41–50 of 58 posts
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?
1.5% with a $0.50 minimum is incredible gross margin on a debit transaction. All major debit card interchange is capped by regulation to just 0.05% + $0.22. Not sure what their fraud exposure is though.
Only in the UK. In the US the average is 2-3% + $0.30
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…
1.5% with a $0.50 minimum is incredible gross margin on a debit transaction. All major debit card interchange is capped by regulation to just 0.05% + $0.22. Not sure what their fraud exposure is though.
>All major debit card interchange is capped by regulation to just 0.05% + $0.22. Only in the UK. In the US the average is 2-3% + $0.30
Are you taking about credit?
Earlier quoted context omitted.
There's plenty of cashflow to negate the occasional fraud/chargeback. This is presumably how Venmo works.
It takes a very low % of chargebacks to completely negate any profits.
iirc, Stripe holds the platform liable, so they get paid either way.
So, the question is whether the extra fee they are charging is worth it, since you would be liable for chargebacks anyway?
> 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 (…
Thanks!
[0] does it rhyme with holla?
> 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 (…
If you don't mind me asking, what's your current marketplace payout solution?[0] Thanks! [0] does it rhyme with holla?
I can say that we aren't processing anything close to Lyft levels of revenue. (I wish.)
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…
This has an even better "turn" on money. Basically, it's not getting money today that would take 30 days, it's really getting money today that might take another 5 days. That means there can be 73 turns per year vs. the 12 turns.
This is still much better than a payday loan btw.