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Instant Payouts for Marketplaces

stripe.com

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Re: Instant Payouts for Marketplaces

#31

Post by derwiki »

manacit wrote: post #28
derwiki wrote: post #25

Really excited to see this feature come to managed accounts on Stripe! Instant transfers are why I use Square Cash over Venmo. A question for the Stripe engineers: does this mean we would instantly know if a transfer has failed? One of our biggest pain points right now is when a user enters incorrect account details, we transfer money to them, and the payment is reversed a week later. And one other question: if we're…

Unfortunately, Square Cash just removed their "instant transfers" - https://techcrunch.com/2016/02/29/square-cashs-fast-payments... They just implemented a venmo-style "balance", and taking money out instantly now carries a 1% fee: https://squareup.com/help/us/en/article/5589-where-is-my-squ... On the plus side, they give you a virtual card that you can use to spend that money, but it's a far cry from "the money is n…

Oh man, I didn't even realize this changed. But I guess I never expected it to last forever...

Re: Instant Payouts for Marketplaces

#32

Post by relaunched »

Everyone is learning that factoring is a very lucrative business. It's beautiful because 1.5% is an egregious rake that doesn't sound like much...until you do the math.

If you normally wait 30 days for your money, but you opt for next day pay for a 1.5% charge on your $100 dollars in receivables, what's the real cost? The provider earns $1.50 for 29 days worth of floating money on your behalf (you'd get in in 30, but you opt for it tomorrow for $1.50).

Now, let's say the company flips the same $98.50 12 times per year. That's earnings of $18 on $98.50, or 18.25% on the company's money...not bad. But wait. What if the company has a strong cash position and can finance the $98.50 at prime, at 90% of receivables (cause that or better is what strong companies can get). Well, then the company needs to borrow $88.65 for the year, at 3.5% per year (prime rate). The company pays $2.66 per year in interest, out of the $18, to earn $15.34 on their initial 10% of the $98.50. So, 1.5% quick pay actually yields the company 15.34 / 9.85 or 156% on their money.

156% isn't a bad ROI.

Re: Instant Payouts for Marketplaces

#33

Post by jamroom »

octaveguin wrote: post #18
pyronite wrote: post #9

> Instant Payouts cost 1.5% of the payout amount, with a minimum fee of 50¢. This is the killer for us and, I'm guessing, many other marketplaces without a Lyft-sized (20%) rake. Our current solution for marketplace payouts charges one quarter per payout. The funds are direct deposited in the user's account the next business day. Maybe we have a sweet deal, but to go from this to 1.5%, in addition to Stripe's other (…

Does this mean that they're charging 1.5% + $0.50 on top of their 2.9% + $0.30 total? It's unclear how all the pricing works. Does the normal stripe fee occur for the user of the market place in addition to the marketplace fee or does it only trigger when you the marketplace owner receives the payments? Or does it not trigger at all?

Yes - I would assume so since this is a Stripe transfer, which means it is money being moved from your account to another account, so likely you already paid the 2.9% + .30 on the money coming in.

Re: Instant Payouts for Marketplaces

#34

Post by ISL »

relaunched wrote: post #32

Everyone is learning that factoring is a very lucrative business. It's beautiful because 1.5% is an egregious rake that doesn't sound like much...until you do the math. If you normally wait 30 days for your money, but you opt for next day pay for a 1.5% charge on your $100 dollars in receivables, what's the real cost? The provider earns $1.50 for 29 days worth of floating money on your behalf (you'd get in in 30, but…

And if the payment is fraud/gets charged back?

Re: Instant Payouts for Marketplaces

#35

Post by ci5er »

ig1 wrote: post #30
ci5er wrote: post #24

Earlier quoted context omitted.

I'm not talking about card refunds. I'm talking about all the lags in ACH and all the ways that (under UCC) that consumers can grab their money back even after it already went through... > Why would anyone agree to a 1.5% reduction in earnings to get their money now instead of tomorrow/2 days? I have no idea. I don't live in that world. Sounds like some pawn-shop level need-for-cash to me. But I do know that in busin…

I work for a peer-to-peer factoring marketplace startup ( http://marketinvoice.com ) so I can shed some more light on it. Typically we charge between 1%-3% for a 30 day advance. A couple of common scenarios in the tech industry: 1) You're a web/mobile agency who gets paid on 30 day terms but you need to pay your staff (and contractors) on a monthly basis. If the times line up exactly you might get away with it but if…

Thanks! I love this kind of market-specific knowledge.

Re: Instant Payouts for Marketplaces

#36

Post by mbesto »

intrasight wrote: post #10

I've no idea what they mean by "marketplace"

Consumer buys product X on Website Y and Website Y pays provider Z.

$ flows like this:

X -> Y -> Z

Consumer -> Marketplace -> Provider

Now marketplaces can basically transact from Consumer to Provider instantly. That's huge.

Re: Instant Payouts for Marketplaces

#37

Post by dave_coen »

octaveguin wrote: post #18
pyronite wrote: post #9

> Instant Payouts cost 1.5% of the payout amount, with a minimum fee of 50¢. This is the killer for us and, I'm guessing, many other marketplaces without a Lyft-sized (20%) rake. Our current solution for marketplace payouts charges one quarter per payout. The funds are direct deposited in the user's account the next business day. Maybe we have a sweet deal, but to go from this to 1.5%, in addition to Stripe's other (…

Does this mean that they're charging 1.5% + $0.50 on top of their 2.9% + $0.30 total? It's unclear how all the pricing works. Does the normal stripe fee occur for the user of the market place in addition to the marketplace fee or does it only trigger when you the marketplace owner receives the payments? Or does it not trigger at all?

We charge the marketplace 1.5% of the amount paid out (with a minimum charge of $0.50, so e.g. on a $30 payout, we'll charge $0.50) and we're able to offer discounts to platforms that are operating at scale. If you'd like to discuss, feel free to reach out to me at dave.coen@stripe.com

During the beta, we've seen many end users choose to pay a fee when they could have waited to receive a slower payout for free. We think the value of this product is in providing choice and giving end users immediate access to their funds when they want it. The stories I've heard from Lyft drivers about the difference it makes to have this flexibility has been my favorite part of working on Instant Payouts.

Re: Instant Payouts for Marketplaces

#38

Post by vizzah »

Does anyone know startups working on bringing Visa Direct / Mastercard MoneySend to us, developers, without all the financial / regulatory overhead? These are world-wide payments with huge potential, but I am struggling to find any offering on the market today. "Coming soon" mostly.. :(

Re: Instant Payouts for Marketplaces

#39

Post by lachyg »

vizzah wrote: post #38

Does anyone know startups working on bringing Visa Direct / Mastercard MoneySend to us, developers, without all the financial / regulatory overhead? These are world-wide payments with huge potential, but I am struggling to find any offering on the market today. "Coming soon" mostly.. :(

@vizzah: I work at Stripe. We're working with Visa Direct and MoneySend, and you're able to sign up and begin using it today. Let me know if you have any troubles, and I'd be happy to help.

Re: Instant Payouts for Marketplaces

#40

Post by tasteup »

ISL wrote: post #34
relaunched wrote: post #32

Everyone is learning that factoring is a very lucrative business. It's beautiful because 1.5% is an egregious rake that doesn't sound like much...until you do the math. If you normally wait 30 days for your money, but you opt for next day pay for a 1.5% charge on your $100 dollars in receivables, what's the real cost? The provider earns $1.50 for 29 days worth of floating money on your behalf (you'd get in in 30, but…

And if the payment is fraud/gets charged back?

There's plenty of cashflow to negate the occasional fraud/chargeback. This is presumably how Venmo works.
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