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Stripe increases price for business in the European Economic Area

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Re: Stripe increases price for business in the European Economic Area

#211

Post by dmurray »

woofcat wrote: post #191
Timshel wrote: post #79

Earlier quoted context omitted.

I wish those transaction cost would be made visible. Imo the seller should not care which card the client use, if it's more expensive to use a "premium" card then it should be made visible to the client and he should be the one to pay the overhead.

I'll be the naysayer here. I very much disagree with this. A Visa is a Visa is a Visa. If you don't like it then don't take visa. Charging me as the end user more money because I have a "Premium" card would be a very fast way for me to not shop with you.

Let me guess, you do have a premium card that gives you 1% or more cashback on your purchases.

Re: Stripe increases price for business in the European Economic Area

#212

Post by dkjaudyeqooe »

triceratops wrote: post #152
dkjaudyeqooe wrote: post #151

Earlier quoted context omitted.

> This is big part of the reason you don’t see high value reward cards or cashback program in the EU. Interestingly my US 1.5%-3% (regular, also 5% special) cashback cards keep paying out on transactions here in the EU. I've always wondered who is losing out in that equation.

You probably pay for it with the exchange rate spread. Your card may say no foreign transaction fees but they're already taking a 3% profit margin on the currency conversion.

I definitely don't. Visa/MC takes about 0.5% and the bank takes nothing. I've checked many times.

Re: Stripe increases price for business in the European Economic Area

#213

Post by dkjaudyeqooe »

triceratops wrote: post #161
pembrook wrote: post #159

Earlier quoted context omitted.

This. There's so much funny business that goes on with FX rates that it makes me almost pro-crypto. Even the people who claim to offer raw spot market rates (ie. Interactive Brokers), in fact do not offer that. I would not be surprised in Visa & Mastercard do the same--although they claim otherwise.

Come to think of it, would Visa/MC be doing the conversion? I believe that's the issuing bank's job. But they offer the rewards, not Visa/MC, so it doesn't change the original answer much.

Visa/MC are doing the conversion, and that does makes sense to me given their central position in the transactions. There are (basically crooked) originating (I think that's the right word) banks/payment processors that convert it for you, with a 3% plus spread. Paypal is the most egregious in this category.

The rewards are funded by the banks via interest income. 3% cashback cannot be covered by interchange fees, for instance.

Re: Stripe increases price for business in the European Economic Area

#214

Post by stefan_ »

pancrufty wrote: post #145
throwaway67743 wrote: post #12

It says something when traditional banks are basically the same price now and are almost as good in features (and many other card processors are cheaper, especially if eg you stick to a processor in the EU for EU cards) - I'm not sure why anyone would pick Stripe anymore, especially as they have just as many "hidden" costs as others (eg fraud stuff)

Having seen many of these systems myself, I doubt they’re “almost as good in features.” My European bank (one of the largest in my country) doesn’t accept passwords longer than 8 characters. Imagine how bad the rest of the systems is.

You will find there is often a big difference between logging into the account and making any change or transaction. Getting the password right might give you account details and some basic transaction history, but it won't allow you to transfer money without 2FA.

Re: Stripe increases price for business in the European Economic Area

#215

Post by thiscatis »

GordonS wrote: post #137
thiscatis wrote: post #41

Earlier quoted context omitted.

Because they give more benefits (insurance, lounge access, cashback etc...) and someone has to pay for this (i.e. the merchants). For example R̶e̶v̶o̶l̶u̶t̶ ̶M̶e̶t̶a̶l̶ premium cards and corporate cards which offers benefits such as lounge access to pay-to-use lounges, travel insurance, cashback etc.. are mostly designed by the schemes in parternship with the issuing banks. Also note that mostly in the US and Europe…

> Because they give more benefits (insurance, lounge access, cashback etc...) and someone has to pay for this The company (or cardholder) pays for this - corporate cards and the like aren't free, they come with an annual fee. So it's not all on the merchant.

These fees are usually waived based on spend and often just require a simple call to the issuing bank. Even 400 usd won’t cover hundreds of thousands of airmiles gained by spend.

Re: Stripe increases price for business in the European Economic Area

#216

Post by thiscatis »

petesergeant wrote: post #169
thiscatis wrote: post #98

Earlier quoted context omitted.

The Revolut Metal (personal, not revolut business) example might not be the best one (see also my other reply) however the reason I mention is still the same, someone has to pay for the benefits these premium cards offer, the interchange on these is higher.

This appears to not be true, because this is specifically commercial cards, and not consumer cards. The correct answer seems to be this one: https://news.ycombinator.com/item?id=34691714

It literally says the same, the interchange in these is higher.

Re: Stripe increases price for business in the European Economic Area

#217

Post by simfree »

traceroute66 wrote: post #177
avianlyric wrote: post #78

Earlier quoted context omitted.

The EU introduced price caps on interchange in 2015 capping interchange on credit cards at 0.3% and debit cards at 0.2%. That’s almost an order-of-magnitude lower than interchange fees in the US, which are usually around the 1%-2% level. This is big part of the reason you don’t see high value reward cards or cashback program in the EU. There simply isn’t the interchange revenue to fund them, which is good thing, beca…

> nasty regressive tax that transfers vast amounts on wealth from As long as you're not a well off person with an AMEX card that regularly makes purchases outside of your AMEX card currency. AMEX is nuts in that all non-home currency transactions go via USD. So, for example, if you have a EUR AMEX and you make a GBP purchase, your conversion will go GBP -> USD -> EUR with AMEX taking a cut at each step along the way.

American Express is a US-centric company, their rest of world market penetratiom and acceptance rates are much lower than in the USA.

Your use case isn't large enough to be a priority to American Express.

Re: Stripe increases price for business in the European Economic Area

#218

Post by zachlatta »

kylehotchkiss wrote: post #172

> Dispute fees (also known as chargebacks) will increase from €15 to €20. We’ll also no longer refund this fee if the customer’s bank resolves the dispute in your favor, due to the costs Stripe incurs for managing dispute evidence submissions (regardless of the outcome). Is Stripe testing dispute fees for all chargebacks out in EU before rolling out in the US? 1) This is gonna be bad for NGOs 2) So now people can jus…

We had someone try to use hundreds of stolen credit cards on our nonprofit's donation form to test them. What a nightmare! I really hope these fees don't get charged to nonprofits.

Re: Stripe increases price for business in the European Economic Area

#219

Post by avianlyric »

rgbrenner wrote: post #192
avianlyric wrote: post #162

Earlier quoted context omitted.

Doesn’t really change anything. VISA and Mastercard rules also prevent merchants from discriminating based on card type, either you except all VISA/Mastercard cards, or you except none. So the exact manner in which they’re billed to merchants is kinda irrelevant, the cost ends up being spread over all consumers, regardless of their ability to recover the money via cashback or rewards.

Prices aren't set based on costs. Prices are set at the maximum the market will bear. If you've ever set prices for a product, you would see this yourself. Price*Volume=Revenue Consumers dont care if you can pay for the inputs to your product. They obtain a certain value from your product and have a certain expectation of what the price should be, and if your costs are above that, consumers are happy to watch you go…

> If you've ever set prices for a product, you would see this yourself. Price*Volume=Revenue

If your market is completely elastic, then sure. But only hypothetical markets (and perhaps some fungible goods) are completely elastic. Most markets don’t have a perfect linear correlation between price and demand.

The other things you’ve completely ignored, is the fact that interchange impacts all sellers equally. So as a consumer you can’t avoid the interchange tax by shopping around, which in turn will increase a consumer’s willingness to pay higher prices.

This may come as a surprise to you, but consumers don’t have a perfect way to calculating the value of something. Ironically, the perceived value of a product is highly influenced by both its price, and the price of its competitors (with Veblen goods being the extreme). So if you introduce a flat 2% price increase across all sellers, then it’s reasonable to expect consumers value perception to increase by a similar amount.

Re: Stripe increases price for business in the European Economic Area

#220

Post by avianlyric »

triceratops wrote: post #161
pembrook wrote: post #159

Earlier quoted context omitted.

This. There's so much funny business that goes on with FX rates that it makes me almost pro-crypto. Even the people who claim to offer raw spot market rates (ie. Interactive Brokers), in fact do not offer that. I would not be surprised in Visa & Mastercard do the same--although they claim otherwise.

Come to think of it, would Visa/MC be doing the conversion? I believe that's the issuing bank's job. But they offer the rewards, not Visa/MC, so it doesn't change the original answer much.

Visa/MC do the conversion, but it’s not unusual for banks to tack on extra fees. Additionally banks can choose to settle in multiple currencies, and handle the FX themselves.

VISA/MC do offer the spot rate. But the idea of a spot rate is a little iffy anyway, as it assumes that there’s a counterparty willing to sell/buy at that price, and at the volume you want to transact at. When you’re operating at MC/VISA scale, that isn’t a given, and neither of them are interested in taking on FX risk. So their spot prices will be close, but likely not identical to spot prices you might find at other FX providers. Over the long term though, I would expect any delta to balance out.

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