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Comment by charlesju | Hacker News Reader

Congratulations. We've recently decided to go with Paypal Pro for better rates on micropayments. Do you guys plan to have a similar program soon?

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Yeah, we don't like the current situation, and this is a topic of ongoing discussion. Credit card network fees make it tricky to do it well but we really want to find a way to make it work.

Can you elaborate like I'm 5? Just very high level for those of us who only know "they charge a flat fee and a percent which makes microtransactions hard".

What are the strategies/thoughts in the industry? Holding and batching payments on a per-user basis? Trying to get agreements so you can batch payments on a per-processor or per-network agreement? Hourly? Daily? Weekly?

> Just very high level for those of us who only know "they charge a flat fee and a percent which makes microtransactions hard".

That's pretty much the story :-). And so the questions are then whether we subsidize the transactions, batch them (as you say, though that makes refunds and statement descriptors tricky), get card networks to change their policies, or somehow shift how the payments are made (e.g. encouraging cheaper payment methods).

I'm honestly a bit surprised credit card companies haven't been more open to the option of lowering the cost of microtransactions, since that seems to be what the Internet's moving towards as a whole.

They'll drag their feet until they can't. It's a go first bunch-up. Eventually someone will do it as a competitive advantage attempt and the rest will fast-follow (you see this happen frequently in such markets, as with the $0 stock trading bunch-up & fast-follow that happened recently).

The various US credit card & processing companies have an extraordinary thing going for themselves. Visa and Mastercard have cartel-like margins (Visa's operating income margin for 4Q19 was 66%, you don't see that outside of maybe illicit drug operations or Facebook's monopoly in its earlier thinner incarnation pre-Russiagate). They're super sensitive to giving any ground on their fee levels, out of fear (correctly so) that they'll never get them back.

Before the market drop, Visa was worth more than all publicly traded banks in Europe combined (frankly that may still be true post market drop, as Visa hasn't declined all that much).

The EU had to legislate to get the fees low enough that microtransactions might possibly be reasonable.

Visa etc are now only allowed to charge a percentage, 0.2-0.3%, but the intermediate (Stripe etc) can still add a flat-rate fee.

Makes you wonder how much those companies really compete.

I recall thinking a few years ago that offering batching as a business built atop stripe sounded like a neat business -- effectively letting users choose a batching solution if they desired, but after closely reading the Stripe Terms of Service, I think it appeared to be disallowed.

If Stripe were willing to allow third parties to act as a batching passthrough (or if I was wrong and you do!), this seems like a low-cost way to let the market decide what an acceptable refund/statement descriptor regime should look like.

> batch them (as you say, though that makes refunds and statement descriptors tricky)

Maybe batch them per user per website, that will solve statement descriptors a bit

At a very high level the batching-with-refunds issue sounds like the kind of problem that the Lightning network on bitcoin tries to solve, or bilateral netting in other financial contexts.

In the public transport space, batching is absolutely required, usually there's a mechanism of "preauth on first tap" and rapid distribution of deny lists.

Payment requests are accumulated and batched, combined with "capping" of travel costs (eg max/day, weekly discounts etc).

Wish you could disintermediate credit card fees. I'm sort of hopeful that credit card surcharging might grow (https://www.cardx.com/) and start competition on those costs.

I don't have strong feelings either way on having consumers pay CC processing fees, but encouraging them to use debit cards online seems irresponsible given the non-existent fraud protections on debit cards. Of course it's technically consumers' responsibility to know and trade off that risk versus the savings, but at least in the US the sad reality is that personal finance education is woefully lacking or non-existent for most people and they don't know the difference.

Yeah. I'm optimistic that the the relentless long-term competitive march to improved customer experience will include better fraud protections on debit cards. Reduced expenses as technology helps us identify fraud will also help.

I haven't used a debit card in years to maximize benefits (altho I sometimes use cash when required by small businesses), but the Capital One debit card advertises $0 Fraud Liability https://www.capitalone.com/bank/debit-card/.

Generally in the US, debit card fraud liability is limited to $500 if the card owner reports it within 60 days.

My strategy is to have less than $100 available in the account connected with my debit card. If I need more for some reason I can just transfer on the spot.

This also makes me more aware of my spending, since I need to manually keep topping up the account.

Seconded! We do micropayments in the $2-3 range and $0.30/transaction is a huge cut of our already slim margins. We're also in the process of migrating the bulk of our transactions to Paypal, but would love to switch back to primarily Stripe at some point as we have had terrible experiences with Paypal in the past.

Related: Have people contacted Stripe's sales team for custom pricing for micro payments (its what they ask you to do on their pricing page, iirc)

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