70s not because of
| shortages, but just from people trying to pull their
| bills along the corner of the pump to flatten them out.
| mixmastamyk wrote:
| Doesn't preclude a cashier that typically still exists.
| Also Arco had cash machines up until a few years ago and
| I never encountered a line at one.
| dylan604 wrote:
| psst, look up. over your head was a joke. nothing to be
| taken seriously. we have cashierless grocery stores,
| hardware stores, and every other store. why would you
| think a late night 24/7 gas station wouldn't go
| cashierless too?
| mixmastamyk wrote:
| Need to work on your jokes. ;) The reason is that a
| significant amount of the profit is in the convenience
| store. Also security reasons... someone to call the
| police.
| dylan604 wrote:
| have you honestly never seen a cashierless gas station?
| you suggest that convenience store is profit center, but
| as you say, those have to be staffed. what do the numbers
| look like if it's just gas with cashless pumps and no
| staff? then, raise the rates of the fuel because
| "shortages", and I can see it being profitable for less
| headache. i can think of at least 3 of these stations
| within 20 miles of me. potentially faster turnover as you
| don't have people parking at the pump while they spend 15
| mins inside. there's a lot of interesting positive
| aspects to this, and it seems that more are willing to
| try it.
| slashink wrote:
| Credit card reward systems & points are not free. Comes
| at the cost of higher transaction fees that eventually
| get passed on to the customer.
|
| 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.
| kuschku wrote:
| Girocard was actually still significantly cheaper than
| the capped credit and debit cards (0.125% end-to-end cost
| (!)), and yet now we're seeing banks drop it because
| MasterCard has threatened to stop business with any bank
| that doesn't drop it.
|
| 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.
| ghaff wrote:
| Although I'm pretty sure most of the rewards go to people
| willing to pay for premium cards because they make a lot
| of transactions. Do the people with free credit cards
| subsidize them? Maybe but it's not obvious. Of course,
| the people with the biggest reward cards are probably not
| paying much interest or late fees either.
| NavinF wrote:
| > Do the people with free credit cards subsidize them?
|
| 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.
| iancarroll wrote:
| The interchange fee differences between credit card types
| are not very high, usually around 0.5%. You can see the
| public Visa interchange rates at https://usa.visa.com/con
| tent/dam/VCOM/download/merchants/vis.... Credit card
| companies play a lot of games with this too and will
| "upgrade" your card type if they think it's worth it,
| even if you don't make any changes.
|
| The biggest variances involve non-exempt (Durbin
| amendment) debit cards.
| NavinF wrote:
| Ah I thought the interchange rates would be 1% higher for
| the best cards, not 0.5% higher
|
| I guess the lowest tier cards really do subsidize the
| rest.
| chinathrow wrote:
| > Credit card reward systems & points are not free.
|
| 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.
| bel_marinaio wrote:
| Why are so many things better in the EU?
| wpietri wrote:
| A historian, Walter McDougall, author of the excellent
| "Let the Sea Make a Noise", was planning to write a
| history of America around the duality of the word
| "hustle", which can mean both "energetic, go get 'em
| attitude" and "scam". In America we are very accepting of
| anti-social or exploitative behavior as long as
| somebody's getting rich.
|
| 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?"
| jhdhjdkjdhcfnj wrote:
| it's a way to exhert maximum control with minimal effort
| (in this case, talking about flow of capital)
|
| https://en.m.wikipedia.org/wiki/Normalization_(sociology)
| AnhTho_FR wrote:
| Haha EU isn't perfect, but from a super high-level and
| personal point of view (and there are millions of nuances
| within Europe), but generally there's more emphasis on
| the common good as a society, than what I've seen in the
| US
|
| (I grew up in France but part of my family lives in the
| US).
| nightpool wrote:
| All of the services you mentioned are debit cards, not
| credit cards. US debit cards are basically free as well,
| it's just that nobody uses them.
| dylan604 wrote:
| >it's just that nobody uses them.
|
| 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.
| optymizer wrote:
| this discussion would be more productive with some data:
|
| * 83% of adults have at least one credit card
|
| * 41% adults actually used a credit card in 2020
|
| https://www.federalreserve.gov/publications/2021-economic
| -we...
| ivalm wrote:
| 41% had credit card debt, presumably a larger amount used
| them.
| ghaff wrote:
| Right. Unpaid balance over at least one month. Although
| some people probably just have a credit card for
| emergency purposes, I assume that most people who have a
| credit card do use it over the course of a year.
| ivalm wrote:
| absolutely, just replying to the poster saying that only
| 41% used a credit card, which would imply majority of
| americans don't.
| dylan604 wrote:
| There's a bit of HN bias here. Just thinking of the lower
| income or non-white side of the country. So many people
| don't even have a checking account (4.5% households or
| 5.9million )[0] let alone a debit card. There's no way
| they have credit cards.
|
| 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.
|
| [0]https://news.yahoo.com/number-americans-without-bank-
| account... (households translates to how many people?) [1
| ]https://www.gao.gov/blog/more-7-million-u.-s.-households
| -hav... (7.1million from April 2022)
| philsnow wrote:
| > it's just that nobody uses [debit cards]
|
| 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.
| nightpool wrote:
| Actually, I don't even have a credit card myself. My
| comment was about observing the general behavior of
| businesses I frequent--only one (a cost-conscious grocery
| store) won't take credit cards. I've just never needed to
| go through the hassle of getting one, myself.
|
| 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.
| ericd wrote:
| This is one of the major reasons I think that the lightning
| network backed by bitcoin could actually be useful, vs the
| totally useless waste of energy that everyone on here seems
| to believe it is - the fees are basically a tiny fraction
| of a cent, and so it could make it economically viable to
| have payments <$1, which currently isn't really the case
| with the credit card networks.
| ivalm wrote:
| Maybe, but really it would just push credit cards to be
| cheaper. Fundamentally credit card processing tech is
| cheaper than lightning network (in terms of compute).
| Pushing CC to be cheaper ofc is a good in and of itself.
| Dand313 wrote:
| I think they are comparing to MoRs like fastspring or
| paddle where the % is higher?
| newaccount74 wrote:
| It's important to consider when you compare with App Stores
| or resellers that charge a flat fee of 15%-30%.
|
| 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.
| withinboredom wrote:
| Sign you business up for something like Wise and take the
| money in its original form without conversion fees. In my
| experience, wiring up webhooks + API on wise to automate
| back to your own currency is less expensive than stripe.
| YMMV
| Terretta wrote:
| It would be good if people remembered these piecemeal costs
| when comparing to Google Play or Apple App Store particular
| in year 2+ of a subscription user.
|
| At that point, the mobile app store offering is effectively
| costing well under 10%.
| deegles wrote:
| It can be up to 30% if they freeze your account for "suspicious
| activity." This is currently happening to someone I know who's
| had all of their November sales frozen. They say Stripe _might_
| return 70% of the funds... in February. They 're trying to
| reach a human but no luck so far.
| Alupis wrote:
| > This is currently happening to someone I know who's had all
| of their November sales frozen
|
| 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.
| rstupek wrote:
| Stripe auto sweeps but not nightly. Not sure you have any
| control over when they sweep funds over
| Alupis wrote:
| Stripe does support nightly sweeps, and according to
| their documentation[1] it's the default when you enable
| sweeping.
|
| [1] https://support.stripe.com/questions/understanding-
| daily-aut...
| chinathrow wrote:
| I can set daily/weekly or monthly payouts just fine.
| satvikpendem wrote:
| > _Never leave money in your processor account... they are
| not your bank!_
|
| 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.
| aliswe wrote:
| Are you serious? This is very concerning
| capableweb wrote:
| Absolutely, payment providers block/suspend accounts left
| and right, and you're out of luck to find any humans to
| talk to. If you manage to find a human, 99% chance is that
| it triggered something in their "anti fraud" systems and
| then they'll simply state "We can't tell you why, and we
| can't unsuspend your account, sorry".
|
| 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...
| viggity wrote:
| This happens far too often. And because stripe handles
| the PCI compliance, you can't even take your customer's
| CC info to another merchant account. This is why people
| need to be using a PCI tokenizer like BasisTheory. Then
| you own the rights to the CC, without needing to handle
| PCI compliance, and you can switch vendors easily.
| jhdhjdkjdhcfnj wrote:
| nice try mr sales person.
|
| 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.
| krallja wrote:
| > you can't even take your customer's CC info to another
| merchant account
|
| Blatant FUD. https://support.stripe.com/questions/export-
| customer-card-da...
| atdrummond wrote:
| I ran a medium/high risk payments firm and Stripe
| followed through on customers' transfer requests perhaps
| 10% of the time. One cannot rely on it.
| posguy wrote:
| For low risk clients, were the results different? Which
| platforms (First Data, Tsys, etc) and ISO (FDMS, Gravity,
| Bank of America, etc) were you seeing success with?
|
| 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.
| theturtletalks wrote:
| This works for normal payment processing, but Connect is
| something that doesn't have a viable alternative. Lago
| wants to abstract the Connect functionality and allow you
| to use Stripe Payments, Paypal, other processors, and get
| the Connect functionality to be open-source. Looking
| forward to their work and it is sorely needed.
| eloff wrote:
| Completely agree, that's why this Lago is interesting to
| me instead of using Stripe services. I'd rather use
| Stripe for the bare minimum so I can implement support
| for a backup provider as well.
| zie wrote:
| I generally agree, but if you go through the process at
| your bank and get your own merchant account(it's a long
| drawn out process), then the risk for the
| bank/visa/mastercard/etc is much, much less, and you can
| generally always reach out to humans and get answers.
| It's worth the headache if you live or die on credit card
| payments.
| ryanbrunner wrote:
| If you have recurring payments, moving the payment
| methods over is a non-trivial amount of time and
| coordination to get done (and I'm not even sure how
| cooperative Stripe will be if you're on a fraud radar
| somewhere), and usually only involves the raw methods
| themselves, stuff like subscriptions you'll need to
| rebuild.
|
| 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.
| jgust wrote:
| You either die a hero or live long enough to become Paypal.
| Spivak wrote:
| live long enough to understand why Paypal became Paypal.
| steve_adams_86 wrote:
| Is the answer simply money?
| aga98mtl wrote:
| No, the answer is that credit cards allow chargebacks for
| up to 180 days. Stripe or Paypal is betting on your
| honesty by allowing you to withdraw sooner. Stray out of
| their secret "safe" behavior allowed and they deem the
| risk too high.
| YetAnotherNick wrote:
| Is there any processor which puts the funds to
| themselves, with the legal binding that unless customer
| charge backs I will get the money after the chargeback
| period? Seems like this could save payment processor with
| lot of headaches while reducing their fees.
| 35mm wrote:
| Probably not because it would be hard for most businesses
| to wait 180 days to get paid.
| Alupis wrote:
| Also... new accounts that experience sudden surges of
| transactions without well established seasonal patterns
| and account history are very risky for all processors.
|
| 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!
| iJohnDoe wrote:
| It's a bummer that Stripe didn't enter the market to be
| better than this and to bring something new to the table.
| tiffanyh wrote:
| Isn't the a function of not having your own merchant account?
| By using Stripe, you're actually just a sub-account to them.
| chinathrow wrote:
| If you let Stripe convert e.g. USD (when you charge USD) to
| your local currency (when you run your account e.g. in EUR),
| then you pay them another 2% for that convenience.
|
| I switched to Wise and pay now an order of magnitude less for
| that.
| the_chatman wrote:
| username_my1 wrote:
| I genuinely don't understand why anyone would use stripe for
| any scaled up business compared to adyen for example.
|
| 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
| emptysea wrote:
| I'm pretty sure adyen requires a decent amount of volume
| before they will allow you to use them, like in the 10s of
| millions.
|
| 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
| makeitdouble wrote:
| It's been a long time, but having dealt with Adyen a few
| years ago my take away was they are way more punishing
| regarding your implementation (we had calls randomly fail,
| users not getting redirected, notifications out of order
| etc.), with more options but also more rope to hang yourself.
|
| 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.
| username_my1 wrote:
| We've been a customer for 7 years now and it has been
| exceptionally stable setup
|
| But yes their documentation can be a bit poor around the
| edges and if you don't really know what you're doing
| dkyc wrote:
| Is it really though? It very much depends on your definition
| of 'scaled up'. Sure, you wouldn't run a Fortune 500's
| payment processing through stripe's public pricing plan.
|
| 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.
| username_my1 wrote:
| Yes 160k extra a year out of 10m is a lot
| treewalking wrote:
| If it costs 1 extra human to build everything you're
| losing money leaving Stripe.
| YetAnotherNick wrote:
| If someone has revenue $10M per year, I guess it would be
| more than 1. Also probably they would get discount in
| stripe if some trusted business has revenue in that
| range.
| etothepii wrote:
| That rather depends on gross margin.
| MuffinFlavored wrote:
| > - Particularly B2B SaaS will likely have some % of
| invoice/bank transfer payment.
|
| 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.
| gizmo wrote:
| > all Stripe services possible (Billing, Payments, Tax, Data
| Pipeline). Where are the other ~4% supposed to come from?
|
| Stripe Radar, Stripe Identity, Stripe Sigma? It all adds up.
| dkyc wrote:
| Even including those, I don't see how you would get to 8%.
| Apart from the fact that 'Stripe Identity' isn't something
| I'd expect a standard SaaS company to need (or a tool like
| Lago to provide), the cost simply isn't that high. Radar and
| Sigma together for 1,000 monthly transactions adds like ~$130
| to your monthly bill.
|
| 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.
| sodality2 wrote:
| I pay 15% fees because of a very low subscription fee
| ($2.50).
|
| 2.5 * 0.029 = 0.0725 + 0.3 = 0.3725 / 2.5 = 14.9%
| jessaustin wrote:
| Have you tried encouraging longer subscriptions through
| steep discounts?
| sodality2 wrote:
| Yep. I offer a yearly plan for $26. My customers are
| split almost exactly half and half with monthly and
| yearly subscribers
| tyingq wrote:
| They also don't refund fees when a customer wants a
| refund.
| the_chatman wrote:
| pattrn wrote:
| As a single sample: my SAAS startup pays just over 7% to
| Stripe.
| krallja wrote:
| Good grief, talk to your account rep.
| AnhTho_FR wrote:
| Hi dkyc, OP here. Sorry to read this was your impression, two
| points:
|
| 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!
| dkyc wrote:
| Thanks for the reply! I just couldn't follow how you end up
| paying 8% to stripe, save some _very_ non-standard
| requirements or setup. You can relieve my concerns by telling
| me the stripe product setup that results in a $100k MRR SaaS
| company to pay $8k per month to stripe. Might very well be
| that I 'm overlooking something!
|
| Otherwise, the "no one knows exactly how much but up to 8%"
| framing reads like FUD to me.
| AnhTho_FR wrote:
| Got it! Will iterate on the article based on your inputs,
| thanks for the constructive feedback!
| danielskogly wrote:
| Just a heads up that "More about our story here." at the
| very end is a 404: https://www.getlago.com/company/about-
| us
| AnhTho_FR wrote:
| Thanks a lot! I've just fixed it, it was supposed to
| redirect to https://www.getlago.com/about-us
| Silhouette wrote:
| _I just couldn 't follow how you end up paying 8% to
| stripe, save some very non-standard requirements or setup._
|
| 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.
| [deleted]
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