Say you’re running an online store, selling something digital or physical.<p>Is it practical to completely avoid the fees of payment processing companies like Stripe?
How do you expect to get paid? That is a serious question, by the way.<p>In general, let's say that you want to use credit card. That pretty much put you at the mercy of Visa & Mastercard. They charge you fees, and the cost of managing the interaction with them is significant.<p>You can accept wire transfers, but note that this probably means quite a bit of dealing with the backend financial stuff (user paid, but didn't add the right invoice number, for example).<p>PayPal or similar also have their fees.<p>Using crypto for payment is possible, but the wild swings in price means that this is a highly unstable option. There are fees there as well (0.5 USD - 1 USD), and the time to close a transaction is a lot (10 minutes, IIRC).<p>It is also making things like taxes a pain. And that is where you start to get into really "fascinating" territory.<p>A truly underrated value you get is the fact that payment processors deals with all those issues around taxes, VAT, etc.
In India we have UPI by government no fees.<p>It is a new way of payments that removes need for middleman and government even has a official app ( BHIM App ) for it and most importantly it is a protocol so anyone can use it without third parties ( private companies )involved.<p>It now also supports subscriptions.<p>Read more:<p>UPI transactions over $100bn in Oct<p>Read more at:
1. Wikipedia
<a href="https://en.wikipedia.org/wiki/Unified_Payments_Interface" rel="nofollow">https://en.wikipedia.org/wiki/Unified_Payments_Interface</a>
2. UPI transactions over $100bn in Oct
<a href="http://timesofindia.indiatimes.com/articleshow/87474515.cms" rel="nofollow">http://timesofindia.indiatimes.com/articleshow/87474515.cms</a>
3. Search Google for "UPI in India"
You can't avoid fees if you're accepting card payments. One way or another you will be relying on multiple specialist services to access the card networks and they are each going to take a cut.<p>Cards are a broken and expensive payment method that needs to go away, and in some parts of the world that is already starting to happen, but it really depends on where your sales are. If you are aiming for customers in the US you're probably stuck with cards for now because it's what people and businesses expect to use.<p>However if you're selling to somewhere like Europe you might get a much better deal with alternative payment methods like SEPA and the national schemes. There will still be fees and risks but they can be much lower than you'll ever get with card payments.<p>Whichever payment method(s) you decide to accept you will still have to deal with the admin around taxes that has been mentioned elsewhere in this discussion. An alternative strategy of outsourcing everything to a specialist that handles both payment processing and tax admin is becoming increasingly attractive. As always if you're running a small business you might want to concentrate on whatever products or service you offer and outsource as much of the rest as you can. In this case the question isn't about how to avoid fees, because obviously you can't, but whether the amount you save is worth the fees you spend, which it easily could be.
In my country (Montenegro), at least one logistic company supports cash on delivery for physical goods shipped within the country. Specifically, a buyer orders something, a seller ships the package, the logistic company delivers package + papers, takes cash + buyer’s signature, pays the seller.<p>I never sold things that way, but I bought stuff couple of times paying cash.
US Centric answer:<p>If you're looking to accept card payments, then no. Both credit and debit cards have interchange fees[0] that are unavoidable. Strong negotiation with a payment provider can land you on an "interchange plus"[1] type fee schedule, which means that they pass through their costs to process the transaction and add some small fixed amount. Note that card interchange fees can range from essentially 0% (debit cards) to >2% fees baked into them. Rewards cards can reach 2.5%+ -- merchants pay for rewards on these cards and eventually pass the cost onto everyone else in the form of higher prices.<p>Now you could look at using something like ACH to automate bank debits. On paper, this could be as cheap as $0.10/txn. However, there's a litany of new issues to worry about. ACH payments take days to clear. The information needed to debit someone is printed on checks and given out, so now you've got a new authorization problem. People usually solve this with microdeposits or something like Plaid -- you're looking at more time and friction or more cost. People are not trained as well as with cards to punch their bank details into every other website.<p>Crypto adds a bunch of friction for unsavvy users, has no dispute flow (though I guess that's to your benefit as a merchant), and can have pretty variable costs.<p>Edit: at the end of the day, checkout completion rate is often more impactful than the fees. Other advice:
1) Try to negotiate with providers. You may not have sufficient leverage until you reach some scale, but it doesn't hurt to ask respectfully.
2) If you plan to grow your business for a long time: create local payments abstractions that make it easier to switch providers or support multiple providers later. Everybody has outages and this increases your negotiating leverage.<p>[0] <a href="https://en.wikipedia.org/wiki/Interchange_fee" rel="nofollow">https://en.wikipedia.org/wiki/Interchange_fee</a>
[1] Depending on the card distribution of your users, "interchange plus" can be more costly than a fixed plan.
You could accept Bitcoin as payment though your accountant may then find taxes frightening.<p>It's not practical really no. There are ways (the way people did it before stripe). But it's much more painful and buerocratic.<p>Stripe is quite friendly compared to the old way.
There is something called a merchant account that might be suitable: <a href="https://en.wikipedia.org/wiki/Merchant_account" rel="nofollow">https://en.wikipedia.org/wiki/Merchant_account</a>. I'm sure there are some fees associated with it but you should look into it and see if it will fit your use cases.
If all your customers are local to your own country then yes you can engage a merchant e-commerce solution usually provided by a local major bank.<p>These were popular before Stripe arose.<p>You can save fees BUT the application process is often much more manual and long. Also don’t expect add-ons like having a good API or strong reporting or analytics.
Don’t crypto exchanges use payment processors to transfer cash to bank account? I’m unsure about it though.<p>Likely only option is pickup and delivery with cash payment or keep crypto only never cash out.
I don’t think the latter is convenient though.
Take payment in crypto. Something like BCH if you want to minimize network fees. Programmatically move your funds to an exchange and convert to USD using your exchange’s API if you don’t want to hold crypto.<p>Easy weekend project.