Stripe increasing "instant payout" fees by 50%
support.stripe.comWhy is this such an important news? Do people regularly use instant pay out? I would think that it's mostly for emergency situations. Normal payout is still free.
I don't think the bar for appearing on the front page of HN is "important news"
This is mildly interesting, and maybe important for a few people. That's enough.
It's apparently lower than "I made a raycaster in 256 bytes" and higher than "I got banned from Stack Exchange for not supporting Israel". I can't really tell where the bar is.
HN post rank != importance or interest, rather something more akin to "discussion quality + recency". A highly polarizing post with lots of comments vs votes or lots of flags will tend to rank lower than a neutral post with mild votes and mild discussion via the algorithm. A lot of that depends on the presentation, if the post presents something more controversial it still tends to float to the top as long as it is thoughtful instead of inciteful.
Did I miss something? The most recent post with the word "banned" in the title was apparently 5 days ago...
It was this I believe -- https://news.ycombinator.com/item?id=40281699
Oh, good find, thanks. I guess flagged/dead posts don't show in search results >_>
I can't see where the original post links to, but if what the commenter said is true, you got banned not for "not supporting Israel" but instead for "supporting the slaughter of 200 teenagers".
Well, yes. That's how this works. In politics, nobody ever says they are punishing you for $obviously_insane_thing_to_punish_someone_for - they make a more plausible excuse to accuse you of. That woman arrested in Russia for holding a blank sign wasn't arrested for holding a blank sign - she was arrested for attempting to destroy Russia or something like that.
But this is too far off-topic. The point is, that was evidently below the bar of what's allowed on Hacker News even though I'd think as many people would have wanted to know what's going on on SE, as want to see a cool raycaster.
Can you share a link to it in one of your comments or your profile?
I mean, don't know if your post was an external link where you explained the issue, or if the explanation was directly embedded in HN, but currently I don't know what SE is retaliating for, and I'd like to be able to know
PS: Nevermind, I noticed I can enable "showdead" in the HN settings.
Doing so still keeps the URL hidden, but at least it reveals that the flagged post was pointing at immibis.com , so you can find the context there. (It seems to be the post from 2024 May 7th)
For gig workers, instant payout is a nice deal and increases the value of the platform, so being able to flow from customer to worker seamlessly is a value add.
In some industries, for example where tipping is important, getting payouts at or almost at the speed of sales is often a differentiating factor.
Ask your Uber driver on a Thursday!
I've met drivers who have had to pay out multiple times per day.
Uber can easily just have 2 days of revenue ready in cash (or even a loan will be much cheaper than 1.5%) to not pay 1.5% every time.
You may be missing vital info, here: Uber isn't paying the surcharge — it's the driver!
Genuine question. In what way free? Stripe still takes their fees? Or is there a way to avoid fees when sending an invoice to a client?
I'd guess advertisers might like this feature as they could do:
- Buy ads targeting your page selling stuff (for example a course) - Generate revenue - Instant payout - Repeat
In this flow you don't need to wait 1 month for a payout so you are not limited doing this once a month, you can do this for example 12 times a month therefore generating much more revenue.
I think stripe was a YC funded company at some point. Algos on hn pump them hard.
Founder still lurks HN as well.
I get stripe was YC, but its basically handling the entire SaaS economy at this point, and then some. 1 trillion dollars flew through the platform in the past year, which is similar to paypal
for Fintechs who're using Stripe as a way to allow users to purchase stock/remittances/e-wallet balances etc. instant payouts are very important since in most cases people who load with stripe also consume those funds on the platform instantly
Won't they have a rolling period, since a lot of customers just add funds and might not use it?
So you can use the balances from the people who added money 2 days ago, today.
In many countries (including most states in the US), comingling funds between users is how you go to "jail" as it is usually a criminal offense.
see: Money Transmission laws
That by itself is not commingling. Money is fungible, and https://en.m.wikipedia.org/wiki/Float_(money_supply) is a well established and widely used concept.
If you send another person’s money to a different person, they effectively came from the same account and are therefore commingled. Your money is fungible, other people’s is not (unless you are a bank).
Some states have laws against floating, some do not.
Stripe will nickel and dime you to death.
The last time I created an invoice manually it tried to upsell me on a far more expensive plan just so I can group things on an invoice. Even worse, adding a recurring product to a quote results in an upsell.
It’s honestly embarrassing. Feature-gating things with 0 marginal cost feels desperate.
Their payment links take on the form of buy.stripe.com/<id> but they added the ability to use your custom domain for $10/mo ... Why isn't this baked-in?
welcome to every business in america.
Businesses want value-based pricing on their sales, cost plus (a small) margin on their expenses.
Yes. Moreover, the goal of most of the companies. Competition is what holds it.
What would be the reason for them to boost this fee right now? Is it just a pure profit play? That is, they think they can extract more cash from the people who are reliable instant-payout users (rather than losing them to standard payouts)?
Does this portend anything for the company, in the way that not backfilling positions means that layoffs may be imminent? Or perhaps a corporate transaction like an IPO?
For any payment processor part of the fees you pay go to offsetting fraud (it is a cost just like servers or people).
Instant payout is much riskier because if a bad actor is using Stripe to cash out stolen credit cards they have less time for the banks to detect and report it before the money is gone. As a result it has a higher cost to the company.
Genuine question: Is fraud actually something that costs Stripe money when it comes to payouts?
The reason credit card fraud for charges costs money to processors is because of charge backs. I believe charge back fees originate from the card networks themselves (Visa, MasterCard, etc). These processors also enforce a variety of limits when it comes to chargebacks for each merchant. This means if you're the layer between the merchant and the network, the merchants generally will rely on you to pre-emptively detect fraud. Those systems all cost money too.
As far as I know when it comes to payout rails such as ACH, real time payments (RTP), Zelle, I don't believe the payment processor holds any liability for fraudulent transactions. In other words, if a fraudulent payout occurs through stripe via RTP then The Clearing House banks aren't going to come after stripe for the money. They'll tell the end user "whoops, should've taken better care of your digital info. Bye!"
source: Worked at a payment processor and worked on payout rails and integrating with banks. Also do work now as an end user of a different payment processor that does charging, payouts, etc.
It's not that simple. Charge backs are a game of hot potato originating at the card issuing bank and making its way back to the merchant.
If Stripe instantly pays out funds to a merchant and there is a charge back, they have to claw that money back. This is normally done by drafting the funds from the deposit account, but if that is empty Stripe (or whatever processor) eats it and it becomes a collections issue.
Processors normally handle this by holding funds on suspicious transactions for 180 days (the max chargeback window). What is suspicious? For most processors it is literally whatever adds up to a [fraud rate]% of your volume over a 180 day window. Stripe doesn't do this because they are "the friendly processor" so they just take a bigger slice and cover losses out of that.
source: I spend a non-trivial amount of time monitoring threat actors and figuring out exactly how they are doing bad stuff, which means understanding the risk/abuse side of the house
Is this really a more plausible explanation than using convenience and urgency as a profit center?
Services like Venmo and Cash App basically have no income stream without paid instant payouts.
Yeah I'm wondering why it's happening now. Is there an indication that fraud is going up, and that's why they're raising the fee? Given the percentage increase, it would have to be a pretty dramatic increase.
I think “quarterly profits” is a perfectly acceptable answer to the question “why now.”
Did they IPO when I wasn't looking? That is, what's different about this quarter versus last quarter? If the answer is "things are going worse this quarter than last quarter" then that's the nugget I was looking for/wondering about.
Maybe they are going for that or acquisition. In which case juicing up the numbers will make things look better.
Who would be in the market to acquire them? This is the sort of thing I was wondering about. I had heard they were planning to IPO for a while, and thought perhaps that 'optimizations' like this might be an indication that things were heating up.
I imagine it's due to the increasing number of card-testing attacks which cost them money, increasing risk for instant payout.
> Navigate to the Payouts section of your Balances page > Filter by “method”
I have no "method" filter on that page, only "date", "amount" and "status". Also they talk about 2 business days payments as default but in the settings you can only choose between automatic every day / week / month.
Since the instant payout is kind of a loan and you have to request it, pretty sure it doesn't affect me but it's all very confusing.
They likely meant the ACH is 2 business days.
Stripe could choose to support FedNow instant payments and push these funds for pennies (up to $100k at a time), assuming the receiving institution hosting the deposit account(s) is set to receive on those rails. They would arrive within 20 seconds, per FedNow’s SLA.
Only costs ~$25/month to plug into these rails, plus a few cents per transaction.
https://www.frbservices.org/financial-services/fednow/organi...
https://www.frbservices.org/resources/fees/fednow-2024
https://www.frbservices.org/binaries/content/assets/crsocms/...
> Stripe could choose to support FedNow
But then they wouldn't be able to charge more fees
Indeed, that was where the comment was leading.
Interesting to see from that list that Bank of America, Citigroup, Capital One & PNC missing from the list.
Appears they are still lagging in adopting FedNow (while Wells Fargo and US Bank have adopted)
Congress directed the Fed to create FedNow so the largest commercial banks couldn’t gate smaller regional banks access to real time payments via the private consortium The Clearinghouse (owned by the banks you list). FedNow directly competes with this private network. Think what IRS’ Direct File is to TurboTax, reducing unnecessary economic drag at scale.
Those listed(and many others) support RTP, which came first and accomplished the same thing. They probably see little incentive in adding FedNow any time soon.
A more honest title to me:
Stripe increasing "instant payout" fees from 1% to 1.5% on US
Current title:
Stripe increasing "instant payout" fees by 50%
The current title is fine. It’s a 50% increase (unambiguously), or a 0.5 percentage point increase (also unambiguously).
lets run away from math if it sounds bad!
Ok so if something previously was free and now costs 1c per transaction, you would think "Stripe increasing price infinitely" would be a good title? Just because it is true that doesn't make it a good title. A good title should create a realistic expectation of the article content.
No that would not be good. I agree that you should choose the correct way to represent something.
But here a 50% increase creates a realistic expectation to me.
Congratulations, you’ve identified a misleading statement that has nothing to do with the present situation.
Using percentages as means of manipulating the masses has always been a thing.
"There has been a 1000% increase in traffic deaths this year, we must do something!"
Ah yes, we went from 1 death per year to 11 because there was a fatal bus accident, surely we need to do something.
What you say is true, but does not really apply here.
The title should be what the article says. We are not to editorialize or rewrite titles.
> June 2024 pricing update for Instant Payouts for businesses in the United States
exactly. so tired of people saying: huehuehue this is correct, its just 50% comon bro the only reason i clicked is because i was like: wtf you need to pay 50% fee of the 100%?
i dont care about anyone trying to say: huehehue thats how its written. no its not.
but yeh i guess ppl rather focus on shitposts and talk endlessly
and even on a hacker site its just a shame for ppl actually defending this title. its #1 phishing/SE method to trick people
The title feels a bit disengenious. Technically, yes, it was increased by 50% of what it was, but it is a shift from 1% to 1.5%, not up to 50% of each transaction.
The title is correct. But I agree that saying "50% increase" conveys less information than saying "1% to 1.5%" (because you don't know 50% of what), and seems to have been used only to make the title more dramatic.
I interpreted it as a increase in the fee.
I think people who know/use Stripe will have no confusion about this.
Although rare, I use instant payout for my small business. It's a lovely convenience and the extra 1% hit (on top of the usual transaction fees) can be a worthwhile tradeoff. I can't explain it, but the new 1.5% fee killed the motivation to use it entirely.
That is what a 50% increase means.
Percent increases are kind of a weird metric in a lot of cases. This is one of them. It's not particularly informative.
If you are a stripe user, it tells you exactly by how much you can expect your fees to increase =)
You'd also get that information by showing start and end values.
The goal of a headline is not to tell you everything that you want to know, it's to make you click it.
Kinda. To the degree that the object of increase is also a percentage the statement “increasing X (where x is quantified as a pct) by Y %” could mean that X of 20% is increased to 70% or to 30%. It would be more clear to state “X increases from Y% to Z%.”
No, not kinda. In the example you present, if 20% increased to 70% the appropriate description is either a 250% increase or a 50pp ("percentage point"[0]) increase.
Math doesn’t do “kinda”. If you are paying $100 for something, and then it is $150, that’s is a 50% increase and is an undeniable fact.
20% to 70% would be quite the fee increase, but I suppose that is a way of thinking of it.
Yes, it's editorialized. The actual title is "June 2024 pricing update for Instant Payouts for businesses in the United States"
I understand why companies want to bury bad news under generic titles but that doesn't mean we have to play along. This is a case where "editorializing" the title seems helpful.
Percent vs percentage points. It's slightly confusing but the title is correct.
A rule of thumb: if it is really bad it will not be reported by the actual company doing it. It will be buried in the TOS and then discovered by angry users, and picked up by media.
It's a common problem when reporting on changes of some percentage value. I guess it's more dramatic to say "increased by 50%" rather than "increased by 0.5 points"
Common example headline: "Inflation up by 100%" when it went from 1% to 2%. The headline implies goods & services are now 2x more expensive than before, which is not the case.
Choose between “now 1.5%” or “50% increase”
I don't feel it's disingenuous at all. When I read the title I instantly understood it to mean multiplying the fee by 1.5. In what world would anyone take this to mean that they're charging 50% of each transaction?
I don't feel it's disingenuous at all? They're increasing the fee by 50%... of the fee, obviously. In what world would anyone take this to mean that they're charging 50% of each transaction?
Fees on payment methods are a good example of the kind of friction we wanted to get rid of, agreeing to use these intermediaries.
If we've just replaced stupid inter-bank 3 day cheque clearing bullshit fees with stupid microtransaction fees which are variable at-will by the guy in the middle, whats the point?
Money is regulated. Money flows should be regulated. This industry should be regulated, and the fees set to cost recovery, not profit point. If that reduces to one interchange agency per economy, I'd be fine: Nationalise them all.
Does it cost the CPU more to process $1b in one transaction than to process 10c?
That isn't the title of the page and a great illustration of why we should always speak in percentage points or real numbers. "Shark attacks increase by 300%" (from one to four) is a textbook example of a tabloid headline.
It's impossible to talk about real numbers in this case of course, and speaking strictly about percentage points or bips doesn't capture the thrust of the change (or situate it accurately vis a vis stripe's continual fee inflation, i.e. see elsewhere others' comments ~"stripe has been nickel and diming us for years"). In an era where stripe has used its cache to capture certain business communities wholesale and then ratcheted up pricing in ways you wouldn't expect outside of a monopoly player IMO, I think it's helpful to be super clear about the relative change rather than absolute change.
If I remember correctly, payouts always take two or three days to clear, to comply with all of the settlement and legal processes.
The “instant payout” is actually a temporary loan from an entity already approved as having all funds available for immediate disposal at multiple links in the chain. This is then used to create the illusion of an instant payout… while the “loan” guarantor receives payment 2-3 days later.
This is also why there’s actually a “instant payout” limit on your Stripe account, almost like a credit limit - because it basically is credit.
> payouts always take two or three days to clear, to comply with all of the settlement and legal processes
No, that's usually just how long ACH transfers can take. In most cases, it's more like next-day these days, in my experience (e.g. from paying out from PayPal to my checking account or between checking accounts), but that depends on the specific ACH type and timeline, I believe.
> The “instant payout” is actually a temporary loan
It's usually not. Actual settlement of both card and ACH payments usually happen on the next business day, but since that goes for both legs of most transactions, the settlement periods "cancel each other out".
Yes as noted on the page
> You can always pay out your funds using our standard schedule (2 business days) for free.
Sounds like a blockchain startup in the making!
Where you'll pay fees on the chain, fees at the exchange trading for fiat, and then fees sending the fiat back to your bank so you can actually make payroll with money normal people actually use.
You would presumably use a faster and cheaper off-chain method of settlement (such as bank or exchange-local settlement) using on-chain contracts with near real time periodically executed and publicly auditable settlement of the derivative CDOs. See other response.
How would blockchain accelerate ACH transfers (or make wire transfers cheaper, or convince banks to support FedNow)?
Caching, reputation and promises make the world go 'round.
Exhibit A) SWIFT famously states it doesn't actually move money.
Exhibit B) Hawallah
ie. It's good enough to promise to deliver in due course most of the time. That's equivalent to a transfer, most of the time. The evidence is that it is the basis of many existing settlement networks (SWIFT/hawallah), but also the stock market / individual broker ledger system, the dominant off-chain transfer model of many exchanges for digital assets, crime ("you have X days to deliver Y or Z happens"), etc.
Where it's not good enough, you attempt to store enough to cover eventualities with forward prediction to maintain settlement volumes, offset with promises, utilise third party risk mitigators (insurance/liquidity providers) and/or leverage reputation.
Speaking hypothetically, because the original comment was made predominantly in jest, but in the knowledge that it was actually potentially applicable enough to yield startups, let me humor you. Specifically, in my mind where blockchain might add value is if you wanted to obtain local liquidity at short notice. I understand micro-lending markets are now well developed on Ethereum, but haven't bothered to dig in to the implementation myself. The point is, it would be theoretically possible to build such a system to translate real world promises to on-chain contracts and thus have the ongoing support of globally distributed capital behind providing stability to local micro imbalances of liquidity as a service. This is an existing business model seen in many aspects of the financial system.
Start looking at the world this way, and notice similarities between capitalism, crime, crypto, cold steel and cojones. It's all the same game. Physical or digital, settled or promised, it's about risk and reward, reputation, and "the availability of effective recourse" (ie. trust). The same band-aids are used everywhere.
1.5% for a 2 day loan is an APR of what? More than 270%.
When you're competing with payday loans, it makes sense to price the product similarly...
Anyone have a list of providers that use Stripe Connect?
I’m confused by your question. They mention Connect in the FAQ but this only applies to instant payouts, honestly it seems more confusing that they mention Connect at all in this context. What are you getting at or trying to figure out with your question?
I’m interested because my business used Stripe Connect but this change seems to have zero change for me. If businesses want instant payouts they can decide that on their own and if they want to eat the fee, it doesn’t matter to me.
There are going to be thousands. I've seen several small businesses in niche areas that happen to use Stripe Connect to offload all of the payments to a company's existing Stripe account.
All companies taking funds via Stripe Connect will know they are doing so via Stripe, so I don't think a list of Connect providers would help here.
Payday loans are cheaper
In other news, the cost of no ey has increased several hundred percent since 2019.
Yawn. In some countries at least, (mine for example) Paypal does the same. If I get a payment (and let me add that I detest paypal but, such are the choices of some employers), I can wait 24 to 48 hours for my money, or I can get it instantly at any time Monday to Friday between 6:15 am and 10 pm, but at an additional cost of roughly 3 dollars. Bear in mind that this is on top of their atrocious, thieving obligatory exchange rates and any other fees they tack onto payments sent to you.
Of course I'm nearly certain that sending me that money instantly costs Paypal nothing, but enshittification creeps into all things, sort of like the dust created by dead skin and human trash. It permeates. Though in Paypal's case, shitty service has been a byword for decades already.
Edit: when occasionally receiving payments in crypto on the other hand, I get charged minimal fees, can convert to my local currency at essentially market exchange rate, and can have the money transferred to my actual bank account at any time 24/7 for free. Yes yes, HN hates crypto and blah blah, but outside the bubble, there are people who find these things useful.