Hi folks -- as Edwin points out elsewhere in the thread, the article title isn't accurate. (I'll update or delete my comment if it's fixed.)
[Update: it was changed. It used to read "Stripe is now charging 0.5% more for recurring charges."]
You can happily make recurring charges yourself and no additional fees are incurred. Lots of Stripe customers do this and we don't charge anything extra for it.
If you decide to use Stripe Billing, which is a separate product, we charge for that. Stripe Billing's pricing hasn't changed in a few years. What's changing is that we're ending the several-year grace period where we didn't charge anything for Stripe Billing for businesses who started to use this functionality before 2018.
Charging for Billing helps us fund a lot more investment in it -- we've gone from very basic cron-like functionality to a pretty full-featured subscriptions management tool. (You can read more at https://stripe.com/billing.) Billing is now sophisticated enough that companies like Slack and Atlassian are using and paying for it. We've built things like "Smart Dunning" (which improves revenue recovery for failed charges by about 14%), better analytics, international payment method and invoicing support, and a whole host of other features. There are now more than 30 people working on improving Billing.
Importantly, Stripe Billing is (and will remain) significantly cheaper than most of the other competitors in the space.
Edwin from Stripe here. It’s worth distinguishing between charging money on Stripe (for which you incur payments pricing) and using Stripe Billing (which is a separately-paid product).
Stripe Billing has had this pricing for a few years. For some longtime users of Subscriptions, we originally didn’t change their pricing but are doing so now. We think charging a separate fee for our Billing product is fair, given comparable products in the market (say, Recurly or Chargebee) charge something similar. (Generally more!)
We’ve been investing a ton in making Stripe Billing better. For example, from talking to users we learned people needed it be significantly easier to get up and running with subscriptions. So in the last year we built the Customer Portal[0]. (We’ve also listened to you and improved the analytics[1].) Payments is a low-margin business and our customers are (quite reasonably) very price sensitive. So to be able to make Billing a great product, we realized it was going to have to charge a fee commensurate with the product scope.
Thanks for jumping in here so quick. I'm sure it'll be a tough thread, but something about this response rubs me the wrong way. It doesn't seem like it's really addressing the change (eg. why is it worth _existing_ customers to be paying an extra 0.5%? The fact that Stripe added features for new customers doesn't really impact those of us who have been with you for 5-10 years). Additionally, I don't recall getting an email about the price increase.
I genuinely don't even know: am I going to be seeing this price increase? Would have liked getting an email about something like this, rather than finding out on HN, and now having to dig into things to figure out if I'm actually affected (which I presume I am).
To give you a comparison: if my bank or credit card company increased their rate, I'd expect to be (and am) notified of that.
We think charging a separate fee for our Billing product is fair, given comparable products in the market (say, Recurly or Chargebee) charge something similar.
Copying what other people in the market are doing is the antithesis of what made Stripe so important when it first launched.
Well, if you start comparing yourselves to chargebee, they have a far more complex product - and really impressive traction in terms of new features being released regularly - combined with a really super support. I have not even seen a single company that deliver on the same level as chargebee does.
I've had to run a number of price changes (mostly increases) over the years. In case the folks with pitchforks are unclear, your mistake was not clearly communicating to your customers. Every impacted customer should have received an email that explained the change, how much their bill would increase, and a timeline for the increase that would give them a few months of runway make other plans.
AWS doesn't charge anything for elastic beanstalk beyond the standard price for resources, even though of course competing products like heroku charge a lot more. I'm not arguing about fairness, I'm sure that's not a concern for AWS either, but if you have a basic product with solid margins, doesn't it make sense to account something you build on top of that product as marketing or documentation, rather then as a distinct product that has to pay for itself?
Awesome, I setup subscriptions using Stripe for a website a few months ago for the first time and was so turned off by how convoluted the process was I was actually thinking about emailing Stripe to suggest they take a hard look at the process and how to make it easier. Glad to see that was already underway, great work!
At the end of the day, you're using electricity to send around a bunch of 1's and 0's. The amount of electricity used doesn't change much whether it represents $10 or $100,000...so why do you need a percentage of the total?
I understand existing banking structures already work on the percentage model (so there's probably downstream percentage-based charges Stripe must pay), but why can't this entire banking structure be disrupted to transfer that value back to society?
We (Streak yc s11) signed up for Stripe way back in the day and have just been paying their standard payment processing fees for years. We haven't upgraded our API version or used any of their new billing features or anything like that. Basically we get the same value from Stripe we did from the day we integrated. I thought our pricing was going to be grandfathered but this change will cost us tens of thousands of dollars. Unfortunately, we're kind of hostage to it.
Anyone else at scale and have an old integration? How are you handling the fee increase?
If you're doing significant volume, which I assume Streak does, you can negotiate significant volume discounts. You have been leaving a ton of money on the table if you have not done that.
Same thing has happened for Radar for example. We set up our whole infrastructure with their beta 3DS and Radar products, and then one day (a few months back), it is $ 0.07 per txn in Radar as well as no returned fees on refunds.
Stuck with nowhere to go.
Not against improving margins, but customers that have walked hand in hand with Stripe for so long and seen them thru their early growing pains should definitely be grandfathered.
The day you decided to go with Stripe you started being hostage of them, but this is not a bad thing, this is business, you choose a partner, they are allowed to change the terms if the contract permit it.
People on HN always think they deserve to be treated better than others
Move to another solution? I have no idea on pricing but maybe NMI, Braintree, etc. Also play hardball with the account manager if you're comfortable with that.
Why are you hostage to it? How much dev time would switching to a different transaction processor take? This seems like it should be a very competitive space.
We recently finished moving our "Recurring Billing" stack from Stripe to Recurly after we found a tonne of problems with the Stripe billing setup. We still use Stripe as a Payment Gateway but we migrated off of their "Billing" product.
I think a lot of those problems related to us being a European business and Stripe not quite being there yet in regards to Tax and Invoicing but now we have switched it's really shocking to me how steep of a price Stripe is placing on a somewhat lacking billing system here. I always assumed their Billing product was there to lock people in to the payment gateway and make it harder to have Interchange++ pricing negotiations.
What's particularly sad is that I have fond memories of the early days of Stripe when I was genuinely excited to use their recurring charge product because the developer experience was so nice.
Today with VAT MOSS, SCA and a larger team the Billing product is neither easy nor powerful for us.
One saving grace for anyone else who finds themselves with an expensive / insufficient Stripe integration is that they make migration out very easy. We were able to get the whole process done with no downtime or missed billing - so it's definitely possible even when dealing with complex billing arrangements.
Stay tuned on the European tax stuff—we're working on that now. (And if you want to talk more about it, feel free to email [email protected] and me at [email protected].)
This is funny timing for us - we are currently looking at implementing a subscription service and were already looking at this price. Even so, 0.5% fee is miles away the cheapest option. (Most others want a fixed fee per month plus .8%).
Is there reason for us to be scoffing at the new price? This is still a fraction even of processing the credit card.
Is there any downside (other than a little more work for the implementer) to just using their main payment processing API, and to implement subscription billing with a cronjob? This is what sr.ht does [1], at least as of a year ago. If doing it manually now means saving a bunch of money, seems like a no-brainer.
Stripe still doesn’t support settling USD payments into a USD bank account on an Australian Stripe account, instead forcing their 2% currency conversion fee on top.
So my fee for every subscription charge is increasing to a an even more ridiculous A0.30 + 5.4%.
Our users have been asking for PayPal for years, and I had always put off integrating because of how frustrating their API was. But it feels like the Stripe developer dream is over. Fine, I’m adding PayPal support. :(
Recurring billing is hard stuff. If you haven't touched it and don't know what Dunning means, or how to handle upcoming card expirations, or proation, or mixing one-time and recurring purchases, then you probably won't appreciate what kind of value is provided by a 3rd party service. Its a wonderful thing to outsource for many SaaS companies. If you have a totally novel business model with unique billing requirements it may make sense to build, otherwise its almost universally cheaper and more maintainable to buy.
Confused because I thought Stripe Billing referred to the Customer Portal functionality and some advanced Stripe Checkout features like customer-facing promotional codes. I thought subscriptions were part of the core Stripe functionality. Can anyone clarify?
I'm pretty disappointed by that move from Stripe as well to be honest. When we signed up long time ago we were not aware that the basic functionality of subscriptions was offered for free only temporarily.
We use the stripe backend only to create and cancel subscriptions, that's it. Now we have to pay a couple of grand a year to do this or hire a developer.
I think a much better move would have been to add a new billing plan for the few new features that have been added, but leave people with the basic functionality that they grew used to.
And c'mon, narrow margins my ass. We are not talking about a small startup here, we are talking about Stripe, a billion dollar company! They should be able to afford having a developer or two working on those long neglected features and not compare themselves with chargebee. It's just sad.
The idea that the ongoing cost of moving money between parties varies on the amount of money moving is very "sus" as they say. Whether they move $10,000 in a transaction or $3, roughly the same number of bits move, the same number of algorithms kick off, and so on.
Is there a cost-based rationale for doing a percentage-based pricing model, or is it really "because they can"?
I could brainstorm and say "fraud" or "defense against lawsuits involving large transactions" but those both feel weak.
Much of the interchange rate is charged directly by Visa / Mastercard. The merchant bank will then add basis points to that, and often you get another mark-up by the individual ISO (independent sales organization) in a typical set up. So, then, why do card processors charge percentage? Well, when you see those Capital One commercials where you get 1% cashback on this type of purchase or 2% cashback on this, that's where the money is coming from.
Companies like Stripe shield you from the intricacies of interchange pricing but if you operate on interchange + (meaning, the merchant account provider is charging you interchange + X %), you see that processing corporate rewards cards are the biggest killers, because you are essentially covering their 2% cashback programs. Additionally, some of that cost is insurance. If you have a fraudulent charge on your card processors work with your banks to cover some of that money, which they make from the overall % of total volume.
Not saying any of that is right, or an ideal situation, that's just the why.
This thought is exactly what the company I work for is thinking: https://www.paystand.com/about (B2B SaaS payments, fixed monthly fee)
The majority of the current payment cost (2%+) happens when paying by card. But as you say a payment right now is just moving bits. The main reason why cards charge so much is due to Risk. If you read about "interchange fees" you will see how Visa, Mastercard, AmEx, etc. classify different cards into different levels and charge a different exchange rate for each of them.
But the thing is, this system and networks were created last century (around 1960) and nowadays there is better technology to assess risk and to perform the transactions.
Percentage of revenue based pricing is very common in enterprise software and not without reason.
How angry is a customer over a $10 payment not going through vs a $10,000 payment not being processed correctly? We're likely talking the difference between the inconvenience of not having Netflix for a few minutes vs you've just cost me $35,000 in lost sales because my subscription failed and you can't find out why on time.
I want the company who made $50 on that transaction helping me, not the company who charged $1.40 flat rate and needs to budget their offering by limiting development and support.
The simplest way to fairly charge everyone an appropriate amount for the risk that Stripe takes on by processing their transactions is as a percentage of the transaction.
I guess this is a good example of why we should be building a very flexible abstraction layer between our payment services and the payment processor we use.
We don't need to be held hostage - but probably will if we're not careful.
We're very happy ChargeBee customers - I guess this doesn't affect us as we only use Stripe to store the card details - ChargeBee is the actual recurring billing engine.
As a Stripe user, it has never been smart to use recurring charges, or most of Stripe's other advanced, hands-off features. It's much, much better to just store payment source IDs and run charges in a cronjob. This gives you the flexibility to leave Stripe more easily when they make changes you don't like. Keep your integrations lean, dependencies are a liability.
We really need a way to facilitate money transfer between one or more parties. There are way too many middlemen (credit card processor, credit card network, bank fees, merchant fees, exchange network fees, ...) that artificially inflate the cost of products and services.
This is likely worsened when you consider transactions between parties in different countries.
I hope they can also innovate more on behalf of the customer with regards to recurring charges.
PayPal has this management console where a customer can see all recurring charges and instantly cancel any of them with one click: https://imgur.com/a/lLE3iAt
IMO, this should be standard across all payment cards. I detest businesses that make it hard to cancel recurring charges and I think payment card providers need to stop that from happening (I get Stripe is not quite a consumer card provider...yet).
[+] [-] pc|5 years ago|reply
Hi folks -- as Edwin points out elsewhere in the thread, the article title isn't accurate. (I'll update or delete my comment if it's fixed.)
[Update: it was changed. It used to read "Stripe is now charging 0.5% more for recurring charges."]
You can happily make recurring charges yourself and no additional fees are incurred. Lots of Stripe customers do this and we don't charge anything extra for it.
If you decide to use Stripe Billing, which is a separate product, we charge for that. Stripe Billing's pricing hasn't changed in a few years. What's changing is that we're ending the several-year grace period where we didn't charge anything for Stripe Billing for businesses who started to use this functionality before 2018.
Charging for Billing helps us fund a lot more investment in it -- we've gone from very basic cron-like functionality to a pretty full-featured subscriptions management tool. (You can read more at https://stripe.com/billing.) Billing is now sophisticated enough that companies like Slack and Atlassian are using and paying for it. We've built things like "Smart Dunning" (which improves revenue recovery for failed charges by about 14%), better analytics, international payment method and invoicing support, and a whole host of other features. There are now more than 30 people working on improving Billing.
Importantly, Stripe Billing is (and will remain) significantly cheaper than most of the other competitors in the space.
[+] [-] edwinwee|5 years ago|reply
Stripe Billing has had this pricing for a few years. For some longtime users of Subscriptions, we originally didn’t change their pricing but are doing so now. We think charging a separate fee for our Billing product is fair, given comparable products in the market (say, Recurly or Chargebee) charge something similar. (Generally more!)
We’ve been investing a ton in making Stripe Billing better. For example, from talking to users we learned people needed it be significantly easier to get up and running with subscriptions. So in the last year we built the Customer Portal[0]. (We’ve also listened to you and improved the analytics[1].) Payments is a low-margin business and our customers are (quite reasonably) very price sensitive. So to be able to make Billing a great product, we realized it was going to have to charge a fee commensurate with the product scope.
[0] https://stripe.com/docs/billing/subscriptions/customer-porta...
[1] https://support.stripe.com/questions/billing-analytics-dashb...
[+] [-] onassar|5 years ago|reply
I genuinely don't even know: am I going to be seeing this price increase? Would have liked getting an email about something like this, rather than finding out on HN, and now having to dig into things to figure out if I'm actually affected (which I presume I am).
To give you a comparison: if my bank or credit card company increased their rate, I'd expect to be (and am) notified of that.
My two cents :)
[+] [-] weego|5 years ago|reply
Copying what other people in the market are doing is the antithesis of what made Stripe so important when it first launched.
[+] [-] pixiemaster|5 years ago|reply
[+] [-] eigthbits|5 years ago|reply
[+] [-] jb775|5 years ago|reply
Hopefully this triggers more competition.
[+] [-] fastball|5 years ago|reply
At least this was true last time I looked into this.
[+] [-] loceng|5 years ago|reply
[+] [-] amadeuspagel|5 years ago|reply
[+] [-] mentos|5 years ago|reply
[+] [-] vmception|5 years ago|reply
Thanks for tackling a low margin business!
I always look at people like they have two heads when they pitch something like that.
[+] [-] jb775|5 years ago|reply
I understand existing banking structures already work on the percentage model (so there's probably downstream percentage-based charges Stripe must pay), but why can't this entire banking structure be disrupted to transfer that value back to society?
[+] [-] floatingatoll|5 years ago|reply
[+] [-] alooPotato|5 years ago|reply
Anyone else at scale and have an old integration? How are you handling the fee increase?
[+] [-] klinskyc|5 years ago|reply
[+] [-] globile|5 years ago|reply
Stuck with nowhere to go.
Not against improving margins, but customers that have walked hand in hand with Stripe for so long and seen them thru their early growing pains should definitely be grandfathered.
Grandfathering would be the cool thing to do.
[+] [-] polote|5 years ago|reply
The day you decided to go with Stripe you started being hostage of them, but this is not a bad thing, this is business, you choose a partner, they are allowed to change the terms if the contract permit it.
People on HN always think they deserve to be treated better than others
[+] [-] TAForObvReasons|5 years ago|reply
- increased fees for non-US payments (3.9% + 30 cents)
- did not refund fees when you refund customers
If there was a compelling alternative that isn't PayPal we'd jump in a heartbeat
[+] [-] epa|5 years ago|reply
[+] [-] sigwinch28|5 years ago|reply
You're literally moving millions of dollars a year through your billing platform. That's not a little bit of money. That's a lot. Own it.
You're not a hostage. You're deeply integrated through nobody's fault but your own.
[+] [-] lwigo|5 years ago|reply
[+] [-] l8rpeace|5 years ago|reply
[+] [-] merlinbeard|5 years ago|reply
[+] [-] grumple|5 years ago|reply
[+] [-] byteofbits|5 years ago|reply
I think a lot of those problems related to us being a European business and Stripe not quite being there yet in regards to Tax and Invoicing but now we have switched it's really shocking to me how steep of a price Stripe is placing on a somewhat lacking billing system here. I always assumed their Billing product was there to lock people in to the payment gateway and make it harder to have Interchange++ pricing negotiations.
What's particularly sad is that I have fond memories of the early days of Stripe when I was genuinely excited to use their recurring charge product because the developer experience was so nice.
Today with VAT MOSS, SCA and a larger team the Billing product is neither easy nor powerful for us.
One saving grace for anyone else who finds themselves with an expensive / insufficient Stripe integration is that they make migration out very easy. We were able to get the whole process done with no downtime or missed billing - so it's definitely possible even when dealing with complex billing arrangements.
[+] [-] edwinwee|5 years ago|reply
[+] [-] ppod|5 years ago|reply
[+] [-] smnrchrds|5 years ago|reply
[+] [-] legitster|5 years ago|reply
Is there reason for us to be scoffing at the new price? This is still a fraction even of processing the credit card.
[+] [-] nathcd|5 years ago|reply
[1] https://cmpwn.com/@sir/103074952842876982
[+] [-] tallytarik|5 years ago|reply
So my fee for every subscription charge is increasing to a an even more ridiculous A0.30 + 5.4%.
Our users have been asking for PayPal for years, and I had always put off integrating because of how frustrating their API was. But it feels like the Stripe developer dream is over. Fine, I’m adding PayPal support. :(
[+] [-] reilly3000|5 years ago|reply
[+] [-] gargron|5 years ago|reply
[+] [-] tomsi|5 years ago|reply
I think a much better move would have been to add a new billing plan for the few new features that have been added, but leave people with the basic functionality that they grew used to.
And c'mon, narrow margins my ass. We are not talking about a small startup here, we are talking about Stripe, a billion dollar company! They should be able to afford having a developer or two working on those long neglected features and not compare themselves with chargebee. It's just sad.
[+] [-] unethical_ban|5 years ago|reply
Is there a cost-based rationale for doing a percentage-based pricing model, or is it really "because they can"?
I could brainstorm and say "fraud" or "defense against lawsuits involving large transactions" but those both feel weak.
[+] [-] PaybackTony|5 years ago|reply
Companies like Stripe shield you from the intricacies of interchange pricing but if you operate on interchange + (meaning, the merchant account provider is charging you interchange + X %), you see that processing corporate rewards cards are the biggest killers, because you are essentially covering their 2% cashback programs. Additionally, some of that cost is insurance. If you have a fraudulent charge on your card processors work with your banks to cover some of that money, which they make from the overall % of total volume.
Not saying any of that is right, or an ideal situation, that's just the why.
[+] [-] JumpCrisscross|5 years ago|reply
Liability scales with transaction size.
[+] [-] lukevdp|5 years ago|reply
It’s definitely because they can.
There is no rule that pricing must be cost based.
[+] [-] xtracto|5 years ago|reply
The majority of the current payment cost (2%+) happens when paying by card. But as you say a payment right now is just moving bits. The main reason why cards charge so much is due to Risk. If you read about "interchange fees" you will see how Visa, Mastercard, AmEx, etc. classify different cards into different levels and charge a different exchange rate for each of them.
But the thing is, this system and networks were created last century (around 1960) and nowadays there is better technology to assess risk and to perform the transactions.
[+] [-] bmcahren|5 years ago|reply
Percentage of revenue based pricing is very common in enterprise software and not without reason.
How angry is a customer over a $10 payment not going through vs a $10,000 payment not being processed correctly? We're likely talking the difference between the inconvenience of not having Netflix for a few minutes vs you've just cost me $35,000 in lost sales because my subscription failed and you can't find out why on time.
I want the company who made $50 on that transaction helping me, not the company who charged $1.40 flat rate and needs to budget their offering by limiting development and support.
[+] [-] ball_of_lint|5 years ago|reply
The simplest way to fairly charge everyone an appropriate amount for the risk that Stripe takes on by processing their transactions is as a percentage of the transaction.
[+] [-] wishinghand|5 years ago|reply
[+] [-] lwhi|5 years ago|reply
We don't need to be held hostage - but probably will if we're not careful.
[+] [-] mtmail|5 years ago|reply
[+] [-] dabeeeenster|5 years ago|reply
Not affiliated to CB - just a happy customer!
[+] [-] corentin88|5 years ago|reply
[+] [-] ddevault|5 years ago|reply
[+] [-] xyst|5 years ago|reply
This is likely worsened when you consider transactions between parties in different countries.
[+] [-] breck|5 years ago|reply
PayPal has this management console where a customer can see all recurring charges and instantly cancel any of them with one click: https://imgur.com/a/lLE3iAt
IMO, this should be standard across all payment cards. I detest businesses that make it hard to cancel recurring charges and I think payment card providers need to stop that from happening (I get Stripe is not quite a consumer card provider...yet).