[Cabal] Credit Cards

[Evan Schoenberg]

On Nov 21, 2006, at 2:02 AM, Sean Egan wrote:

> The processing company rates are in addition to the Visa and  
> Mastercard rates.
>
> What we pay is $10 to $15 a month. There's a minimum charge of $5/mo.
> So they will bill us to $5/mo if we don't handle enough transactions.
> This minimum fee was lowered from their standard $25/mo. The other 10
> dollars are the monthly statement fee and gateway fee. Typically,
> people would pay $20 to $45 a month.
>
> Per transaction, we pay the Visa/Mastercard rates, which vary
> depending on the type of card and transaction, plus $0.15 and .05%.
> These rates are typically $0.30 and .2% Additionally, the
> authorization fee of $0.10 per transaction was waived, so typically a
> merchant would pay starting at $0.40 and at least .2% (depending on
> how shrewd and dishonest their sales rep was).
>
> Can you share PayPal's rates for comparison?

PayPal has no monthly fees and charges $0.30 per transaction plus 2.9%.

Using the typical rate of $0.30 plus .2%, for n = number of  
transactions and a = average transcation amount, it looks like we have:
PayPal = ($0.30*n) + (0.029 * n * a)

Processors monthly fee = $5
Processing costs = ($0.10 * n) + (0.0005 * n * a)
Gateway monthly fee = $5
Gateway costs = ($0.05 * n)
Batch fee = ??? / day
Visa/Mastercard rate (typical) = ($0.30 * n) + (0.002 * n * a)
Total cost, ignoring the batch fee =  5 + ($0.10 * n) + (0.0005 * n *  
a) + 5 + ($0.05 * n) + ($0.30 * n) + (0.002 * n * a)

The average transaction size is important.
At $5/transaction, Paypal is cheaper than the merchant solution for  
any number of transactions.
At $10/transaction, Paypal is cheaper for less than 87 transactions  
per month, and the  merchant solution is better for more than 87.
At $20/transaction, Paypal is cheaper for less than 27 transactions  
per month. The merchant solution is better for 27 or more.

The differences remain surprisingly small, actually, at small numbers.
At 100 $10 transactions, Paypal costs $59 and the other costs $57.50.
At 100 $20 transactions, Paypal costs you $88 and the other costs you  
$60.

At big numbers, it's more significant.
At 1000 $20 transactions ($20,000 / month, clearly way out of scope),  
Paypal is $880. Merchant is $510.

Without the special deal we're getting, it looks like Paypal would be  
a much better solution for anyone without a huge volume of sales/ 
donations.

Cheers,
Evan
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