For online payments, the Dutch use the IDEAL system, which is even easier than online credit cards. This also prevents vendor lock-in, like Amazon. And, the banking apps make it super easy to send money to friends.
Looking back, I have to imagine that this 3%+ tax on all American transactions must put a weight on the system.
[1] https://www.ing.nl/media/ING-rates_for_business_transaction_...
This translates into much lower merchant fees. Even a tiny startup with zero transaction volume can easily get less than 2% on their physical card transactions (using something like iZettle or SumUp). Big retailers will be paying well under 1%.
Also, merchants are banned from adding surcharges for debit and credit card transactions in the EU & UK.
Visa for example, plan to increase the interchange fee on digital payments made between European customers and British businesses from 0.3% to 1.5%. Other providers will surely follow.
Still lower fees than in the states but probably not for long.
Any pointer to this legislation would be appreciated.
The local swimming pool lately started adding the transaction fees to the ticket after the sale.
I 100% agree. It's pretty absurd that all merchants have to pay a 3% fee on the vast majority of their transactions with no real alternative.
And I realize crypto gets a bad rap around here, but I really do think stablecoins offer an interesting way around this. It's an open standard that anyone can build on top of and integrate with which means we could have a healthy market with many payment processors, and wallet providers. Even if we ended up with the likes of coinbase, kraken, etc custodying the majority of user funds, the fact that users would have options, and any startup could integrate would help a ton with maintaining a competitive arena and driving prices down.
(and before someone yells "crypto fees", there are already solutions that can drive these well below $0.01 if we're just sending payments between 2 parties)
Can you specify what you're referring to? As someone who frequently yells "crypto fees" my understanding is most low-fee options either (a) require transfers within a centralized ecosystem, (b) aren't likely to scale effectively as a system (e.g. bitcoin's lightning network, or a shitcoin network of choice that's never experienced heavy usage) (c) are exciting but hypothetical future ideas, such as sharding on Ethereum
I looked at stablecoins for a stingy friend's side gig (they were using Square Cash for payments until they got shut down), but it was too complicated just trying to explain and onboard a bunch of regulars with varying financial circumstances onto a single service.
No, they do not have to pay a 3% fee. Debit card fees are basically negligible. Sellers can also impose additional fees for credit card users if they wish. For example, Winco grocery stores in the western US only accept debit cards. Many government agencies also charge a card fee if you want to pay via card rather than ACH.
Sellers in the US choose to pay the extra processing fees because they earn more than that from people who pay with credit cards.
See:
https://www.ftc.gov/tips-advice/business-center/guidance/new...
> A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously. For example, you can offer your customers a discount or a coupon if they pay with cash or a debit card rather than a credit card.
https://en.wikipedia.org/wiki/Expressions_Hair_Design_v._Sch...
https://harvardlawreview.org/2017/11/expressions-hair-design...
I mean, rationally you would expect the opposite: people typically don't do $10k+ transactions using credit cards, so a worst case consequence of fraud you're not protected from is quite small.
But for medical emergencies, the worst case cost is orders of magnitude larger, so a system that protects everyone (financially) is much more beneficial.
ICS requires you to snailmail them printouts of your purchase etc. within a small time window.
All of these services (including PayPal) charge no fees for personal payments. Just to merchants for commercial transactions, which often come with buyer protection, free credit/payment plans for the buyer, etc.
"all american transactions" - who cares what proportion it is? It's the most vulgar display of market power imaginable. "We will tax this large chunk of the economy." And I'm not even seeing anyone saying they won't get away with it.
It's really quite astounding!
Btw these high transaction fees are the reason why loyalty programs are so good in US while so bad in EU. EU caps credit card fees at around 1.5%, while in US it's much higher, so basically banks give people part of the fee in form of loyalty points
They can, for example ~15 years ago I used a maestro card to pay for a subscription to Sony. All they needed was a card number and an address (the latter for tax reasons, that is mandatory).
edit : according to the document, ING charges € 0,25.
I don't know if it's really easier than cards though given all the tools that are available for cards now, from auto fill to contactless.
To be honest, google pay / apple pay are just so damn convenient. Being able to just hold my phone and have payment happen in a second is fantastic. And here in Europe let's not forget visa and mc fees are capped at something like .7%.
You can start accepting Twint without any hurdles. Or use a merchant gateway and pay like 0.3% or so.
90% of the credit card take gets paid back out in the form of rewards, so it’s not really a tax
It's about whether or not we should pay a 3+% cut to the payment processor when there are clearly other options.
Nothing in this world is free, question is who pays for it and how much.
Of course US credit card transaction fees also fund cashback and other reward systems
The Dutch banks all work together to prevent a US fintech takeover which they saw coming.
[1] https://web.archive.org/web/20210727095034/https://www.paypa...
[1] https://newsroom.paypal-corp.com/2021-06-18-Upcoming-Changes... [2] https://news.ycombinator.com/item?id=27560616
These changes went into effect on August 2nd 2021. Here is a PDF that has a breakdown showing all the changes that happened that day [1]
To PayPal's credit, this was their first rate increase in a very long time if not forever. That said this is a huge new fee for merchants while not providing any new services, at least at this time, to justify it.
[1] https://www.paypalobjects.com/marketing/ua/pdf/US/en/feepage...
There is no reason to assume that rates should go up at all, it's not like the % you take needs to be corrected for inflation.
This also comes after they've adjusted their policy so that they keep all fees even after a payment has been refunded. They're getting less and less attractive every month.
We haven't gone live with it yet, but following this change I actually went comparison shopping a little. I'm planning on swapping my payment processing over to Braintree.. which is still paypal.. but actually does have less fees. It has the benefit of still being able to accept paypal payments (at the paypal fee rate) but lower fees for credit card transactions.
"Upcoming changes to our fee structure"
And also the fact that they are one of the few established and widely accepted payment / transfer systems, so their customers aren't going to flee in droves.
And its getting bigger and bigger by the day, so it should scale. Not increase cost..
I'm pretty sure they do it:
A) for the stock
B) because they are a monopol (almost)
There's a narrative where companies are painted as regretfully rather than opportunistically raising prices, maybe they just want to make more money. That's kinda the point of the system after all
Do you know of any other service that is suitable for microtransactions, besides cryptocurrencies?
I wonder why that is. Are they offering this service at a loss? If not, why not offer it to everyone automatically?
Sometimes works out really well if I have spare US$ or EUR sitting around (I’m in Canada).
Maybe some donations get lost or stolen, but zero-fees makes it a net benefit in my mind.
Venmo has been ubiquitous for years—everyone seems to have it. I’ve used it for everything from buying plants at the farmer’s market to paying rent and medical expenses.
Edit: Of course the default broadcasting of your payments to a social feed is bonkers and needs to be turned off.
[edit] That's a lot like saying you can't beat the "$0 commission" at the airport currency exchange - true, but misleading. They wreck you elsewhere (in that case, in exchange rates). The truth is if Nano were "just as good" as sending dollars back and forth except free everyone would be using it. The fact they're not, this many years in, means you're missing something in your analysis.
Stripe desparately needs a customer-facing account that can manage cards and payment methods. If it were my guess, Stripe is already working on this.
First, they have my credit card info and shipping address already. Using their checkout means I don't need to fill all that info in.
I may not trust some random website I only plan to buy from once with my credit card info.
There are times when I can get money back from PayPal purchases on some of my credit cards. Right now I can get 5% back on one of them until the end of December. That means if paypal is an option I'm going to us it.
I see about a 70/30 percent split, as you do, for Paypal/Stripe.
I had to use the dispute resolution once. The merchant become unresponsive to all other means. PayPal ruled in my favour and provided a refund.
I’m not sure a credit card chargeback would have been as simple.
I don’t understand all the circumstances, but PayPal let me keep the money. Dunno if they successfully won the dispute with the issuer or if PayPal ate the loss.
The new API otoh, no it has to render button dynamically using Javascript, with some very confusing REST api, API keys and tokens and a sandbox mode and endpoints URLs which change frequently for no reason. Even the page down button does not work on the API age, just to give you an idea how bad this whole thing is.
It's like the team who made the API and the sellers (the end-user) have never spoken once to each other.
Parts of their business don't have much network effect, and competitors could totally rebuild the tech and eat away at the market share... Yet somehow that hasn't happened.
From my northwestern European perspective, it's weird this straightforward solution that we've had since, well, the fifties? is overlooked.
Here in Australia we’re constantly warned not to transfer money direct to sellers bank account as there’s pretty much no way you’ll get your money back if the goods don’t arrive, and there’s not much the police will do for small value transactions.
Being able to send money to someone just knowing their phone number is the real value-add.
- In DE at there are fast "instant" payments called paydirekt or giropay, which make "checkout" using your giro account fast and simply. However, it's debit again. Balls grabbed.
- Your checking account usually receives your salary, and you have to monitor it for fraudulent charges, which can just "happen" if somebody knows your IBAN. Therefore, entering my IBAN on any site that is not 100% trustworthy and liable is a no-go.
Debit is really bad for buyer's protection, and even when using "reverse debit" which means authorizing a party to draw money from your giro account, you in theory can reverse such charges, but the reversals are handled by your home bank and in many cases the reversal is getting rejected based on intransparent reasons or takes _very_ long. Customer service is simply bad at banks.
So what about credit card processors like Stripe?
- German credit cards are issued largely by banks in the visa/mastercard system. That means the banks themselves are responsible for accepting or rejecting chargebacks. Bad customer service by banks again, very high burden of proof => high chance of chargeback not going through, paper tiger wars.
- Most merchants have really shitty payment gateways in place or even store credit card information on site. The smaller the business, the shittier the storage and you can basically guarantee that data protection is effectively handled at most SMB like trash. => I do not enter my main credit card info on random sites.
So what does Paypal offer?
- almost no questions asked chargeback of any amount if you return the goods (proof = shipping label) - masks credit card number IBAN and other information from merchant
That's it. I'm ok paying small amounts using direct debit but expensive purchases, like electronics, gardening equipment and so on, go through either (a) Amazon w/ its no-fullshit refund policy (b) a merchant offering PayPal. PayPal is expensive, but customer friendly. Germany has _no_ true competitor to PayPal's service except notarized escrow, and I don't want to lawyer up just to buy a lawn mower.
Also, in the US, credit card providers accept all liability for fraud, as a consumer there's no way you will ever lose money to credit card fraud.
More often than not sites will get different prices based on the transaction volume, so having a number of small minor payment options is of little benefit, except for very specific cases like Alipay.
Then if volume is transaction an important consideration, going with the market leader is the most reasonable choice.
I'd assume that's the logic Nintendo applied for its online store for instance, making PayPal the only alternative option to standard payment systems.
Contrasting with social — if I want to message all my friends about a housewarming party, Mastedon might be my preferred platform & I might hate FB/WhatsApp, but if none of my friends actually _use_ Mastedon I'm out of luck. I have to talk with my friends somewhere that they can receive the message.
Whereas if a merchant offers me payment options of MasterCard, Amex or PayPal online, there's no additional pull towards PayPal because all my friends use it.
When paying in foreign currency, they try to trick users into using their "conversion" service, which helpfully charges a bit more money to your credit card than you would have paid without their "assistance".
I'm pretty sure though that most PayPal customers have no clue about this practice or just don't care.
If anyone is looking for a startup idea: an online payment platform that charges on outbound bank transfers only. Heck charge 5% fee. And let all transactions be completely free.
I'd expect online payments will integrate with banking providers to support initiating instant payments from deposit accounts, similar to Europe's IBAN instant payment system.
https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federa...
https://www.federalreserve.gov/paymentsystems/fednow_about.h...
https://news.ycombinator.com/item?id=28393576 (a comment I previously wrote on this topic)
At this point it's basically the same as some other shitty wallet like skrill and loaded with fees for anything.
21 July 2021 Amount received 110,00 USD
Fee 6,24 USD Total 103,76 USD
If you pick a right bank, you also get a JSON/HTTP based API for free, if you want to get your payment processing fancier later on. And your funds are insured.
PayPal is ridiculously expensive and risky way to receive money, and not simple at all. As a result almost nobody offers it in Czechia.
Just sign up for a regular payment processor, if you're in Scandinavia. The larger ones will also support iDEAL, SoFORT and other local options and help you get started with those.
Also gumroad if you want a platform
It is incredible how, very few times, developed countries can directly build a new infrastructure that beat the infrastructure of most developed countries.
70-75% PayPal
15-20% Stripe
7-9% SEPA wire transferI have no exact numbers but like 70% of orders I get from Germany are paid with PayPal.
When I added PayPal to a SaaS of mine a few years ago only like 3% even used it.
For a normal credit card transaction, most of the fee goes to the bank issuer of the card. This is banks' major source of income nowadays (aside people who don't pay off their credit card on time).
This means that most acquiring business -- the companies like Visa, Mastercard and actual acquirers that maintain the infrastructure -- get very small part of that pie but it is still very worth their time.
I don't know what kind of deal PayPal has but 3% suggests their cut is order of magnitude more than any traditional acquirer, but without hassle of maintaining EPOS terminal infrastructure.
And that half a dollar is damaging to micro transactions. Technology was supposed to make it easier to pay for small things, individually. Half a dollar cannot be explained even if each transaction was processed manually.
The difference between crypto and cash is that the bank can refuse a cash transaction, from either end, and through. With crypto the network accepts the transactions with no recourse to block it, reverse it, or impose their view on how money should circulate.
Many of my customers are in countries that aren’t supported by Stripe, so it’s not much of a choice from a business perspective.
For me, if I go to a site, that only accepts PayPal, then I'm won't be buying anything. I honestly don't trust PayPal, at all. If it's PayPal only, I assume it's fraud.
Most customers pay with PayPal, but the credit/debit card option is seamless with PayPal. I think it’s even better than Stripe since it doesn’t always take someone to another page.