This is actually one of the very few things that has bothered me about Stripe – they don't make their volume pricing public (Amazon does, now Balanced does). We've had to email when we hit larger sums to get pricing reduced.
Edit: although to be fair, I asked them about this, and they said their processing costs vary user to user, so they don't have a simple matrix (rather, they apply discounts based on the costs associated with an account). That's probably the best possible answer short of a pricing matrix...
Right; we've gone back-and-forth on how best to implement our volume pricing. The upside of a clear pricing matrix is that it's clear. The downside is that it's conservative -- we can (and do) give lower pricing than what we could commit to in a matrix like this to many users.
Perhaps we should release a matrix of what we do on average (or a set of minimum discounts) or something.
(As ever, feel free to drop me a line to discuss -- [email protected].)
Visa Signature Preferred (highest-end Visa cards): 2.4% + $0.10
Mastercard is usually similar. AmEx is usually more expensive.
-----------
[1] This 0.05%/$0.21 rate is super interesting to note. The Durbin amendment was recently passed and regulates most debit card interchange down to practically nothing. This basically just happened and is potentially a huge profit center for processors who haven't updated their fees to reflect it. My guess is processors are right now all looking at each other and waiting to see who breaks rank.. but for the moment, merchants are not necessarily seeing the benefit. Processors are.
This is one of the advantages to having a real merchant account instead of using a 3rd-party processor like Balanced/PayPal/Stripe. I pay interchange + 0.04% for all cards, so when someone pays me with debit, I'm charged 0.09% and not 2.9%. Several thousand dollars a month of my subscription payments are from debit/check cards; it adds up.
Your insight about the debit markup is very interesting as it seems to me that Stripe and Balanced do it and perhaps also Braintree. That is a great revenue source for them and there is no way that the cost of accepting Amex (typically about 3.5% but can be negotiated down based on volume) outweighs the revenue from that markup on debit.
The only issue that I see with your analysis is that you refer to Balanced as a processor. Read their commercial entity agreement here: https://www.balancedpayments.com/terms/selleragreement Correct me if I am wrong but the references to Vantiv and Wells Fargo Merchant Services in this agreement indicate that those two entities are doing the processing--although Wells Fargo Merchant Services may have First Data do the actual sending of the transaction across the VISA network. What Balanced is really doing is signing up merchants for these entities as an ISO and perhaps also a Merchant Servicer as defined by VISA.
For the purpose of the following breakdown of Balanced's charges lets exclude closed loop networks like Amex and Discover because they don't have the same structure. Balanced's VISA and Mastercard rate is really a result of the following:
-Interchange charged by VISA and Mastercard (which is what abalone just explained). This fee goes to the bank that issued the user's card. One caveat is that abalone's explanation does not include EIRFed transactions which is a ~0.50% markup ontop of interchange for transactions that are not entered properly. For some companies this is a big pain and a source of unexpected cost.
-Assessment charged by VISA and Mastercard for using their network. This fee is ~0.11% + $0.0195.
-Processor's markup from Vantiv and Wells Fargo. Given their volume, this fee is probably ~0.06% + $0.10 or whatever calculation that gets the processor around 12 basis points from an individual transaction.
-Acquiring bank's cut of about 2 basis points for providing the BIN/ICA. For the Wells Fargo Merchant Services transactions
-Everything else is Balanced's commission that they charge for the service of signing up a merchant for the acquirer (ie bringing them x amount of transactions) and a charge for the service that they provide the merchant (customer service, great API, etc).
I'm not quite sure the reason for having 2 processors though. It must be a difference in price at a certain transaction size and risk profile.
Basically, it is really all of those factors combined that make up the price to the merchant. The reason for the tiers is that processing is all about economies of scale which means that the additional cost to the processor for routing more transactions through their systems is very small. That is how they are able to provide these tiers.
In reality these companies are not that transparent.
This is dead on. Here's a few other things to keep in mind:
1. A Durbin Regulated Debit Card include any bank that has over $10B in deposits. That's most debits cards by volume.
2. We've been lucky in being able to negotiate with our processing banks (also called acquiring bank) to receive very favorable rates to pass on those savings. You have to factor in this cost in addition to the interchange defined by the card brands.
3. Amex is more expensive than most other cards, but Amex is also the only card brand that will negotiate on their interchange based on volume and other factors.
I've been dealing with credit card merchant accounts for our company for many years. The lack of transparency in the industry made it impossible to know if I was getting the best rates possible. Then I found http://www.cardfellow.com where major providers compete for your business. All bids are cost plus based, so you can do a real comparison of the bids. Rates are locked in for life. You can keep the gateway that you're currently using. I ended up with a different division of the same provider I was using, but at a much lower rate. This reduced my net merchant account cost by 3 percentage points. Give it a try. There's no cost. And I have no connection to CardFellow other than that of a very happy customer.
I'm sorry if this is stated somewhere but I have not seen it anywhere. How are these thresholds calculated? Is this per store/merchant account or for the whole marketplace?
Nonprofits automatically get 2.2% with no minimum volume, and in-person transaction with a PayPal Here dongle on your phone/tablet automatically get 2.7% flat with no minimum volume.
Cool. So this is essentially per marketplace? I've just launched simplegym.co that uses Balanced for handling payments. We currently are only doing around $10K/month in payments, but I believe it could grow into the discounted volume over the next few months.
Yes, this is per marketplace. We'd love to give you a discount. Our discounts are applied quarterly, so if you get to $100K+ by April 1, we'd be happy to drop your rate to 2.7% + 30¢
I am really trying to integrate balanced into my software but I am just getting stuck. A few video tutorials or a live workshop/meetup/hack day would really help!
[+] [-] dnfriedman|12 years ago|reply
Edit: although to be fair, I asked them about this, and they said their processing costs vary user to user, so they don't have a simple matrix (rather, they apply discounts based on the costs associated with an account). That's probably the best possible answer short of a pricing matrix...
[+] [-] pc|12 years ago|reply
Perhaps we should release a matrix of what we do on average (or a set of minimum discounts) or something.
(As ever, feel free to drop me a line to discuss -- [email protected].)
[+] [-] abalone|12 years ago|reply
Here's Visa's: http://usa.visa.com/download/merchants/visa-usa-interchange-... For online the fee program is usually "e-Commerce Basic".
So here's Balanced's interchange costs, for Visa:
Major debit cards[1]: 0.05% + $0.21
Unregulated debit cards (small banks): 1.65% + $0.15
Non-rewards credit cards: 1.8% + $0.10
Rewards credit cards: 1.95% + $0.10
Visa Signature Preferred (highest-end Visa cards): 2.4% + $0.10
Mastercard is usually similar. AmEx is usually more expensive.
-----------
[1] This 0.05%/$0.21 rate is super interesting to note. The Durbin amendment was recently passed and regulates most debit card interchange down to practically nothing. This basically just happened and is potentially a huge profit center for processors who haven't updated their fees to reflect it. My guess is processors are right now all looking at each other and waiting to see who breaks rank.. but for the moment, merchants are not necessarily seeing the benefit. Processors are.
[+] [-] dangrossman|12 years ago|reply
[+] [-] alisasa|12 years ago|reply
The only issue that I see with your analysis is that you refer to Balanced as a processor. Read their commercial entity agreement here: https://www.balancedpayments.com/terms/selleragreement Correct me if I am wrong but the references to Vantiv and Wells Fargo Merchant Services in this agreement indicate that those two entities are doing the processing--although Wells Fargo Merchant Services may have First Data do the actual sending of the transaction across the VISA network. What Balanced is really doing is signing up merchants for these entities as an ISO and perhaps also a Merchant Servicer as defined by VISA.
For the purpose of the following breakdown of Balanced's charges lets exclude closed loop networks like Amex and Discover because they don't have the same structure. Balanced's VISA and Mastercard rate is really a result of the following:
-Interchange charged by VISA and Mastercard (which is what abalone just explained). This fee goes to the bank that issued the user's card. One caveat is that abalone's explanation does not include EIRFed transactions which is a ~0.50% markup ontop of interchange for transactions that are not entered properly. For some companies this is a big pain and a source of unexpected cost.
-Assessment charged by VISA and Mastercard for using their network. This fee is ~0.11% + $0.0195.
-Processor's markup from Vantiv and Wells Fargo. Given their volume, this fee is probably ~0.06% + $0.10 or whatever calculation that gets the processor around 12 basis points from an individual transaction.
-Acquiring bank's cut of about 2 basis points for providing the BIN/ICA. For the Wells Fargo Merchant Services transactions
-Everything else is Balanced's commission that they charge for the service of signing up a merchant for the acquirer (ie bringing them x amount of transactions) and a charge for the service that they provide the merchant (customer service, great API, etc).
I'm not quite sure the reason for having 2 processors though. It must be a difference in price at a certain transaction size and risk profile.
Basically, it is really all of those factors combined that make up the price to the merchant. The reason for the tiers is that processing is all about economies of scale which means that the additional cost to the processor for routing more transactions through their systems is very small. That is how they are able to provide these tiers.
In reality these companies are not that transparent.
[+] [-] zende|12 years ago|reply
1. A Durbin Regulated Debit Card include any bank that has over $10B in deposits. That's most debits cards by volume.
2. We've been lucky in being able to negotiate with our processing banks (also called acquiring bank) to receive very favorable rates to pass on those savings. You have to factor in this cost in addition to the interchange defined by the card brands.
3. Amex is more expensive than most other cards, but Amex is also the only card brand that will negotiate on their interchange based on volume and other factors.
abalone: thanks for writing this up. It's a more detailed answer to https://news.ycombinator.com/item?id=7033534
[+] [-] jareau|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] TomBeckman|12 years ago|reply
[+] [-] mcorrand|12 years ago|reply
[+] [-] jareau|12 years ago|reply
We calculate these fees per marketplace. Usually a single marketplace has many merchants associated with it.
[+] [-] rasengan|12 years ago|reply
[+] [-] steveklabnik|12 years ago|reply
* http://blog.balancedpayments.com/volume-pricing/
* https://stripe.com/us/pricing
* https://www.braintreepayments.com/faq control-f pricing
TL;DR: Everyone has 2.9% + 30¢ on their page, Stripe mentions to email them for a discount if you're doing over $1MM/year.
[+] [-] dangrossman|12 years ago|reply
https://www.paypal.com/webapps/mpp/merchant-fees
[+] [-] mcorrand|12 years ago|reply
[+] [-] throwaway85723|12 years ago|reply
[+] [-] harrisreynolds|12 years ago|reply
[+] [-] jareau|12 years ago|reply
Yes, this is per marketplace. We'd love to give you a discount. Our discounts are applied quarterly, so if you get to $100K+ by April 1, we'd be happy to drop your rate to 2.7% + 30¢
More here: https://www.balancedpayments.com/pricing
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] MyNameIsMK|12 years ago|reply
[+] [-] zende|12 years ago|reply
You can also email us at [email protected]
[+] [-] johnnyg|12 years ago|reply
[+] [-] jareau|12 years ago|reply