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Comment by joshuak | Hacker News Reader

We were just about to add payments to our site, and Braintree was high on the list to checkout. Any other suggestions in addition to Stripe?

-edit- This seems like a good list: http://gatewayindex.spreedly.com

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If you do at least $3-5k/month in transactions, a real merchant account from a bank/ISO/MSP. I pay $0.05 + 0.04% markup over interchange. Even after the monthly and gateway (Authorize.net) fees, that's around 2%, compared to Stripe's 2.9% or PayPal's 2.2% (I qualify for their merchant rate discount). Amex cards are the only ones I pay more for by not doing a flat rate.

[By coding against Spreedly, it's possible to do things like send all Visa and MasterCard charges to Authorize.net, and all Amex charges to PayPal for the flat rate, without ever seeing the cardholder data myself. I don't though.]

I'm more interested in micropayments but this interchange stuff seems a bit complicated. How would a $2 payment work out with interchange included ? I mean, what fees would apply for a $2 credit card payment ?

So you'd have to pay interchange, plus whatever your processor charges on top of that, which will depend on them, and volume. You can definitely shop around a little bit, there's probably several local people who can talk you through it and bring you some offers to the table from various processors, but also get a quote from people like TSYS, First Data, and Chase Paymentech directly.

I'm remembering fees varying from $.05 to $0.10 and 0.10% to 0.15% on top of interchange. The visa interchange rates are available at (1) to give you an idea. You're mostly interested in the eCommerce categories probably, so you'll be paying 1.80 to 1.95% plus $0.10 on top of whatever you're paying from you're processor for credit cards, debit cards are cheaper.

Many people that do micropayments will try to combine some transactions together, in order to save money. That said, you might be interested in paypal micropayments (2), as they only charge $0.05 + 5%, which for a $2 transaction, is a big savings.

1: http://usa.visa.com/download/merchants/visa-usa-interchange-...

2: https://www.paypalobjects.com/IntegrationCenter/ic_micropaym...

Thanks for the detailed information. That certainly clears things up a bit.

I've been using Paypal micropayments for the past year or so and it's been the best bet for $2 transactions (I pay 6%+$0.05 for cross border payments). Ends up being $0.17 per transaction. I haven't come across anything that beats that by a large enough margin so as to replace Paypal yet.

The only downside is that Paypal is applying the standard 6% fee to $20 transactions as well (as opposed to the lower 2.9% fee), so I either need to route these transactions to a non-micropayments Paypal account or do something else with them... this is what I am currently working on solving. The difference doesn't come out to be much for a $20 transaction but with higher transaction volume it will certainly stick out as a sore point.

If you want customers to be able to pay with a credit card, it will be difficult to get individual charge fees under $0.30. If you expect repeat purchasing, best to aggregate charges either ahead of time (aka "pre-pay") or post.

How does iTunes do it? They're doing $0.99 payments all the time.

probably some combination of

- charging a 30% processing fee

- taking a loss on small payments

- bundling charges whenever possible

- encouraging people to buy itunes gift cards

- being big enough to negotiate better rates than normal people can.

Apple aggregates to a great extent but I think could go much further. It only bundles up purchases over several days or perhaps a week. Since it's minimum fee is $0.30 (30% of $0.99) it just about breaks even on single song purchases.

But Apple would be fine with the whole App/iTunes Store being a break-even proposition since it has consistently stated that its interest is in the hardware sales.

Don't discount everything Paypal does to buffer you as a merchant from the effects of fraud. I think some people look at raw transaction fees and don't realize how much extra shit they will have to deal with if they're going to process credit cards directly. There is definitely value added by Paypal in this area, and I think it's easily worth more than saving 0.2% on $3-5k in payments per month.

(I work at Stripe)

We've encountered a lot of customers that are paying much more than they should be for a merchant account and gateway setup. Stripe's fees start at 2.9% + $0.30 per transaction, we don't have any hidden fees, and we offer volume discounts for businesses on track to do $1MM/year or more. Separately, PayPal has many add-on fees ($30 per month if you want to design and host your own checkout pages, 1% cross-border surcharge, 3.5% transaction fee when your customers pay with American Express, etc.) which often make it more expensive than Stripe.

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