Ask HN: Can payment processors like Stripe and their fees be avoided?

In India we have UPI by government no fees.

It is a new way of payments that removes need for middleman and government even has a official app ( BHIM App ) for it and most importantly it is a protocol so anyone can use it without third parties ( private companies )involved.

It now also supports subscriptions.

Read more:

UPI transactions over $100bn in Oct

Read more at: 1. Wikipedia https://en.wikipedia.org/wiki/Unified_Payments_Interface 2. UPI transactions over $100bn in Oct http://timesofindia.indiatimes.com/articleshow/87474515.cms 3. Search Google for "UPI in India"

If you want a service that does all of the VAT admin on sales, including reporting and remittance to government authorities in all relevant jurisdictions, you might want a "merchant of record" service. You mentioned Paddle, who seem to be popular and getting positive reviews among my network, though they aren't the only MoR available now.

Given how much pain governments are increasingly inflicting in this area, and the EU more than most, I expect that the market for these services will grow and using a merchant of record will become the dominant mechanism for accepting online payments, at least for smaller online businesses with significant international or inter-state sales. (I'm not sure this will be a good thing for various other reasons but it's what I expect to happen if current trends continue.)

The tax products offered by Stripe and a few specialist providers seem to offer little more than tracking some VAT rates and doing some simple calculations. I don't understand who the target market is supposed to be for these services today. Anyone with the resources to handle reporting and remittance properly everywhere surely doesn't need to pay the extra fees just for a bit of tracking and arithmetic. Anyone who doesn't have those resources might prefer to outsource everything (including responsibility for compliance) to specialists who offer a comprehensive service.

lol

US Centric answer:

If you're looking to accept card payments, then no. Both credit and debit cards have interchange fees[0] that are unavoidable. Strong negotiation with a payment provider can land you on an "interchange plus"[1] type fee schedule, which means that they pass through their costs to process the transaction and add some small fixed amount. Note that card interchange fees can range from essentially 0% (debit cards) to >2% fees baked into them. Rewards cards can reach 2.5%+ -- merchants pay for rewards on these cards and eventually pass the cost onto everyone else in the form of higher prices.

Now you could look at using something like ACH to automate bank debits. On paper, this could be as cheap as $0.10/txn. However, there's a litany of new issues to worry about. ACH payments take days to clear. The information needed to debit someone is printed on checks and given out, so now you've got a new authorization problem. People usually solve this with microdeposits or something like Plaid -- you're looking at more time and friction or more cost. People are not trained as well as with cards to punch their bank details into every other website.

Crypto adds a bunch of friction for unsavvy users, has no dispute flow (though I guess that's to your benefit as a merchant), and can have pretty variable costs.

Edit: at the end of the day, checkout completion rate is often more impactful than the fees. Other advice: 1) Try to negotiate with providers. You may not have sufficient leverage until you reach some scale, but it doesn't hurt to ask respectfully. 2) If you plan to grow your business for a long time: create local payments abstractions that make it easier to switch providers or support multiple providers later. Everybody has outages and this increases your negotiating leverage.

[0] https://en.wikipedia.org/wiki/Interchange_fee [1] Depending on the card distribution of your users, "interchange plus" can be more costly than a fixed plan.

You can't avoid fees if you're accepting card payments. One way or another you will be relying on multiple specialist services to access the card networks and they are each going to take a cut.

Cards are a broken and expensive payment method that needs to go away, and in some parts of the world that is already starting to happen, but it really depends on where your sales are. If you are aiming for customers in the US you're probably stuck with cards for now because it's what people and businesses expect to use.

However if you're selling to somewhere like Europe you might get a much better deal with alternative payment methods like SEPA and the national schemes. There will still be fees and risks but they can be much lower than you'll ever get with card payments.

Whichever payment method(s) you decide to accept you will still have to deal with the admin around taxes that has been mentioned elsewhere in this discussion. An alternative strategy of outsourcing everything to a specialist that handles both payment processing and tax admin is becoming increasingly attractive. As always if you're running a small business you might want to concentrate on whatever products or service you offer and outsource as much of the rest as you can. In this case the question isn't about how to avoid fees, because obviously you can't, but whether the amount you save is worth the fees you spend, which it easily could be.