PayPal raises fees for most domestic transaction types to 3.49% + $0.49
paypal.comWhen I moved to the Netherlands, I was at first irritated that my credit cards weren't accepted anywhere. But as the debit (maestro) card transactions are often free [1], paying 3%+ to a card service does seem exorbitant.
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_...
Merchant fees for both debit and credit cards are significantly lower in all EU countries (and UK), compared to the US, thanks to the interchange fee regulation (IFR) that caps interchange fees at 0.2% for debit card and 0.3% for credit cards.
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.
Due to Brexit merchant fees in the UK are no longer capped.
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.
> "Due to Brexit merchant fees in the UK are no longer capped."
No, they are absolutely still capped in the UK. The IFR regulation has been mirrored in the UK so the same caps still apply to UK cards and UK banks.
The exception you are referring to is when a UK card is used for an online ("card not present") transaction at an EU merchant. In this case it is now considered an inter-regional transaction and a higher cap applies: 1.15% for debit and 1.5% for credit cards. (but note, even here there is still a cap!)
Interesting. In Australia you can charge a surcharge, but only what the interchange fee cost you. So airlines especially used to charge large fees, like $12 or something, and now can only charge a few dollars.
Before this law in the UK it was mostly small businesses (e.g. local independent grocery stores) charging 50p per transaction. I think the law was probably to encourage uptake of contactless payments which are targeted at these small transactions.
It's still legal here to have a minimum transaction value for paying with card, which some businesses use. But since the pandemic it's become more common to find businesses that don't accept cash than the other way around.
I occasionally had disagreements with shop owners because I didn't have cash and I wanted them to add the payment fee manually so I could pay by card and actually - you know - buy stuff.
A lot simply wouldn't - like I was attempting fraud or something.
I once tried to buy a beer in a small corner shop. The beer was 2€. The minimum charge for card payments was 5€. I agreed to pay 5€. The shopkeeper refused to charge me 5€.
I walked out without my beer, sad, and wishing I'd remembered to carry some cash that day.
Couldn't you buy three? I mean, if you're already price insensitive to pay 5 euro for one...
I wish I'd thought of that at the time. I will remember that for future. Thanks!
You're trying to use the workflow outside of the happy path.
How do the IFR caps work with small transactions? Like < 1 EUR? Maybe I should move to Europe.
"Also, merchants are banned from adding surcharges for debit and credit card transactions in the EU & UK."
Any pointer to this legislation would be appreciated.
The local swimming pool lately started adding the transaction fees to the ticket after the sale.
In the UK, the relavent legislation is the Consumer Rights (Payment Surcharges) Regulations 2012 (amended by the Payment Services Regulations 2017).
The ban on surcharges for credit & debit cards has been in force since January 13th, 2018.
Further details here: https://www.businesscompanion.info/en/quick-guides/pricing-a...
https://www.gov.uk/government/publications/payment-surcharge...
Sure, but then add in 21% VAT tax. Not defending the US but a 3% fee + (0%-11%) added sales tax doesn't seem like it would be a bigger "weight on the system" than a 21% VAT tax
The 21% is used to evolve and invest in a country which ultimately will lead to further economic growth whereas the 3% is used to enrich CC companies.
VAT pays for our free schools and healthcare, transaction fees go into banks coffers. For you as an individual, some things are more expensive to purchase in Europe, sure, but I think equivocating the two is false.
E: I didn't read the guy you were answering closely enough. In the context of his comment, yours of course makes perfect sense.
Canada also banned said fees, and retailers with high-priced/low-margin goods (ie: computers) simply gave cash discounts to compensate. nb my info is at least 20 years out-of-date, though.
> Looking back, I have to imagine that this 3%+ tax on all American transactions must put a weight on the system.
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)
> (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
A lot of scaling solutions for Ethereum focus on being fully EVM compatible, and as such are forced to store every transaction on a widely distributed, permanent datastore, which in my mind is never going to be "cheap". Since we just need to move money around, payment channels [0] allow us to move the funds by just committing an entry and exit transaction to the widely distributed, permanent datastore, and once we "enter" this network, transactions can be very very cheap.
In terms of implementations, Bitcoin's lightning network is probably the biggest active version today, but this only allows you to move Bitcoin around, and hence is a non-starter for a widespread consumer adoption.
Which brings us to payment channels on Ethereum. It doesn't feel like there has been as much focus on the payments use case yet, and none of the solutions have as much adoption as Bitcoin's lightning network, but there are a few options I know of. Raiden network has been around for a while, visa is supposedly creating a "universal payments channel" [1], there's xdai [2] (not payment channels, and I'm not super familiar with this solution), and there's connext [3].
There's a long list here [4].
Basically it boils down to - payment channels are the solution, and it'll probably be a mix of self custodied wallets and custodial providers, all integrating with an open standard.
[0] https://hackernoon.com/how-we-built-the-largest-payment-chan...
[1] https://decrypt.co/82233/visa-universal-payment-channel-stab...
[2] https://www.xdaichain.com/
[4] https://ethereum.org/en/developers/docs/scaling/state-channe...
Payment/State channels exist today. Is there a difference between your (c) hypothetical future ideas and hypothetical future scaling problems? Lightning works today. Try Breez Wallet https://breez.technology/ or Strike https://strike.me/ and tell me what your experience is like.
> Is there a difference between your (c) hypothetical future ideas and hypothetical future scaling problems?
Hypothetical future ideas require development. Hypothetical future scaling problems block current development.
For example, suppose that Amazon Marketplace wanted, as soon as possible, to have all customers pay through bitcoin including through lightning network). The question is, would the average fee per transaction average 1c or less?
I claim the answer is no. Lightning channels require broadcasts (though much less frequently than 1 per merchant transaction) on the main network. Let's suppose someone does 100 transactions with amazon per 1 broadcast to the bitcoin network, which seems generous to me. A google search[0] suggests that the current average transaction fee on bitcoin main network is about 2.5 dollars, which then averages to 2.5 cents per lightning transaction with Amazon. This is close to the desired goal of 1 cent per transaction, under the listed assumptions.
However, Amazon adopting bitcoin for all transactions would drive a ridiculous amount of traffic to the bitcoin network. If we go to recent history, march-april 2021 saw about $20 average transaction cost (or more - peak at $60). Going back to our same calculations, $20 per broadcast puts us at a fee of 20c per amazon transaction, far beyond our goal of 1c per transaction. Furthermore historical data has not yet seen Bitcoin as a primary transaction network for a large commerce site like Amazon, so it's reasonable to speculate we could see per-broadcast fees average above $100.
In simpler terms, while Lightning network greatly decreases the fee per real-world transaction, it's not enough to handle large scale adoption unless ratio of real-world transactions to bitcoin broadcasts increase in direct proportion to the fees on the bitcoin network. Realistically, if a large amount of US commerce occurred on the bitcoin network, the most optimistic access pattern would have users broadcast to true-up their channel liquidity roughly in line with receiving paychecks - maybe twice a month.
The simple fact is that if you take millions of humans and have them broadcast twice a month on the bitcoin network, the bitcoin network would not be able to handle it (bitcoin volume is roughly 10 million transactions per month[1]). Forget even hoping to scale to billions of humans.
[0] https://ycharts.com/indicators/bitcoin_average_transaction_f...
[1] https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#/m...
> 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.
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.
> It's pretty absurd that all merchants have to pay a 3% fee on the vast majority of their transactions with no real alternative.
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...
Even better, many PayPal payments are from PayPal funds, Checking acct debits or EU/AU/NZ cardholders with capped charges, so PayPal pays 0% or under 1% to visa/MC for those transactions, but charges the same 3%+ to vendors. Plus additional charges for cross-border payments (even if there’s no forex) and terrible rates for forex which they probably self-settle anyway.
They can afford to do this because "it just works"(r)(tm).
The problem with iDeal is that there is 0 consumer protection. If you pay for an order using a credit card and it’s a scam, you do a chargeback. If you pay for an order using iDeal and it’s a scam, the money is gone the moment you pay. There is no way to get the money back.
I love how Americans are totally fine with paying a tax on every transaction they make in order to protect random people from occurrences of financial fraud, yet are vehemently opposed to exactly the same system for healthcare.
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.
Oh, you’re giving us Americans too much credit, credit card fraud happens all the time. It’s like a constant thing you have to watch out for, and I’d estimate happens once every couple of years for most people. Either straight up fraud and theft, or just a recurring charge that will not stop no matter what. So the system is super broken and relevant to individuals, which is why people accept all the fees maybe. It’s not a sign that Americans are ok with a communal approach to anything, we’re just as selfish as always with this one. Sometimes it does feel like a third world country.
> It’s like a constant thing you have to watch out for, and I’d estimate happens once every couple of years for most people. Either straight up fraud and theft, or just a recurring charge that will not stop no matter what.
Not in my experience. I probably have 10 to 15 credit cards for over a decade, and only once have I had a fraudulent transaction. And even if there was, you simply call the bank, dispute it, and that’s the end of that. Same with recurring charges.
It is even less of a problem going forward since EMV and contactless have become standard.
This seems overblown, I've had credit cards for over ten years in the US, using them in person and online, and the only time I've ever had a fraudulent transaction was an hour after my wallet was stolen, which like yeah, kind of expected.
I'm not sure what you mean by "happens once every couple of years for most people."
Your personal experience is not statistically relevant data. It is a major problem here in the US, not just fraudulent transactions, but people signing up for credit cards in your name since the equifax data leak, people creating fake ids to be used to reset your accounts in person, constant phone calls attempting to scam people, and even letters in the mail withhuge print saying “last notice - important - pay now” with very small print saying “this is an offer not an invoice” or like that tricks the elderly and those not careful. All of these and more cause massive amounts of fraud in the US.
Well the post I was replying to specified credit card fraud as the rampant issue, the list your provided seems to just be general financial fraud. I agree that financial fraud in general in the US, and probably globally, is a huge problem.
Maybe I'm wrong and all of that can be blamed on credit card fraud, but I'm not so sure.
Most of the examples I gave are done to steal your credit card information and make purchases and transactions under your credit and without your knowledge, not just sell you once for $10 that you have to dispute later once you talk to a friend or relative and find out it’s a scam. In those cases the credit card companies end up eating the cost, although when they find out this has happened to you specifically several times or in very large amount then, often through no fault of your own, you will get kicked off the credit card so they can save money.
I’ve had at one card # stolen each year for the past 4 years.
I’m pretty sure it’s gas stations and airport merchants. But it could be hacked online stores.
Amex is good at catching it.
Pnc bank on the other hand wad bad. My work card got used shorty after flying from sfo and PNC bank let them ring up 2,000 of hotel fees and didn’t flag any of it, and due to how the work cards work I didn’t find out until a month or more later
Note that high fees aren't a prerequisite for consumer protection. European credit cards offer full protection, despite having capped interchange fees.
Do they? Can I get an immediate refund for anything if I don’t like the item? I can with my Amex. No questions asked under $1000.
That doesn't sound like a feature I'd want to pay fees towards enabling but I'm likely missing something - what kind of up-to-$1000 purchases are you making where you might not even like the item?
I have used it multiple times for headphones. “Return protection”. Generally they’ll cover restocking fees if you make a claim.
How many places globally are going to accept the Amex? If you are in Europe somewhere, are you going to be able to use it to buy groceries?
Probably not, and almost definitely not at the small retailer. Amex charges are more for the retailer, so they often simply don't accept it.
Other than that, though: I'm not sure how often you even need that $1000 'no questions asked' policy. Second, return policies through the EU market (plus at least one country) are pretty good without credit card protections. It just really isn't a big concern. Finally, the culture around returning goods differs in different areas. Folks here (Norway) seem way less disposed to returning items - especially for simply not liking an item and would rather do some research upfront. (Not working as desired, defective, and things like that are a bit different, but folks still hesitate).
From what I understand amex is different from Mastercard or visa in Europe. The European limit on fees does not count for amex, or the fees are much higher. I'm not sure exactly. This usually means support for amex is lower than Mastercard or visa.
>I can with my Amex. No questions asked under $1000
So you don't try to return the item for a refund first?
That is an obvious step 0. So I suppose there is one question asked: “did you try to return it”. It is of no consequence. If the vendor takes it back I’m happy. If not, I collect from Amex’s insurance.
This is so far off topic, but just like Americans are guilty of seeing the rest of the world as a homogenous entity, you are making a huge miscalculation on what “Americans” want.
Americans really don't have a choice, the merchants are making the rules and offering a service.
Anyway Americans pay pretty high taxes, they're comparable to Europe (albeit not as high as crazy countries like Italy, Spain or France, I have no idea how those countries can even survive). I'm sure they'd be more than happy if the government were spending less and letting them to pay less taxes and buy a private insurance instead.
The problem with the US healthcare and higher education is not being private, it's being too expensive - tldr thanks to government intervention some actors got away with massively raising prices with no competition
The main problem with healthcare is prices are not transparent and the customers don’t have the ability to shop around even if the prices were known.
In term of insurance systems, the 2 are extremely different, so the comparison is not justified.
Have you ever done a chargeback in NL? Which card? Which bank? What kind of proof was required?
ICS requires you to snailmail them printouts of your purchase etc. within a small time window.
There is no customer protection because the payment system is not broken and insecure by design (e.g., hand your secrets over to an unverified entity and allow them to charge random amounts of money), plus there is no insane 3% fee. All those "benefits" that CCs argue to offer do not add up to the value of 3% of all your transactions.
Yes there is, talk to your bank. Consumer protection is way better in the EU. I use the same Dutch bank that the OP uses (ING) and I can revert many transactions from right inside the app.
You can revert automatic transactions (as these are unauthorized and can be done by parties that know just your account number) but it is impossible to revert iDeal payments.
> as these are unauthorized
It is mandatory to request authorization, but the banks do not have a way to verify that outside of a little flag that says "yes I definitely asked".
This isn't true. There is a delay between the iDeal transaction and the money being transferred. If you call your bank immediately, like my mum after being scammed, they can revert it.
Yeah, in Poland it’s similar. Since ~2001 we’ve had wire transfers that take up to a few hours to arrive (or instant) and cost 0-0.25$ to send, regardless of the amount. It made PayPal or Venmo kind of pointless over here.
People use PayPal, Venmo, Revolut, etc mostly for convenience. You just need a phone number or email to send a payment, compared to a bank/wire transfer where you first need to obtain the account number you’re sending to.
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.
My bank app, ING, lets me send a payment request link as a text, via whatsapp, etc. Which is a nice way of not needing account numbers to send money.
But does it offer an API to do this? No. So it's useless for merchants who'd like to offer it as an alternative payment method.
I believe this would work, but I'm not an influencer: https://medium.com/@mariusandreiana/open-letter-to-banks-ple...
Yeah, the banking regulator and the banking industry alliance added that as a feature with the New Payments Platform in Australia. You register a ‘PayID’ with your bank (can be a phone number, email address, company number etc.) and then you just share that with people to do free real-time transfers (between basically any Australian banks).
PayPal is used because of customer protection.
Revolut is used because they hide their low forex exchange fees (despite their claims of nearly no fees, you'll find cheaper transfers elsewhere).
Venmo may be convenient in the States. I've never seen anyone in Europe using it. Banks have some system to send money to a phone number, though, which serves the same purpose.
One of the key features of these apps is that you only need the phone in order to make transfers, that allows you to avoid asking for the account number to anyone.
On the other hand, account numbers are not a significant 'secret' or something like that. They are just as 'safe' to share as phone numbers.
For anyone in the US, if I have your bank account number, I can steal your money. I strongly advise you not to share your account number with me or anyone else. I have to commit fraud in order to steal your money, making it a crime, but stealing's a crime in the first place, so that's not going to deter thieves.
My understanding is that this is no longer true: only a relatively small set of trusted entities can perform a direct debit (check or check substitute not present) from an account number without having to perform additional verification. The ones that I’ve personally seen are utilities and colleges; I tried to do the same with a friend once (so he could pay me back for something without having any fees) and our banks refused the transaction because our account names did not match.
Jeremy Clarkson fell victim to this. He published his bank details in his column to prove it was no big deal, and someone set up a £500 direct debit to charity.
Wow, I had no idea about Mr. Clarson's experience [1]. Is this also true in the USA?
Replying to myself here since the edit time expired: this does of course depend on where you live; in the context of the thread and the while fintech popularity in various places around the world and the EU not really having much use for that, this is because you can safely transfer money around without the risk of someone abusing your 'secret bank number'.
In the US and probably other places as well this is more like an SSN where just having the number allows you to do all sorts of (criminal) abusive things.
Up to a point. They may be used to create direct debit subscriptions (you just need account details and name), which can be annoying.
Think about it this way: a check is just an account number on some fancy paper, with a few more numbers.
Technically speaking you can write a check on anything. One company paid their tax with one written on a 150lb halibut.
https://mobile.twitter.com/barclays/status/77386310895160115...
It's a bit of a stretch to equate Paypal with "all American transactions." There are of course Visa/Mastercard (variable but about 2%), debit cards, Venmo, and older bank transfer technologies (ACH).
A service that costs a fraction of a cent to perform but charges tax on total revenue plus a big old fee has a big barrier to entry or it has zero customers tomrrow.
"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!
Would you propose a national price cap on transaction charges? It would be hard to justify intervening in this way, given that there is plenty of competition and rates are not very different. Any transaction (even cash) has associated costs.
I'm yet to find a European that complains about the EU's caps on interchange fees for debit and credit cards. Is a regulation like this unfathomable for most Americans?
Folks in the US are so used to corporations stepping on them a balanced discussion about this (where both parties agree that you being exploited is not okay, but maybe disagree on the solution) is no longer possible.
It's bizarre how in the US, companies unionize against consumers, instead of the other way around.
There is already Bitcoin with basically free Lightning Network transactions, so it's more like people vote with their wallets that they prefer (at least for now) paying this 3% tax instead of few bucks per year for channels opening/closing. And it works in the same internet market (real life and cards is a bit more complicated because of existing payment infrastructure).
So nobody force Americans to pay, actually, they do that voluntarily.
I like that, too. The only thing that bothers me is that Maestro cards can't be used for online payments, so if I buy something from other countries (where shops don't support iDeal) I still need to use credit card, and support for credit cards in NL is pretty bad.
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
> Maestro cards can't be used for online payments
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).
That's interesting, are there different types of Maestro cards? I also had one years ago, but it didn't have CVV so I could not pay online. My current one does not even have a real card number, it has just my bank account number on it.
It is not a creditcard-compatible system. I was merely hooking into the thought that this was not possible at all, it definitely is. Most companies just choose not to support it (or use payment gateways that prefer not to).
It seems to be somewhat compatible.
I work in the card-payments space, but in the US. We can handle Maestro cards, so long as all parties are aligned to accept them. You need a shopping cart that doesn't scream "This card number looks weird" before even letting the customer submit it, a gateway that identifies it correctly, and a processor that's built to handle it. Probably the merchant account needs to be configured to accept it too, but that's outside my scope.
If the processor mentions Maestro at all, it's usually a corner-case line item in the documentation-- "Send field 923 = AA for Mastercard, and AB for Maestro, but everything else the same."
It's an interesting evolutionary divergence. We had/have "debit only" networks in the US (i. e. Star, Cirrus, Plus). They still exist but they are largely irrelevant for purchases because virtually every checking account provides a Visa or Mastercard badged card. There are a few situations where merchants can try to reroute the transaction to a debit network for lower fees, but it's a narrow interest at best.
They actually went through a legal tussle here because some merchants felt imposed on when the card networks said "If you take Credit Visa/Mastercard, you also have to take Debit Visa/Mastercard" back when the fees for doing so were higher.
In Austria banks switched from Maestro to Mastercard Debit to make online payments easier.
Just to add : iDeal is a flat fee, starting at about € 0,29 AFAIK. Depends on your contract.
edit : according to the document, ING charges € 0,25.
I like iDEAL. My bank is dutch (bunq) although i live in Belgium, i got to use it a few times.
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%.
Android supports contactless debit card payments too, depending on your bank.
Switzerland has a system called Twint. It exists as prepaid account or attached to one of the most popular Swiss bank accounts. Transactions are free (for end users) and instant, you can even chat with emojis under the transaction.
You can start accepting Twint without any hurdles. Or use a merchant gateway and pay like 0.3% or so.
There's Zelle in the US.
> Looking back, I have to imagine that this 3%+ tax on all American transactions must put a weight on the system.
90% of the credit card take gets paid back out in the form of rewards, so it’s not really a tax
It's a tax on the people paying with debit, who finance the credit card fees by paying higher prices with no rewards paid back. Credit cards are regressive.
Debit interchange is regulated, and much lower than credit.
Everything is not so much more expensive in the US, not the least because this is dwarfed by the difference in VAT. Not that I am in any way in favour of the current duopoly in credit card payments.
It's not about more or less expensive or higher/lower VAT.
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
UK credit card transactions also used to fund cashback and rewards, but when EU rules from a few years ago limited the fees all that ended. Society no longer funds rich/middle-income people's air miles, which is an improvement.
No one else is funding other peoples money in any significant way. The problem with cash back and miles programs is consumers don’t realize the business they just bought something from is paying the fees which then amounts to the cash back. Essentially forcing the consumer to pay a higher price but it’s their own money coming back to them later. In the mean time the banks hold more cash in their pocket and earn interest until you redeem your rewards and benefit even more when people don’t use their rewards and points, some people never redeem them, similar to gift cards. Then the banks want to seem like the good guys giving your own money from the fees of stuff you bought back to you. It’s all a big unnecessary loop when the price of goods could have just been lower in the first place.
One fee that Dutch banks have, and PayPal does not, is negative interest on your balance over €100K. So as a small business owner I park excess cash there, which makes up a little bit for the high fees when customers choose PayPal.
Dutch banks, unlike their American sisters, are not archaic. iDeal was a direct response to e-commerce and a preemptive strike against Visacard.
The Dutch banks all work together to prevent a US fintech takeover which they saw coming.
I have seen absolutely zero coverage about this change so I wanted to make sure people knew about it. The change seems to have happened on August 2nd according to archive.org [1]. I checked my PayPal records to verify this was true and sure enough I've been paying the higher rate in fees starting after July.
[1] https://web.archive.org/web/20210727095034/https://www.paypa...
They technically announced it [1], but I agree that it got next to no coverage. Presumably they deliberately "silently" put the announcement on their blog without circulating it to news outlets. HN discussion at the time [2].
[1] https://newsroom.paypal-corp.com/2021-06-18-Upcoming-Changes... [2] https://news.ycombinator.com/item?id=27560616
Ah, thank you for the links. I searched prior to posting but the title on [2] is very non-descript. I was expecting a lot more outrage considering the size of this hike is pretty massive for merchants that process a lot of smaller transactions.
I have a merchant account with PayPal for my side business. I received an email notifying me of the change. I presume this is legally required for this sort of change to the terms.
Thanks for your effort!
This was actually announced in a easy to miss email with the subject "Upcoming change to your account" sent on June 30 2021. It did get a little press that day but on the fee increase day I saw little reporting.
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...
> To PayPal's credit, this was their first rate increase in a very long time if not forever.
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.
The opposite in fact. All costs should decline over time.
When you fail to attract new customers but your shareholders continue to expect their holding's value to increase, a price increase will temporarily show gains on your balance sheet. The downside is that you've also provided additional impetuous for your customers to consider alternatives.
Yeah I definitely missed it and it caught me by total surprise today. I imagine many are in the same boat.
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.
Keeping the fees on refunds bugs me so much as well and is completely out of line. Sadly everyone seems to do this now.
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.
The last time I went comparison shopping I figured Wirecard was a good deal. I even got a quote from them and planned to switch to them. But I was a lazy procrastinator, so I did nothing for a couple of months, and then all of the sudden I read about them on the news...
"Upcoming changes to your account" - What anti-pattern hogwash.
"Upcoming changes to our fee structure"
Is this in anyway related to EBay cutting them out and passing their savings to themselves?
I blame the increased cost of compliance.
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.
I'm not sure if you can blame compliance for that. PayPal is back since a very very long time already...
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)
C) Or they're seeing more transactions that maybe be fraudulent, or not. And their users (sellers, and perhaps to some extent buyers) are asking such transactions be allowed. The increase is to cover the increase in risk.
Note: Not defending the increase. Only pointing out there's a possible upside for their market. Yes, at a slightly higher price.
Monopoly in what? I've never used paypall in any physical or online payment.
It's the prisoner's dilemma. Merchants using PayPal can't charge more on PayPal transactions so they increase the price of all their items for all customers. For card transactions they pocket the extra profit and likely then use it to pay PayPal fees and refunds. A similar mechanism happens for credit card chargebacks.
All customers pay for this feature.
When given the choice between credit card or PayPal, customers can get PayPal protection or not for the same price. If they use PayPal they perpetuate the story that people prefer PayPal and contribute to generally higher prices to account for PayPal refunds, mostly damaging themselves in the long run (given we already have laws in place that force merchants to refund / return items and most merchants are not scammers) and benefitting PayPal.
It seems like we need a law that requires a credit card processing fee to be shown on the receipt like sales tax. People would then start gravitating to the cheapest processors due to competition being obvious to consumers.
Or it could be just simple profit and the second thing you mentioned.
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
I blame all the sellers using PayPal's services but not wanting to pay the fees. <RANT>I pay a 3% fee to purchase with my debit card, so sellers need to pay up as well. I'm sick of sellers wanting me to use F&F or cover their PayPal fees. If you have a business that accepts payment through PayPal, or any other payment service, pay the fees!</RANT>
PayPal is awful for small transactions, I regularily get donations for my projects that are literally 0 USD, because all of it is eaten away by PayPal fees, and even for a 5 USD donation you end up losing around 15% of the transaction amount.
Do you know of any other service that is suitable for microtransactions, besides cryptocurrencies?
I don't know if they support it for accounts that are receiving contributions instead of payments (and I have no clue what is going on now with this new change today: I need to research this), but PayPal has also offered a "micropayments" tier that costs 5%+$0.05 instead of the 2.9%+$0.30, which is much better for small transactions. You had to activate it with customer support, though.
> You had to activate it with customer support, though.
I wonder why that is. Are they offering this service at a loss? If not, why not offer it to everyone automatically?
The answer is obvious. They want people to pay the higher amount, and this gives them a way to pacify anyone who complains.
I figure most people make transactions over ~$12, which would cost more in fees at the 5% + 0.05 rate.
Yeah, but so what was always annoying about it is that they don't just automatically give you the better rate on transactions where it makes sense, considering that they explicitly would suggest you create multiple accounts--one with micropayments set and one without--and split your payments between them depending on which would be better. I guess maybe the bulk fee rate threshold would then be separate? Amazon Flexible Payments (which was amazing but was killed with no migration path and for a shitty expensive replacement) just did it all automatically for you to give you good rates (and even had fee tiers for tiny transactions down to I think even less than a penny, if you were working with an internal balance transfer and not an external payment like a credit card).
Is that actually mentioned anywhere, publically? We use it and as it’s account-wide, we always calculate which account we have to use to minimize fees.
https://www.paypal.com/us/webapps/mpp/merchant-fees#statemen...
https://www.paypal.com/gf/smarthelp/article/how-can-i-update...
The first page says it's 5% + 0.09 now, though.
Edit: Oh, fixed the first link, the page was using javascript to break anchor links for some reason.
Also that second page only exists on some versions of the site.
I am not 100% sure I am doing the math correctly, but I think--with the other changes today to the normal pricing--that means the boundary at which you should use this pricing tier has moved from ~$12 to ~$29?!
Something like that. $27 if it's 9 cents now. The 25 cent gap has grown to 40, and the 2.1% rate difference has shrunk to 1.5%
Interesting, that section in the first link is missing in the German version of the document.
I doubt it’s a common thing, but if I can send cash in the mail, I just do that. I always have extra stamps and cash is king. Can be zero paperwork for the recipient if they just pocket it (ok by me when it’s a solo project).
Sometimes works out really well if I have spare US$ 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.
How much does a stamp cost, 29 cents?
What about Venmo? Or Cash App?
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.
Speaking of Venmo. Venmo for some reason would not let me confirm my bank or credit union no matter what I did or what email address I used or however long I waited, the error message is one of those non-sensical catch-all error messages originating from some black hole. And customer service cannot do anything because "it's not up to them". Cash app worked instantly though. Anyway I would not recommend venmo or at least offer an alternative.
They don't appear to be viable for people outside the US.
Venmo is owned by Paypal
There's zero fees in Strike afaik. https://strike.me
As far as donations go, Patreon and Ko-fi should have a lot lower fees.
Patreon is not necessarily an alternative because supporting someone is more of a subscription kind of transaction, and not a one-off thing.
It also isn't alternative because it makes one-to-many transactions which can offer lower fees than one-to-one transaction due to pooling
You say no crypto, but Nano was built for exactly this. You're not gonna beat zero fees.
Except it exhibits absolutely monstrous volatility.
[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.
Sure. There's always a downside to everything. OP wanted a solution for small donations, and Nano is still the best option. It's worth it to take on some volatility risk so that the people donating know that all their donation goes directly to you, and anyone in the world can donate any amount with or without a bank account, just by showing a short address on your site's page.
And no, it's not at all like an airport currency exchange. In that case there's a deliberate actor trying to defraud you. Volatility is a property of all assets. Some have far more than others. Just understand that and you'll be fine.
Significant volatility is not a property of any decent currencies. I respectfully disagree with your assertion of the supremacy of nano for small donations on the basis of volatility.
Your statement that understanding of volatility is sufficient is [edit](incomplete IMO). Ask anyone holding Dentacoin haha.
Fair enough. I guess it boils down to what's worse: you _will_ lose money on the transaction because someone is taking it from you, or you _may_ lose money after the transaction.
For example, take a $1 donation that PayPal takes their 50-cent fee out of. That's a guaranteed loss of 50%. You'd have to be extremely risk adverse to take a 50% loss to avoid even crypto volatility.
It's all tradeoffs. Volatility sucks. Fees suck. But they suck more or less depending on the situation.
Zero fees? In crypto, there's an inverse correlation between on-chain fees and price volatility. So either you incur high on-chain fees or accept a high exchange rate risk.
Bitcoin and Nano move very closely together, yet one charges hundreds of thousands in fees every day and the other none at all. I'm not sure where you got that idea from.
Fair point. But Nano doesn't have sufficient liquidity to be used for payments. You can barely move $50k USD worth of Nano without moving the price 0.5%.
In comparison, you can move around $100 million USD worth of Bitcoin until you move its price by 0.5%.
I run a SMB with $1.2M in transactions per year through various online storefronts. Paypal/Stripe are the most common forms of payment, but to my surprise the split is 70%(Paypal), 30%(Stripe including Apple/GPay/Alipay). We see a consistent behavior that perhaps incidates Paypal is far easier to use than Stripe. I feel like the slightest friction in the choice between payment options and it will win. Paypal offers the easiest way to pay, perhaps even easier than Apple Pay. It is one click on the popup window. With Apple Pay, you gotta double click this awkward button on the side, then Face ID that doesn't work with the mask, followed by entering the PIN - the whole thing takes too long. It also doesn't work on most browsers and desktop computers (perhaps Apple Pay works on macOS with Safari). I thought about this a lot and tried to go through the details of the friction that leads to better conversion. Stripe has a better developer experience but it doesn't help the customer.
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.
As a customer there are a few reasons I might prefer PayPal.
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've noticed the same. If you have CCs stored in the browser, I find the Stripe flow easier on my website, and it loads very fast, while the PayPal widget is the slowest-loading part of the website.
I see about a 70/30 percent split, as you do, for Paypal/Stripe.
I wonder if PayPal’s consumer protection is also part of the appeal?
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 once had a set of headphones (back when Bose Beats wireless were popular and you got a free one on academic discount when buying a MacBook Air) sell on eBay, with receipt confirmed but the buyer did a chargeback claiming the purchase was unauthorized.
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.
Paypal's API is one of the biggest nightmare I have to deal with lately(1). As much as Paypal has sucked, at least it was super simple to integrate before: just set amount, freq, period, return url and ipn url and that was pretty much it and that's why even noobs loved PP and integrated it everywhere.
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.
I'm glad I'm not the only one who thinks this! I inherited a site with PayPal and it uses just a single link that takes you to PayPal and returns you after the transaction. Plus an endpoint to handle IPN pushes. I've looked into updating to the current API but it's just so confusing and awful, it took me a couple of days just to understand the new workflow.
PayPal is awful and I am not talking about the fee. The developer experience is so disgusting. Their developer portal is completely useless, it does not show any data. They have 5 different documentation pages about one thing, each one is more outdated than the other. If you want to onboard merchants on your platform you will have no way of seeing the connected accounts. Their button that you can integrate on your website is super heavy, it wastes so much data just to show the div, do not try to click on it if you do not want to lose a few megs of data.
You also get rate-limited in the sandbox just for clicking around too fast. WTF is the point of a sandbox!?
It amazes me that despite not really modifying the core PayPal service for 10+ years, they are still a market leader.
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.
As someone who was using PayPal during all of the 2010s, they actually changed a lot. It is also worth noting that--until today, meaning they have lost he high ground and it arguably doesn't matter anymore as sane companies will chase the lowest price for a service that is a direct cut of revenue--they were always cheaper than Stripe (with bulk rates that kicked in sooner and micropayments pricing options), had a fully functional product (it was amazing how Stripe was getting people without offering auth/capture), and a safer mechanism for notification buffering. PayPal supported being a fully backend credit card processor in addition to their "express checkout" flow, and frankly did everything Stripe did better... except have complex documentation and no real help to do your integration. If anything I would claim that it was this documentation that bit them. (Hell: one chance they made was to build out an entire REST-API version of their service with OAuth and a bunch of other stuff in a direct attempt to compete with Stripe, but that wasn't actually the issue: they just look not cool and have documentation that felt daunting.)
All this, and all that other Silicon Valley financial infra, because direct bank tranfers are (presumably?) not known or difficult or impossible.
From my northwestern European perspective, it's weird this straightforward solution that we've had since, well, the fifties? is overlooked.
Fraud. Hacked bank accounts. Chargebacks. The brutality of banking customer service. These are all good reasons. PayPal does have a dispute system for 'buyer/seller protection'.
You can only transfer to a number, you can't (easily) charge back already effectuated transfer, nor can you (with a consumer account) debit a number. All of these things are covered.
Buyer protection has rarely been something one needs. Some (many nowadays?) banks offer insurance for this.
>Buyer protection has rarely been something one needs.
I disagree, I think it is the biggest factor. I used it several times and I know other people who have too.
>you can't (easily) charge back already effectuated transfer
I promise if you try to do something involving bank transfers without doing some form of 'Know Your Customer' you'll get people try to use bank accounts that are compromised in some way. You'll be getting calls from your bank and potentially lose money, and may get your bank account closed if you persist with that behavior
> I disagree, I think it is the biggest factor.
You probably think that because of the insecure nature of the alternatives you're familiar with. It simply doesn't occur that much, fraud, and when it does, the recourse options you have seem to work. Take a closer look!
> KYC
Yes, and this has increased over the past few years. An account number can't be private, in fact, many banks double check the name of the owner before they let you transfer (they'll show you the mismatching name).
The countries with more advanced banking generally have stronger consumer protection laws across the board. Less need for buyer protection as a service of your credit card or non-bank payment platform, when the regulatory environment discouraging bad actors with fines/enforcement action.
What does direct bank transfers offer in the way of dispute resolution?
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.
> What does direct bank transfers offer in the way of dispute resolution?
It's just not something that comes up. The number of such stories I read on here/through Anglo-Saxon sources far outnumbers the number of local problems. Fewer shady sellers, perhaps?
To your question: although not as easy as a charge back, banks let you appeal. Some (perhaps many now) also offer cheap or free 30/90/365 day purchase insurance.
Also, for small value transactions there's a special legal channel.
Address books in phones don't store people's Bank details, making it a pain to pay someone. Many people don't have their own bank details memorized either.
Being able to send money to someone just knowing their phone number is the real value-add.
Within several European countries they do, since the banking systems support sending a payment using a phone number. You get confirmation of the recipient's name before pressing "send".
It's MobilePay in Denmark and Finland, Vipps in Norway, Swish in Sweden, PayM in Britain, etc.
For example, we split a restaurant bill at the weekend. In roughly the time it took one person to pay the whole bill on a card, the rest of us had sent ¼ each to her using her phone number. There are no fees for this.
In the next year or two, this should start to work internationally.
https://en.wikipedia.org/wiki/European_Mobile_Payment_System...
I can send anyone a 'payment' request from banking app on my phone over whatsapp, which they can very easily pay through their banking app.
> Many people don't have their own bank details memorized either.
In the era of ubiquitous smartphone usage, nobody needs to memorize bank account numbers.
But even 15 years ago I would copy/paste my IBAN into an email.
You can ask someones account number.
- direct bank transfer = debit. When you send money using SEPA you have no right at all to charge the money back, as it's always a voluntary authorized transaction. The marchant got you by the balls.
- 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.
About the charge backs if one is mainly shopping from local companies there is really strong consumer protection laws instead.
Basically you can demand a refund and if they don't give it to you it is a really simple process of just sending a bill to that company for your money and initiate bankruptcy process if they fail to pay.
Yes, but in this context, everything depends on the interaction with the merchant. While most merchants are not pricks, they are businesspeople and won't unconditionally accommodate any claim even if it is reasonable. Based on my experience, the worst are not necessarily the small merchants unless they are just fraudsters but the semi-large online stores like Otto/Saturn/MediaMarkt which will do everything to make a return and refund as impossible as possible.
In Finland consumers have the right to return the product for 7, 14 or 21 days (depending on product category and if online/offline store). The merchant has very little control over this with the main exceptions being stuff like underwear etc that can not be returned due to hygiene reasons.
The product when returned still has to be in a state that it can be sold.
This also means that lot of people pointing out Amazons very liberal return policy being a good reason to shop there makes no sense here. We got roughly the same return policy for all online shopping. And as others pointed out EU regulations give 14day return policy for all online shopping.
In the EU, the law is that merchants have to allow a return and refund for any online purchase unconditionally, provided that it was initiated within two weeks of purchase. I have never had any problems with this.
There's no way to do peer to peer direct bank transfers in the US.
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.
ACH does work, but it's just not accessible via an API and such.
How do you send money via ACH? I've never figured out a way to do it. Unless you're talking about the common "link an account" functionality where you do trial deposits, etc...
There’s Zelle, but it lacks universal coverage.
I don't know if we'd call that a "network effect", but there is a (vicious?) cycle cementing PayPal's position.
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.
PayPal do have a network effect amongst customers who choses PayPal because they marketed for decades that purchases through PayPal are protected in case of issues.
That probably just makes them a nicely cemented incumbent rather than a network effect.
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.
That isn't a network effect
Paypal is a pretty scammy service also on the consumer side.
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".
A very common trap when using your credit card abroad too. If you don't insist on being charged in the local currency the payment processor may "convert" it for you with a worse rate and pocket the difference.
I wish there was some kind of regulation against this.
Totally agree. I feel scammed every time I have to change the currency during the payment process. Some time ago, I don't remeber when they changed it, you used to be able to opt-ou of currency exchange permanently per credit card. It was a very well hidden setting and I had to google the deep link every time to find it. Nowadays you have to explicitly disable it for each and every transaction.
I'm pretty sure though that most PayPal customers have no clue about this practice or just don't care.
Paypal is a classic rent seeker. Nearly two years into pandemic, they still refuse to hire people for live customer service. Despite record profit.
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.
Are you aware that the US Federal Reserve is deploying instant payments infrastructure in 2023? I believe the cost will be free to consumers, and pennies per transaction to businesses.
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)
I am aware of the Fed solution. I can tell you it’s DOA and by design.
Would love to hear more, as I know a stakeholder involved in beta testing and that's not the ground truth I'm hearing (working as expected, deployment ahead of schedule). Don't violate any NDAs of course.
Australia has one and it works very nicely.
That exists - wise.com.
I don’t think so.
I'm avoiding Paypal as much as possible.
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
Still the easiest way to start selling online, at least in Europe... They've got the low volume starter business niche by the balls.
Easiest way to start selling is just to put your bank account number on a website or send it via email. I've yet to find a service that doesn't offer bank transfer. And since this year it's also 0 fees, instant payments.
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.
Maybe it has improved in the last six years, but setting up PayPal for an eCommerce site was an absolute nightmare. It could only be done by the CEO of the company, legally, and you needed a PayPal representative on the phone, guiding you through setting up the account correctly.
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.
We're an online retailer and they wanted to keep all payments for 60 days from us. Stripe pay us in ~2 days. We aren't exactly in a high-chargeback industry either, Stripe say our chargeback rate is well under the norm for our industry. Paypal was just a complete non-starter for us.
Yep. I investigated Stripe once but you had to use an API. Paypal is just copy and paste code into your HTML page.
Also Stripe is not supported in many countries.
I completely disagree. Stripe or Paddle if you want them to take care of vat nightmares
Also gumroad if you want a platform
What about Shopify?
Apples and oranges.
There's such a thing called Shopify Pay
I think it's powered by stripe though.
PayPal is going cPanel route. It should be replaced and never look back. Those, who can't control their greed are doomed to see the void of ignorance.
Can you elaborate on what you mean by “cPanel route”?
i assumed he is talking about the control panel (cPanel) for webhosting.
Brazil implemented a neutral QR with direct payments which been there are basically no fees if you use this system: https://news.ycombinator.com/item?id=28757537
It is incredible how, very few times, developed countries can directly build a new infrastructure that beat the infrastructure of most developed countries.
Has anyone ran a recent A/B test for Stripe direct CC-based checkout + paypal vs Stripe only in the context of B2C subscriptions? Last time I've checked circa 2014-2015, there was consumer trust in Paypal (for cancellation/etc), and so having that option added ~+10% conversion rate (or so), but would appreciate more recent data, thank you!
No but I bet some people are turned away because of Paypal. I use it and customers occasionally inquire "Do you accept credit cards because we don't have a Paypal account?". It's aggravating that they make the credit card option hard to find compared to the shitty Paypal account login.
I am one of those people that is put off by PayPal.
German userbase, B2C, I offer PayPal, Stripe and SEPA wire transfer:
70-75% PayPal 15-20% Stripe 7-9% SEPA wire transferI am kinda forced to accept PayPal because credit card adoption is not as big in the German speaking area of Europe. Especially the younger audience often only has PayPal.
I 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.
I have worked for an acquirer side of the business where I implemented the credit card application but also took part in complete certification process and day to day business.
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.
And they charge a 5% currency conversion fee for moving money from your account. Even moving USD to another USD account they charge 3% ”fee” for doing nothing.
Time to put all this on crypto rails and disrupt these bastards out of existence.
Will that work particularly well since PayPal also adopted crypto? They have the money and resources to out-maneuver any weaker attempts at using crypto to displace them.
I assume that Lightning Network will devolve into federated payment infrastructure rather than something that is fully decentralized. It would be closer to email where providers share a protocol and interoperate by default with each other. In that sense, Paypal wouldn't compete vs crypto but with dozens of payment companies.
Yes because it's PayPal again in the middle with whatever fees they wish to apply. On crypto.
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.
That's exactly what Flexa https://flexa.network/ is doing (I just got hired there)
It's even more fun if you operate cross border because on top of all the usual fees there's a cross border fee (of 2% if the buyer was in the US) and then a markup on currency conversion of 3.75%. We used to put a lot through PayPal's merchant system but are now almost entirely on Stripe due to this non-stop nickel and diming.
Paypal can die already, had a terrible experience as a seller. Never using them again for either buying or selling
I still use PayPal because it has the best global coverage and least friction for consumers. Their new checkout form also seamlessly accepts credit/debit cards and does subscriptions.
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.
Do you just use PayPal to accept credit/debits cards? Because there are alternatives to Stripe. They aren't as well made, but they do exist.
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.
I accept PayPal and credit/debit cards, using “PayPal Checkout”. Go to https://LuckyResumeMaker.com and click “Download PDF” to see what PayPal checkout looks like.
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.
The reason I use PayPal is because it doesn't trigger the credit card SMS confirmation that is enforced in europe and I don't have a phone number to receive them.
I presume the US banking industry pays lots to lobby and makes big campaign donations, gives senators offspring jobs, etc. In the old days we got great at check processing and lowered the cost to pennies. Processing a transaction should be close to free (especially in a debit scenario.) I just paid 1.4% on Coinbase to transfer USD to ALGO. (They probably make something on the spread also.) But 3%+ on a card? One thing I did hear from some retailers is that the cards that provide lots of benefits and cash back charge more to cover the benefits. That money has to come from somewhere.
Processing fees have to cover chargebacks. That's processing fees in some industries prone to chargebacks (adult for instance) are eye-wateringly high. 10% or more in many cases.
Tried to send some money using a long dormant account, after logging in and updating my password some automated process kicked in and froze my account. Never bothered to do anything about it because there are now more dependable and hassle free options. I was relieved to not have anything in my account. I'm even more relieved I'll never have to use their product again.
I despise Paypal. But you don't have a way to sell except for Paypal. I prefer moneygram with Visa Direct but it takes ages for the transaction to complete and often times you have to call the customer service for that. I am trying to switch to wise but it is difficult to convince clients moneygram and wise is worth the hassle.
Meanwhile, accepting Bitcoin Lightning Network payments is free of charge. Can't wait for more adoption.
I dislike Bitcoin but Lightning Network is effectively a decentralized Paypal. Assuming it works, it should have a very easy time competing against these excessive fees.
Bitcoin Lightning Network fees are $0.02 per transaction. Yay for crypto disrupting legacy finance.
This is insane; the fee is too much, especially for domestic transactions. Also, the conversion rate is too much, especially if the money is coming from the foreign market.
This is straight out of Peter Thiel's handbook. Create a monopoly and then take the profits.
PayPal doesn’t seem like a monopoly. Merchants can offer multiple payment processors, and customers can use a different one for each purchase without any lock-in. PayPal has strong competitors like Stripe and even Apple. They also lost their flagship client, eBay.
In some ways they are for consumer products. There is some percentage of people that won’t buy at all without the option. Then a much bigger percent that will still buy but prefer to use PayPal if you give the option.
In fairness, I still wouldn't call that a monopoly, just a popular choice.
I mean, I know some people who won't drink soft drinks unless it's specifically Coca-Cola and know a lot of people who'll pick Coke as their first choice but they clearly don't a monopoly on cola drinks.
It’s ok, more competitors will come in now
Time to leave, I guess!