Diminishing the hidden costs and fees of Stripe Merchant Account

Diminishing the hidden costs and fees of Stripe Merchant Account

Stripe is a popular payment processing platform because it is easy to set up, scales easily, and operates in many countries. Yet, while Stripe merchant account presents their pricing structure as transparent, the reality is that there are often hidden costs and fees depending on your business. Understanding these different fees and, most importantly, how to mitigate them can dramatically impact your business's profitability and clarity... 

The cost that companies working with Stripe often think of is the transaction fee, which is standard at 2.9% + 30¢ per successful card charge on domestic payments. While this is straightforward, not everyone understands the additional charges, like currency conversion fees, international card processing fees, chargeback fees, and integration or customization charges. 

International and Currency Conversion fees

If your business accepts international customers, Stripe imposes an additional 1% charge for international cards and an additional 1% for currency conversions. As your international sales increase, so will these charges. To reduce the need for currency conversions for your international customers, consider opening multiple Stripe accounts, by region, and billing customers in their local currency. This would decrease your conversion fees and create operational efficiencies.

Chargeback Fees

Stripe applies a fixed $15 charge for each chargeback you receive, win or lose. Thus, if your business is potentially high-risk or has a high dispute level, this could equate to substantial costs. You can combat chargebacks by implementing clear billing descriptors, using strong fraud prevention tools, and having customer service methods to reduce disputes before they need to escalate into chargebacks.

Hidden Integration and Add-On Costs

Stripe has a strong developer API with complex customization. Although it is possible for to everyone to use Stripe easily, the integration of these features leads to many hidden costs because it relies on developer skills to do this work. If your business does not have its own development team, you may find Trinity Consultings to adds costs to achieve the same results. Utilise pre-built plugins or use Stripe-certified platforms that can do these integrations without code; this can reduce costs a lot.

Refund and Payout Fees

Stripe does not have a refund process fee, but it does not return the transaction fee when you refund. This is not always easy to track, meaning that businesses can expect a refund to be easy, and then find an extra charge that does not appear up front. Engaging with a customer to avoid a refund can be supported by better product descriptions and better quality control, reducing refunds and economic impacts.

Subscription and Advanced Features

The Stripe platform offers one of the best advanced feature packages in billing (Stripe Billing), fraud/detection (Stripe Radar), and analytics (Stripe Sigma).  But these features, and others, truly grow as we described above, often providing you with a wealth of new features and functionality at a cost. So, regularly review what features you are using and whether or not you need to be using all of the features.  You may find some features are no longer required, and you can cut some unnecessary expenses by removing these features and/or products.

Ways to Reduce Fees Overall

Regularly monitoring and auditing your statements to pay close attention to where the fees originate is the best practice. 

  • If your business is processing a large number of transactions, don't hesitate to negotiate your rates.
  • Utilize Stripe's built-in chargeback prevention features and best practices.
  • Educating and training your team on fraud and billing best practices.
  • Utilizing local currencies and setting up Stripe in their region as applicable.

If businesses can focus on the less obvious charges, they can take more control of their Stripe merchant account. Reducing not only all of the less obvious charges (maintain as much as possible), helps realize more profits, but creates a more manageable payment structure going forward, allowing for better providing in a scalable revenue environment, if possible.

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