Working at a company that is currently making this decision, I appreciate the blog post. That being said, I absolutely don't see how they arrive at their numbers. They state that SaaS founders routinely pay "4-8% of revenue" to stripe. Then their own calculation ends up at 4.2% of revenue using a combination of all Stripe services possible (Billing, Payments, Tax, Data Pipeline). Where are the other ~4% supposed to come from?
If anything, the calculation is overstating the realistically expected cost in a few ways:
- Particularly B2B SaaS will likely have some % of invoice/bank transfer payment. Assuming 100% payment via credit card is a 'worst-case' assessment.
- Even given that, the bulk of the cost are credit card processing fees, which you would pay either way. Maybe not exactly at stripe's rate, but something similar.
- Stripe Tax for example doesn't charge 0.5% of revenue flat. It only charges for revenue where you’re registered to collect taxes, which for an international business will be far from every transaction (depends on locality & customer base, of course). In addition to that, the pricing drops to 0.4% if you process more than $50k per month.
All in all, I appreciate the effort, but given that Lago is a stripe competitor, this calculation dressed up as a 'neutral assessment' on Github seems disingenuous and makes me trust them less.
You are right, and I see how that would push up the bill as % of revenue.
That being said, this has nothing to do with stripe's software platform which this article focuses on, and all to do with credit card payment fees. Braintree charges "2.59% + $.49 per transaction". PayPal charges "3.49% + $.49 per transaction". Square payments charges "2.9% + $.30 per transaction".
>this calculation dressed up as a 'neutral assessment' on Github seems disingenuous and makes me trust them less
agreed. they have a corporate blog on their site, so there's no reason that advertorial content like this couldn't be posted there. posting on github just seems like a dirty trick to add authority to marketing content. and it feels especially dirty because they don't share their own pricing to compare it to.
Why would GitHub add authority? It only really helps when your target audience is technical. But choosing payment providers is not a technical decision for lots of companies.
It can be up to 30% if they freeze your account for "suspicious activity." This is currently happening to someone I know who's had all of their November sales frozen. They say Stripe might return 70% of the funds... in February. They're trying to reach a human but no luck so far.
> This is currently happening to someone I know who's had all of their November sales frozen
Why on earth is this person not sweeping nightly into their business bank account? Never leave money in your processor account... they are not your bank!
This is the same stuff people complain about with PayPal - failing to realize this scenario (to this extent where it's threatening your business) is almost entirely the business operator's fault due to a severe lack of understanding of how to use a processor.
My guess is this person's processor account went from small benign numbers and then suddenly had a surge of business (possibly seasonal). This sudden increase in volume can (and will) trigger anti-fraud audits from your processor if you do not already have a well established history with them. You go through it, and move on. Generally it's not an issue if you sweep nightly!
Spread the word - your payment processor is not your bank. Sweep nightly, it's almost always a free service they offer.
I genuinely don't understand why anyone would use stripe for any scaled up business compared to adyen for example.
stripe has a lot of value for out of the box integration, but if you're running your own custom solution you will need to put the same effort to integrate stripe at a 3x cost compared to adyen.
I understand it's a silicon valley thing and most likely those who use it don't get the same public pricing other people get, but aside from branding stripe is extremely expensive compared to comparable solutions.
It’s been a long time, but having dealt with Adyen a few years ago my take away was they are way more punishing regarding your implementation (we had calls randomly fail, users not getting redirected, notifications out of order etc.), with more options but also more rope to hang yourself.
Those are all use cases we needed to cover either way and we did, but errors were part of the routine more than exceptional events. In comparison Stripe was way smoother and documentation/support a lot easier to grasp.
I’m pretty sure adyen requires a decent amount of volume before they will allow you to use them, like in the 10s of millions.
Stripe provides self serve with is nice for getting started and I’m guessing once you’re big enough to jump to adyen, you can likely get a discount on the sticker price since you have bargaining power
Is it really though? It very much depends on your definition of 'scaled up'. Sure, you wouldn't run a Fortune 500's payment processing through stripe's public pricing plan.
But for a $10M SaaS startup, this would come to $350k/yr (assuming some amount of non-credit-card and non-taxed payments). I would say at least 60% of that you would pay anyway to other payments processors, even doing all the software stack yourself (nothing is free in the world of finance, after all). So that leaves you with $140k p.a. for a software stack that covers billing UI, invoicing, taxes, financial reporting. It's far from obvious how you can come up with a comparable solution yourself with a budget of at most 0.5 developers and 0.5 designers that your $140k would get you.
i can tell you firsthand that Stripe rates can be very competitive, and if you’re looking to enable some complicated fund flows it can be a great fit. I saw companies with transactions numbers in billions of dollars considering moving to Stripe.
The real question is how much do you want to put your eggs in a single basket. The company I’m at now has a multiprocessing setup that requires more work but isn’t completely dependent on a single provider.
If you let Stripe convert e.g. USD (when you charge USD) to your local currency (when you run your account e.g. in EUR), then you pay them another 2% for that convenience.
I switched to Wise and pay now an order of magnitude less for that.
Hi dkyc,
OP here. Sorry to read this was your impression, two points:
1/ To prevent such a feeling, we've included this disclaimer at the beginning of the post, (i) to state where we stand vs Stripe, (ii) the source data is Stripe's pricing, happy to share more details about the hypothesis
"Disclaimer: This analysis is based on Stripe’s public pricing as of July 21, 2022. Some merchants may be able to negotiate fees or benefit from grandfathered plans. Lago partners with 'Stripe Payments' and can be used as a complement or replacement of 'Stripe Billing'."
2/ I think below comments (to be clear: comments from people completely unrelated to Lago) show how you can reach 4 to 8%. It's also one of the reasons why 'Paddle' is an attractive solution in Europe, it's an all-in-one solution that takes 5-6% on revenue and provides subscription management, payments, invoicing, tax management.
Let us know if you need more info, or if you have feedback on what we could have done differently. In any case, I genuinely appreciate that you took the time to comment!
Thanks for the reply! I just couldn't follow how you end up paying 8% to stripe, save some very non-standard requirements or setup. You can relieve my concerns by telling me the stripe product setup that results in a $100k MRR SaaS company to pay $8k per month to stripe. Might very well be that I'm overlooking something!
Otherwise, the "no one knows exactly how much but up to 8%" framing reads like FUD to me.
They state that SaaS founders said it's 4-8%. It's not their statement but the SaaS founders
>We asked this question to dozens of SaaS founders and none of them was able to provide a precise figure. Answers ranged from 4 to 8% of their revenue.
Well, for reasons stated I don't believe it was a fair and representative sample then, and that 4% is closer to the upper bound than the lower. Also no idea how "no one was able to give a precise figure" – go into stripe dashboard, open most recent invoice, divide amount paid through payments processed (which are both stated right there on the invoice!)
I'm a B2B SaaS founder and paid 2.7% to stripe last month. OP, feel free to update post with new lower bound.
Even including those, I don't see how you would get to 8%. Apart from the fact that 'Stripe Identity' isn't something I'd expect a standard SaaS company to need (or a tool like Lago to provide), the cost simply isn't that high. Radar and Sigma together for 1,000 monthly transactions adds like ~$130 to your monthly bill.
I challenge the authors of this blog post to provide me a Stripe product setup that would result in an $8,000 monthly cost for a $100,000 MRR SaaS company. It must be very unusual.
[I work at Stripe]
As a practical matter, this guide is somewhat misleading in the sense that it very substantially overestimates what a typical B2B SaaS business pays for Stripe.
For example:
• Cards pricing. The guide assumes a B2B SaaS business accepts 100% of payments via cards. B2B SaaS businesses on Stripe tend to encourage payments via bank transfers and other lower-cost payment method, especially for their biggest customers, and we try to make it as easy as possible for businesses to do this. Bank transfers are priced at 0.8% in the US. The guide states that “additional fees apply for bank transfers, additional payment methods”, which is not true. We encourage users to use alternative payment methods for this reason.
• Stripe Tax. The 0.5% per transaction cost is incurred only in jurisdictions where the business is obligated to collect taxes. For US-based businesses, this generally represents a very small fraction of total payment volume. (And, of course, the tax collection itself is mandatory, and so some tax provider or calculation engine presumably has to be paid for.)
• Stripe Data Pipeline. Including this as a default cost is misleading. It isn’t. While we think it’s a great product (especially if you have a sophisticated ETL pipeline), most Stripe users don’t find themselves needing it.
More broadly, I think it’s important for onlookers to know that OP is the founder of a business that runs on Stripe and positions itself as an alternative to Stripe Billing. They seem to be trying to write deliberately-provocative posts to go viral, as described in this tweet: https://twitter.com/byAnhtho/status/1601197512227885056. Competition is good, and anyone is of course very welcome to analyze Stripe’s pricing. But, in the spirit of transparency, we’d welcome a slightly more realistic analysis.
Stripe Tax. The 0.5% per transaction cost is incurred only in jurisdictions where the business is obligated to collect taxes. For US-based businesses, this generally represents a very small fraction of total payment volume. (And, of course, the tax collection itself is mandatory, and so some tax provider or calculation engine presumably has to be paid for.)
That's obscenely high compared to what we pay one of your competitors for more functionality than what Stripe Tax provides.
Your customers are easily pay a 100% premium over alternatives just to keep everything within Stripe.
Sort of. You need to do a minimum of business in the state, usually $100,000/yr or 200 transactions. I don’t have enough customers in Utah to require tax payments.
OP here. I appreciate the inputs, we're big fans of Stripe at Lago. We operate in the billing space, and are alternatives to home-grown billing systems, Chargebee, Recurly, etc. and Stripe Billing.
1/ Some users use Lago as a complement of Stripe Billing, or don't even consider Stripe Billing, and we built a native integration with Stripe payments.
Out of transparency, the first lines we wrote in this post stated that:
"Disclaimer: This analysis is based on Stripe’s public pricing as of July 21, 2022. Some merchants may be able to negotiate fees or benefit from grandfathered plans. Lago partners with 'Stripe Payments' and can be used as a complement or replacement of 'Stripe Billing'."
2/
> 'write deliberately-provocative posts to go viral'
Thanks for quoting my tweet. I actually shared 2 old articles I wrote in 2021 this week, that made the front page of HN, unrelated to Fintech:
- One on my personal blog sharing what I learnt about press relations, main message being 'don't waste money on an agency if you're early stage' because I've seen this happen too often, and too many founders asked me the same questions about this topic [1] I was actually surprised it was read, as HN is known for being more 'engineering oriented' than 'marketing oriented'.
- Another one about 'scouts' not being necessarily a good thing for founders, with Sifted (TC for EU) which is a position I stand for as a founder and as an investor, and I think Europe should mature towards this topic [2]
The TLDR is: I've been writing about a wide range of topics for a long time, things I like to share, things I stand for and want to have an impact on and was grateful it resonated within my community.
Btw I think the HN ring vote is pretty strong, and HN community very 'fierce' (at times), so I don't think we could have got attention by just 'clickbaiting' and attempting to go viral.
Like any startup, we're excited to share our vision of the world, and this is why we're writing.
Lastly, here are two other examples of content that were intended to spark a discussion in our community (and it did) and don't bring much to Lago as a business:
a/ What not to say to someone who has just been laid off [3]
I wrote it after my partner was laid off and too many people around him just did not know what to say, which amplified the 'grief'. It reminded me of my personal history of grief, and wrote the post. I received dozens of messages of people who have been laid off recently, or whose friend/closed ones had been fired. Founders reached out to say they would share it with their team (it's not an easy topic to discuss).
b/ I recently shared my thought process about moving to the US after YC, as it's a recurring question we have as YC founders based in Europe. This sparked a lot of discussions and helped me iterate on how I approach the question, in a scalable way. I believe other founders learned things by the discussion it sparked, some founders reached out to help me with the US visa etc. Feel free to read it here [4]. Took me some time to write it, but the main ROI was how I've been able to connect with other founders, at the same stage, or 5 steps ahead, and learn from them. And, based on the comments/discussions, I believe other founders in the same situation benefited from this too.
My point is: not all content is written in an attempt to go viral, but I just write about what I believe brings value, and it happens to go viral (whatever you mean by that) when it does have an impact. Regarding my tweet, I think a lot of people wonder how to approach HN, and make a lot of rookie mistakes, and I could also write about what I've learned. This would (if I write it successfully) in fine help having better content on HN.
YC says 'build something people want', I also happen to (occasionally) write things people want. And there's no better gift for a writer.
I think the point here is that this post was optimized to try to go viral. Most startups won’t have 4% as a minimum revenue cost.
For example, you chose the most expensive Billing plan (Scale), which includes things startups don’t need. Similarly assuming the most pessimistic payment mix where everyone is using international cards along with currency conversion, which will never be true. Similarly adding data pipeline.
It’s not “Stripe’s real pricing”, as you’re no doubt aware. That’s where it turns from informative to marketing.
If there’s a way that Lago, or any other Stripe competitor for any product, cuts down on fees, that’s fantastic. There are definitely ways to beat Stripe’s fees on payments, for example, though they’re as difficult as the are transformative.
In the USA, there is a huge payment processing API industry. Stripe is a great company and it has this family of products that work great together but it has lots of competitors that have better pricing and better service.
I work in the industry for a payment processor. It's not a silicon valley startup (it's basically run by salespeople) but we have way better pricing and you can get someone on the phone if you have an issue.
Reading HN, you might think Stripe is the only option.
Sure but the reason Stripe became Stripe is due to the fact that they have an excellent API and dev experience. Most old school processors are too difficult to setup and manage and have horrendous APIs.e.g: authorize.net
Having said that, feel free to share your company becaise I m always open to evaluatin for our company (low 7 figures ARR)
The association of Stripe with simplicity and good dev experience could be more due to Stripe's marketing/PR than the views of devs who've used Stripe APIs, at least from the few things I've read.
A common problem with payment processors is international support. Stripe isn’t perfect by any means, but they support much more than than most of the US focused competitors.
As an example, a few years ago the EU brought in Strong Customer Authentication (SCA). Stripe was one of the few companies ready for this, being ready about a year before. I used them at the time and adopted their SCA support and it worked well.
We also happened to be considering alternative payment processors at the time. Braintree had some basic support for it, not fully ready, and seemingly undocumented. Other suppliers didn’t even know about SCA despite notionally taking GBP payments.
Of course it’s fine to only sell to the US market, but Stripe is pretty good in many places and I suspect that’s a significant contributor to their popularity.
We are paying roughly 9% fees to stripe which includes currency conversion charges.
So if a customer pays us $100, we are getting $91 to our bank account which is absolutely ridiculous.
If anyone looking for next $10B-$100B business idea, work on making the transaction fees to 1% and you can take business from stripe and PayPal immediately.
Wise.com is doing this and I hope more such companies work on this.
The disruption has to come from bypassing credit card companies like Visa and Mastercard.
In India, almost every merchant is using UPI which saves them fees of credit card processing.
The world banking is getting more advanced and technical and I am sure payment gateways can bypass the credit card and currency conversion fees with direct bank to bank transfer.
For larger Amount, we are asking our customers to use Wise instead of stripe or PayPal as the saving for us is significant.
Could crypto help here, at least for customers who have some in a wallet ready to use?
When I checked about 2 years ago, transferring bitcoin from one wallet to another was negligibly cheap, although I think it took about 20 minutes for the seller to be certain that the bitcoin had been sent to them (too slow for most website payments).
Curious to know if crypto could solve this problem though, if not now, maybe in the future. If some of the 9% fees were passed on to customers in the form of lower prices, it could be quite appealing and give a price advantage (if only a few %) over competitors.
Depending on where you're located you should potentially consider a solution that looks more like Payment Processor -> Hold in Currency -> Bulk Fx to Local currency. Typically business level Fx processing is 2% - with 3% for credit card fees.
At scale your Fx fees can be less than 2% of the conversion amount, I know that at scale the fees can get down to <0.2% if you're moving multiple millions (USD) in a month.
I know that both Adyem and Braintree will capture into local currency, so you can avoid Fx fees by the payment processor themselves.
Are there any companies arbitraging this % difference by collating lots of different businesses transactions into larger sums to then move into a particular currency for business owners who transact in non local currencies?
I'm not an expert, I think by default they payout in the currency of the country that your business is located in.
In not sure about India, but in AU, we have the option to receive USD payouts to USD accounts in Australian banks, so you can avoid Stripe's conversion fees. But now you have USD in an AU bank. What are your options? Convert to AUD at the bank's terrible exchange rate. Or send the money to a US bank (or Wise), paying horrendous international transfer fees.
I hope I'm missing something but I don't see this offering from Stripe as being very useful.
Yes. They only do bank to bank. But there is definitely a business model here.
If you can offer subscription model and can do bank to bank transfer with 0.5% fees, you will disrupt the whole subscription industry relying on visa/Master card monopoly. Not only this, banks also charge very high currency conversion fees which you can disrupt.
You of course need to build lot of things from scratch but with most of the banking now a days going online with new APIs, it is possible.
I know that I started and shutdown a company through Stripe Atlas a year and a half ago and they're still charging me recurring fees for it. I'm not convinced that Atlas was ever fully thought out on their end and I regret using it.
Fellow Stripe Atlas-er here. I have no experience with corporate anything and started my C Corp because I won the Pioneer Tournament and they said I had to to give them a 1% SAFE to claim my winnings, even though I'd made it clear I did not intend to try to monetize my project at all. The company has literally done zero things since inception except cost me money for my registered agent, Delaware corporation tax, and having to pay someone to file taxes for $0 of income because I am too terrified of the tax legal system to do it myself.
If you don't mind me asking, what was your process for dissolving the corporation? I'd love to shut down mine but last time I looked it up I got bogged down in all the legalese about Notices of Dissolution and Board Approval and all that jazz.
There’s no charge to use Stripe after the $500 Atlas fee to form a company. What fees are you seeing? If you’ve maintained a presence in Delaware, perhaps you’re still paying for your registered agent? (You can also email me at edwin@stripe.com and we can look into this.)
Yeah Stripe is a joke considering its size. I much rather use Square which is saying a lot because that is also a poorly run company. Fintech space is a big joke. They were selling more fluid payment platforms with less fees/cost to consumers. Instead all-in prices have actually gone up.
Almost as if all the "meatspace banking" regulations had their purpose, born out of decades of experience with the many, MANY, M A N Y weird edge cases that crop up sooner or later.
Not to say that the meatspace regulations and practices are fine (from an European POV, the fact y'all still use literal paper cheques instead of bank transfers and credit cards instead of direct debit because consumer protection is way easier on CCs), but still... it's amazing none of the fintechs ever really got hit hard by regulation agencies despite the continuous complaints.
I used to work at Stripe, specifically on Connect, and I want to point out one thing that's not quite accurate:
> and there’s also a transaction fee of $0.25 + 0.25% (in addition to the cost of Stripe Payments and other Stripe products)
This is not a per-transaction fee. That implies that the fee is per-payment. This fee is per-payout, which is the ACH credit (or debit rails transfer) to the account holder from their Stripe balance. It's not uncommon for the payout schedule on accounts to be at least weekly, so you have many payments worth of funds batched together into a single payout. The per-payout fee of $0.25 ends up being a lot smaller as a percentage in practice.
There is no company (that we're at least aware of) on Stripe that is using this combo of Stripe products and paying the "total cost" outlined in the post. Our pricing scales with the size (and needs) of the business. If a business on Stripe is large enough to use our highest billing tier, quotes, revenue recognition, and data pipeline together, then Stripe would've bundled the products together. (And then we charge for them at the end of the month with a volume-based rate of bundled products + payments.) These products are built for the companies who've asked us for these enterprise features and aren't necessarily meant to be used one-off, as the post implies.
As a retail customer, there are three payment processors which I notice “convert” me into a sale more often purely because I’m confident the process will be fast, safe, convenient, and familiar: Apple Pay, Stripe, and Square.
I would have been surprised to learn that they aren’t priced at a premium on the back end, because they certainly feel better and more trustworthy.
Did an AB test a while back and mere presence of the PayPal option boosts sales through all other options plus generates extra sales through PayPal itself. Not something that I was expecting at all, but the confidence level was over 99%.
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If anything, the calculation is overstating the realistically expected cost in a few ways:
- Particularly B2B SaaS will likely have some % of invoice/bank transfer payment. Assuming 100% payment via credit card is a 'worst-case' assessment.
- Even given that, the bulk of the cost are credit card processing fees, which you would pay either way. Maybe not exactly at stripe's rate, but something similar.
- Stripe Tax for example doesn't charge 0.5% of revenue flat. It only charges for revenue where you’re registered to collect taxes, which for an international business will be far from every transaction (depends on locality & customer base, of course). In addition to that, the pricing drops to 0.4% if you process more than $50k per month.
All in all, I appreciate the effort, but given that Lago is a stripe competitor, this calculation dressed up as a 'neutral assessment' on Github seems disingenuous and makes me trust them less.
For a B2B SaaS this likely represents a minuscule percentage of the revenue. For a $5/month subscription, this fee alone is more than 6%
That being said, this has nothing to do with stripe's software platform which this article focuses on, and all to do with credit card payment fees. Braintree charges "2.59% + $.49 per transaction". PayPal charges "3.49% + $.49 per transaction". Square payments charges "2.9% + $.30 per transaction".
agreed. they have a corporate blog on their site, so there's no reason that advertorial content like this couldn't be posted there. posting on github just seems like a dirty trick to add authority to marketing content. and it feels especially dirty because they don't share their own pricing to compare it to.
Why on earth is this person not sweeping nightly into their business bank account? Never leave money in your processor account... they are not your bank!
This is the same stuff people complain about with PayPal - failing to realize this scenario (to this extent where it's threatening your business) is almost entirely the business operator's fault due to a severe lack of understanding of how to use a processor.
My guess is this person's processor account went from small benign numbers and then suddenly had a surge of business (possibly seasonal). This sudden increase in volume can (and will) trigger anti-fraud audits from your processor if you do not already have a well established history with them. You go through it, and move on. Generally it's not an issue if you sweep nightly!
Spread the word - your payment processor is not your bank. Sweep nightly, it's almost always a free service they offer.
stripe has a lot of value for out of the box integration, but if you're running your own custom solution you will need to put the same effort to integrate stripe at a 3x cost compared to adyen.
I understand it's a silicon valley thing and most likely those who use it don't get the same public pricing other people get, but aside from branding stripe is extremely expensive compared to comparable solutions.
and 4% of your top line is a huge thing to pay
Those are all use cases we needed to cover either way and we did, but errors were part of the routine more than exceptional events. In comparison Stripe was way smoother and documentation/support a lot easier to grasp.
Stripe provides self serve with is nice for getting started and I’m guessing once you’re big enough to jump to adyen, you can likely get a discount on the sticker price since you have bargaining power
But for a $10M SaaS startup, this would come to $350k/yr (assuming some amount of non-credit-card and non-taxed payments). I would say at least 60% of that you would pay anyway to other payments processors, even doing all the software stack yourself (nothing is free in the world of finance, after all). So that leaves you with $140k p.a. for a software stack that covers billing UI, invoicing, taxes, financial reporting. It's far from obvious how you can come up with a comparable solution yourself with a budget of at most 0.5 developers and 0.5 designers that your $140k would get you.
The real question is how much do you want to put your eggs in a single basket. The company I’m at now has a multiprocessing setup that requires more work but isn’t completely dependent on a single provider.
I switched to Wise and pay now an order of magnitude less for that.
Dead Comment
1/ To prevent such a feeling, we've included this disclaimer at the beginning of the post, (i) to state where we stand vs Stripe, (ii) the source data is Stripe's pricing, happy to share more details about the hypothesis
"Disclaimer: This analysis is based on Stripe’s public pricing as of July 21, 2022. Some merchants may be able to negotiate fees or benefit from grandfathered plans. Lago partners with 'Stripe Payments' and can be used as a complement or replacement of 'Stripe Billing'."
2/ I think below comments (to be clear: comments from people completely unrelated to Lago) show how you can reach 4 to 8%. It's also one of the reasons why 'Paddle' is an attractive solution in Europe, it's an all-in-one solution that takes 5-6% on revenue and provides subscription management, payments, invoicing, tax management.
Let us know if you need more info, or if you have feedback on what we could have done differently. In any case, I genuinely appreciate that you took the time to comment!
Otherwise, the "no one knows exactly how much but up to 8%" framing reads like FUD to me.
At what price point? I would imagine anything lower than... $200/mo? $500/mo? isn't worth ACH setup?
I could be wrong. Would love to hear relevant experience on what the cutoff is.
>We asked this question to dozens of SaaS founders and none of them was able to provide a precise figure. Answers ranged from 4 to 8% of their revenue.
I'm a B2B SaaS founder and paid 2.7% to stripe last month. OP, feel free to update post with new lower bound.
Deleted Comment
Stripe Radar, Stripe Identity, Stripe Sigma? It all adds up.
I challenge the authors of this blog post to provide me a Stripe product setup that would result in an $8,000 monthly cost for a $100,000 MRR SaaS company. It must be very unusual.
Dead Comment
For example:
• Cards pricing. The guide assumes a B2B SaaS business accepts 100% of payments via cards. B2B SaaS businesses on Stripe tend to encourage payments via bank transfers and other lower-cost payment method, especially for their biggest customers, and we try to make it as easy as possible for businesses to do this. Bank transfers are priced at 0.8% in the US. The guide states that “additional fees apply for bank transfers, additional payment methods”, which is not true. We encourage users to use alternative payment methods for this reason.
• Stripe Tax. The 0.5% per transaction cost is incurred only in jurisdictions where the business is obligated to collect taxes. For US-based businesses, this generally represents a very small fraction of total payment volume. (And, of course, the tax collection itself is mandatory, and so some tax provider or calculation engine presumably has to be paid for.)
• Stripe Data Pipeline. Including this as a default cost is misleading. It isn’t. While we think it’s a great product (especially if you have a sophisticated ETL pipeline), most Stripe users don’t find themselves needing it.
More broadly, I think it’s important for onlookers to know that OP is the founder of a business that runs on Stripe and positions itself as an alternative to Stripe Billing. They seem to be trying to write deliberately-provocative posts to go viral, as described in this tweet: https://twitter.com/byAnhtho/status/1601197512227885056. Competition is good, and anyone is of course very welcome to analyze Stripe’s pricing. But, in the spirit of transparency, we’d welcome a slightly more realistic analysis.
That's obscenely high compared to what we pay one of your competitors for more functionality than what Stripe Tax provides.
Your customers are easily pay a 100% premium over alternatives just to keep everything within Stripe.
Didn’t “S Dakota vs Wayfair” require sellers to charge interstate tax regardless of physical presence in the state?
I don’t see how it would be a small fraction given that.
OP here. I appreciate the inputs, we're big fans of Stripe at Lago. We operate in the billing space, and are alternatives to home-grown billing systems, Chargebee, Recurly, etc. and Stripe Billing.
1/ Some users use Lago as a complement of Stripe Billing, or don't even consider Stripe Billing, and we built a native integration with Stripe payments.
Out of transparency, the first lines we wrote in this post stated that: "Disclaimer: This analysis is based on Stripe’s public pricing as of July 21, 2022. Some merchants may be able to negotiate fees or benefit from grandfathered plans. Lago partners with 'Stripe Payments' and can be used as a complement or replacement of 'Stripe Billing'."
2/ > 'write deliberately-provocative posts to go viral'
Thanks for quoting my tweet. I actually shared 2 old articles I wrote in 2021 this week, that made the front page of HN, unrelated to Fintech:
- One on my personal blog sharing what I learnt about press relations, main message being 'don't waste money on an agency if you're early stage' because I've seen this happen too often, and too many founders asked me the same questions about this topic [1] I was actually surprised it was read, as HN is known for being more 'engineering oriented' than 'marketing oriented'. - Another one about 'scouts' not being necessarily a good thing for founders, with Sifted (TC for EU) which is a position I stand for as a founder and as an investor, and I think Europe should mature towards this topic [2]
The TLDR is: I've been writing about a wide range of topics for a long time, things I like to share, things I stand for and want to have an impact on and was grateful it resonated within my community. Btw I think the HN ring vote is pretty strong, and HN community very 'fierce' (at times), so I don't think we could have got attention by just 'clickbaiting' and attempting to go viral.
Like any startup, we're excited to share our vision of the world, and this is why we're writing.
Lastly, here are two other examples of content that were intended to spark a discussion in our community (and it did) and don't bring much to Lago as a business:
a/ What not to say to someone who has just been laid off [3] I wrote it after my partner was laid off and too many people around him just did not know what to say, which amplified the 'grief'. It reminded me of my personal history of grief, and wrote the post. I received dozens of messages of people who have been laid off recently, or whose friend/closed ones had been fired. Founders reached out to say they would share it with their team (it's not an easy topic to discuss).
b/ I recently shared my thought process about moving to the US after YC, as it's a recurring question we have as YC founders based in Europe. This sparked a lot of discussions and helped me iterate on how I approach the question, in a scalable way. I believe other founders learned things by the discussion it sparked, some founders reached out to help me with the US visa etc. Feel free to read it here [4]. Took me some time to write it, but the main ROI was how I've been able to connect with other founders, at the same stage, or 5 steps ahead, and learn from them. And, based on the comments/discussions, I believe other founders in the same situation benefited from this too.
My point is: not all content is written in an attempt to go viral, but I just write about what I believe brings value, and it happens to go viral (whatever you mean by that) when it does have an impact. Regarding my tweet, I think a lot of people wonder how to approach HN, and make a lot of rookie mistakes, and I could also write about what I've learned. This would (if I write it successfully) in fine help having better content on HN.
YC says 'build something people want', I also happen to (occasionally) write things people want. And there's no better gift for a writer.
[1] https://anhtho.substack.com/p/pr-for-startups-is-it-only-for... [2] https://sifted.eu/articles/vc-scout-programme-problems/ [3] https://sifted.eu/articles/what-not-to-say-layoff/ [4] https://github.com/getlago/lago/wiki/Moving-to-the-US-after-...
For example, you chose the most expensive Billing plan (Scale), which includes things startups don’t need. Similarly assuming the most pessimistic payment mix where everyone is using international cards along with currency conversion, which will never be true. Similarly adding data pipeline.
It’s not “Stripe’s real pricing”, as you’re no doubt aware. That’s where it turns from informative to marketing.
If there’s a way that Lago, or any other Stripe competitor for any product, cuts down on fees, that’s fantastic. There are definitely ways to beat Stripe’s fees on payments, for example, though they’re as difficult as the are transformative.
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I work in the industry for a payment processor. It's not a silicon valley startup (it's basically run by salespeople) but we have way better pricing and you can get someone on the phone if you have an issue.
Reading HN, you might think Stripe is the only option.
Having said that, feel free to share your company becaise I m always open to evaluatin for our company (low 7 figures ARR)
That's their reputation, but it doesn't always stack up in reality.
Recent example: https://twitter.com/levelsio/status/1600316372344373249
Canonical HN example: https://news.ycombinator.com/item?id=30535572
The association of Stripe with simplicity and good dev experience could be more due to Stripe's marketing/PR than the views of devs who've used Stripe APIs, at least from the few things I've read.
As an example, a few years ago the EU brought in Strong Customer Authentication (SCA). Stripe was one of the few companies ready for this, being ready about a year before. I used them at the time and adopted their SCA support and it worked well.
We also happened to be considering alternative payment processors at the time. Braintree had some basic support for it, not fully ready, and seemingly undocumented. Other suppliers didn’t even know about SCA despite notionally taking GBP payments.
Of course it’s fine to only sell to the US market, but Stripe is pretty good in many places and I suspect that’s a significant contributor to their popularity.
So if a customer pays us $100, we are getting $91 to our bank account which is absolutely ridiculous.
If anyone looking for next $10B-$100B business idea, work on making the transaction fees to 1% and you can take business from stripe and PayPal immediately.
Wise.com is doing this and I hope more such companies work on this.
The disruption has to come from bypassing credit card companies like Visa and Mastercard.
In India, almost every merchant is using UPI which saves them fees of credit card processing.
The world banking is getting more advanced and technical and I am sure payment gateways can bypass the credit card and currency conversion fees with direct bank to bank transfer.
For larger Amount, we are asking our customers to use Wise instead of stripe or PayPal as the saving for us is significant.
When I checked about 2 years ago, transferring bitcoin from one wallet to another was negligibly cheap, although I think it took about 20 minutes for the seller to be certain that the bitcoin had been sent to them (too slow for most website payments).
Curious to know if crypto could solve this problem though, if not now, maybe in the future. If some of the 9% fees were passed on to customers in the form of lower prices, it could be quite appealing and give a price advantage (if only a few %) over competitors.
At scale your Fx fees can be less than 2% of the conversion amount, I know that at scale the fees can get down to <0.2% if you're moving multiple millions (USD) in a month.
I know that both Adyem and Braintree will capture into local currency, so you can avoid Fx fees by the payment processor themselves.
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Can you add a bank account which can handle alternative currency payout and let your bank handle do conversion?
In not sure about India, but in AU, we have the option to receive USD payouts to USD accounts in Australian banks, so you can avoid Stripe's conversion fees. But now you have USD in an AU bank. What are your options? Convert to AUD at the bank's terrible exchange rate. Or send the money to a US bank (or Wise), paying horrendous international transfer fees.
I hope I'm missing something but I don't see this offering from Stripe as being very useful.
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If you can offer subscription model and can do bank to bank transfer with 0.5% fees, you will disrupt the whole subscription industry relying on visa/Master card monopoly. Not only this, banks also charge very high currency conversion fees which you can disrupt.
You of course need to build lot of things from scratch but with most of the banking now a days going online with new APIs, it is possible.
If you don't mind me asking, what was your process for dissolving the corporation? I'd love to shut down mine but last time I looked it up I got bogged down in all the legalese about Notices of Dissolution and Board Approval and all that jazz.
Almost as if all the "meatspace banking" regulations had their purpose, born out of decades of experience with the many, MANY, M A N Y weird edge cases that crop up sooner or later.
Not to say that the meatspace regulations and practices are fine (from an European POV, the fact y'all still use literal paper cheques instead of bank transfers and credit cards instead of direct debit because consumer protection is way easier on CCs), but still... it's amazing none of the fintechs ever really got hit hard by regulation agencies despite the continuous complaints.
> and there’s also a transaction fee of $0.25 + 0.25% (in addition to the cost of Stripe Payments and other Stripe products)
This is not a per-transaction fee. That implies that the fee is per-payment. This fee is per-payout, which is the ACH credit (or debit rails transfer) to the account holder from their Stripe balance. It's not uncommon for the payout schedule on accounts to be at least weekly, so you have many payments worth of funds batched together into a single payout. The per-payout fee of $0.25 ends up being a lot smaller as a percentage in practice.
I would have been surprised to learn that they aren’t priced at a premium on the back end, because they certainly feel better and more trustworthy.
Did an AB test a while back and mere presence of the PayPal option boosts sales through all other options plus generates extra sales through PayPal itself. Not something that I was expecting at all, but the confidence level was over 99%.