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Comment by gruez | Hacker News Reader

>but with cheaper processing fees

What? The product's page says it charges 1% + whatever Stripe charges ("generally" 2.9% + $0.3). A quick search says that Square charges 2.6% + $0.10 per in-person transaction. Seems like that this product is more expensive than Square.

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Ah, good find! The article claims

> The app collects a 1% service fee on every single charge.

Per your comment, this is indeed a more expensive Square. Square already does Card Not Present transactions.

The question then is why do people choose to use this?

The only thing I can think of is because certain issuers/networks treat Card Not Present transactions differently for chargeback disputes. For example, depending on the network, if you fail to collect CVV or zip code, you automatically lose second presentment rights. I don’t know how CNP vs CP charges are priced, but the mere presence of different fraud liability treatment leads me to believe there’s a fundamentally different lens applied to online transactions, and real life (less likely to be fraud?) transactions.

Just my guess

Here is a good high level book [1] that touches this subject

[1] https://www.amazon.com/dp/0982789742/ref=cm_sw_r_cp_awdb_t1_...

Stripe is available is more countries.

Sounds like his app is for people who already are using stripe (existing online store, etc) and want to start using Stripe for in-person too.

Correct. Most user come from the e-commerce world and are willing to pay for the convenience of a simple, POS app.

Maybe they already have Stripe and don't do very many transactions this way, so they're not that cost-sensitive? For exceptions to their normal way of doing business, convenience might be more important.

I'd say you're right. $70M annual processed by 56K merchants comes out to an average of ~$1.2K in sales per merchant per year.

Bingo, although the YAUs is a bit lower than that for obvious reasons. However, simple solution for these places to depend on for in person charges.

Though the private jet company and exotic car rental place are a touch higher than that.

My question is: why doesn't Stripe just include this feature themselves? Not enough of a market? But as an integrated feature it would certainly be higher (probably much higher) than what this third party app is making.

Stripe is supported in many more countries. In europe for exaple nobody ever heard of Square on the other hand people wait with open hand for Stripe to come to their country.

Good for him for getting paid now. But that margin is too fat to go unchallenged. Market forced and competition will grind that 1% down quickly.

The margin might be ample, but the fact that it adds up to only $60K per month might not attract much competition. This is no unicorn, it pays the bills for a couple of families.

Unicorn isn’t the goal, I’ll let Stripe be that. I’ll take the financial freedom.

Market forced competition always has to grind up against inertia and switching costs.

There are several copycat apps that have tried varying pricing structures (some more like 1.3%) and others that tried to go lower (like 0.1%).

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