Stripe, the financial services company, boasts “always know what you’ll pay.” But for many businesses it’s much more complicated than simple, pay-as-you-go pricing.
In addition, almost all businesses have direct and indirect costs associated with the tools they use.
So how much are Stripes fees really?
In terms of direct costs, Stripe charges ~2.9% + 30c per transaction online across domestic card only transactions. If you have a foreign card, the fees increase by 2%, which includes a 1% international card fee and a 1% currency conversion fee.
A SaaS company recently interviewed dozens of businesses and found that actual Stripe payments ranged from 4% to 8% of their total revenue. Despite the platform being perceived as transparent their payments were significantly more than Stripe’s base charges.
So where do these extra costs come into play?
Stripe offers another 20 or so products that are often required for you to operate your business in addition to Stripe’s payment processing fees. Once you start using these products, Stripes pricing becomes a bit more complicated.
In the scenario of a B2B SaaS solution, Stripe uses example companies like Zoom and Slack. In order to build a unified SaaS solution with Stripe billing and payments and more, the total costs increase significantly.
The below is a breakdown of the B2B SaaS solution with national card payments only where additional fees apply for bank transfers or other payment methods.
Stripe Billing – 0.8% of revenue for subscription management
Stripe Checkout – additional $10/month for custom domain name
Stripe Payments – 2.9% + $0.30 per transaction (+1% international +1% currency conversion) for processing payments
Stripe Tax – 0.5% per transaction for tax collecting and reporting
Stripe Data Pipeline – $0.03 per transaction for data exports and data warehousing
Total costs: 4.2% of revenue +$0.33 per transaction +$10 monthly
And an additional 2% should you process any international transactions.
In a Vertical SaaS model, the required setup costs would be the same as the B2B SaaS solution above but would also use Stripe Connect to redirect merchant payments.
Vertical SaaS typically has two revenue streams:
- Standard SaaS like the example above
- Commission fees as a percentage of the merchants’ revenue (Stripe Connect)
This would increase your costs by $2/month per active account with a transaction fee of 0.25% + $0.25.
So now typical direct costs for Vertical SaaS looks like:
4.45% of revenue + $0.28 per transaction +$12 monthly.
The above costs however do not consider indirect costs. Indirect costs include additional applications required on top of Stripe Billing to make it easier to use Stripe. Many Stripe products only work with other applications within its ecosystem.
In the event you were using Stripe for billing and wanted to use another payment provider in addition to Stripe, like Paypal for instance to give your customers more payment options to choose from. You would not be able to without switching for another billing solution.
The more you rely on Stripe the harder it is to diversify your business for your own customers needs. If both your Billing and Payments are done through stripe, switching payments solutions can be extremely costly.
Using a billing solution that is payments agnostic connecting to any type of payment processing can help your business better serve your customers and potentially decrease overall costs of operations. You’re better off starting working with companies who help improve your customer experience.