I have been looking into multiple payment processors and it seems everyone charges the same thing. Why is that?
Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
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Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#2Dwolla doesn't charge that but I have no idea who uses them
Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#3Processors have upstream costs to Visa/Mastercard/etc that are charged in similar ways. The idea behind them using a percentage is that it relates to the risk. The more you spend, the more could be fraud and might need to be written off. The $0.30 is effectively a lower bound to stop micropayments. Otherwise people could do a $0.10 transaction and only pay $0.003. This could be to avoid system load.
While it might seem expensive, until a few years ago, taking card payments required getting a merchant account at a bank with high monthly fees which could take months. Now you can pay similar rates but without the misery of dealing with the banks.
Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#4I've wondered this for a while – could it simply be competition? Nobody wants to drop below that mark?
Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#5Dwolla doesn't charge that but I have no idea who uses them
Dwolla doesn't charge that way because they're not billing credit cards. You give them your bank details and they do an ACH transfer with them, IIRC.
I've heard both good and bad about them, but they don't have large use yet.
Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#6It doesn't quite answer the question, but we use GoCardless to handle payments from our sellers on our marketplace and that's 1% per transaction - the difference is that it's processing direct debit payments (withdrawals direct from one bank account to another) instead of credit cards.
It seems to be partially down to the underlying costs of processing credit cards and partially down to competition.
Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#7Dwolla doesn't charge that but I have no idea who uses them
Bitcoin doesn't (practically) charge that but I have no idea who uses them (except few crypto geeks/criminals/speculators)
Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#8NYT had a discussion a few years ago: http://www.nytimes.com/2010/01/05/your-money/credit-and-debi...
> While there is little controversy about the fees that Visa collects, some merchants are infuriated by a separate, larger fee, called interchange, that Visa makes them pay each time a debit or credit card is swiped. The fees, roughly 1 to 3 percent of each purchase, are forwarded to the cardholder’s bank to cover costs and promote the issuance of more Visa cards.
Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#9I've wondered this for a while – could it simply be competition? Nobody wants to drop below that mark?
Wouldn't dropping below the mark let you beat the pants off the competition?
Re: Ask HN: Why do all payment processors charge 2.9% + $0.30 per transaction?
#10It has to do with the fact that the processors you are talking about are called "PSPs" or Payment Service Providers. 2.9% + $0.30 is a standard rate that incorporates risk, operations, interchange (visa/mc), etc... while still making a profit. That's why PayPal, Stripe, etc... price accordingly.