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[Commerce]Fee for payment options


SjorsK
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Hi! 

I would like to see an option to charge money for using a partular payment method. The reason that some payment methods tend to get more expensive over time (Paypal does that quite a bit and demands a higher cut with regular intervals).

Some insight into our payment flow with clients:
- Client places purchase (Around a 3% fee) - This fee depends on the country and is an approximation. 
- We withdraw money in USD (3% fee. As that is not the home country, but we use it for payments to international partners)

Effectively making out transfer costs around 6% and I'm not willingly to eat a fee larger than 3.5% for payment processing without calculating this directly to the client. That said, I want to give our clients also the option to not be charged the additional fee if they choose an alternative payment method. 

As of such it would be nice to have the ability to add a fee for usage for a specific payment option. 🙂

Edited by Sauren
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1 hour ago, Sauren said:

Hi! 

I would like to see an option to charge money for using a partular payment method. The reason that some payment methods tend to get more expensive over time (Paypal does that quite a bit and demands a higher cut with regular intervals).

Some insight into our payment flow with clients:
- Client places purchase (Around a 3% fee) - This fee depends on the country and is an approximation. 
- We withdraw money in USD (3% fee. As that is not the home country, but we use it for payments to international partners)

Effectively making out transfer costs around 6% and I'm not willingly to eat a fee larger than 3.5% for payment processing without calculating this directly to the client. That said, I want to give our clients also the option to not be charged the additional fee if they choose an alternative payment method. 

As of such it would be nice to have the ability to add a fee for usage for a specific payment option. 🙂

Hey @Sauren, Jordan here. Thanks for putting in the suggestion! Would love to try and get a better understanding. Wondering... why not adjust the cost of your item to account for the fee(s)? 

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I've had a lot of conversations with different entities who dislike payment processor fees, and who inevitably come up with the idea of charging a premium for using a certain method of payment. While I'm sure there are processors where this is not the case, many have terms in their agreements that in order to use them you need to charge the same as payment via another method. As @Jordan Invision pointed out, you might consider repricing your offerings to factor in this cost as a function of conducting business, though it's understandable that you may not be able to do so for competitive reasons.

Review your agreements carefully to make sure that you won't run afoul of your payments processor in charging a fee for this that would not apply to those paying by some other means.

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2 hours ago, Sauren said:

(Paypal does that quite a bit and demands a higher cut with regular intervals).

Noticed you mentioned PayPal:

https://www.paypal.com/us/webapps/mpp/ua/useragreement-full#accepting-payments

See the section on No Surcharges.

Quote

You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services as long as the handling fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions.

 

Edited by Paul E.
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10 minutes ago, Paul E. said:

I've had a lot of conversations with different entities who dislike payment processor fees, and who inevitably come up with the idea of charging a premium for using a certain method of payment. While I'm sure there are processors where this is not the case, many have terms in their agreements that in order to use them you need to charge the same as payment via another method. As @Jordan Invision pointed out, you might consider repricing your offerings to factor in this cost as a function of conducting business, though it's understandable that you may not be able to do so for competitive reasons.

Review your agreements carefully to make sure that you won't run afoul of your payments processor in charging a fee for this that would not apply to those paying by some other means.

 

5 minutes ago, Paul E. said:

Noticed you mentioned PayPal:

https://www.paypal.com/us/webapps/mpp/ua/useragreement-full#accepting-payments

See the section on No Surcharges.

 

 @Paul E. coming through like
 

giphy.gif

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10 hours ago, Jordan Invision said:

Hey @Sauren, Jordan here. Thanks for putting in the suggestion! Would love to try and get a better understanding. Wondering... why not adjust the cost of your item to account for the fee(s)? 

I don't think that it's fair for me to adjust pricing for all clients just because one payment processor (out of multiple) has thrown out a major price increase of +3% for  our use case. I wish to continue to deliver the same value and services for the same price whenever possible 🙂 I don't want to punish our clients for a decision made by PayPal if possible. But if they still wish to use it, they can of course pay a part of the additional costs we make for using paypal (compared to other services like stripe).

I would say that charging 3% more to paypal users would be fair considering the price increase for withdrawal are increased with 3%.  

Also, in regard to the point. It states in my local version of the user agreement that it may only be done if law allows (Which it does over here, as it's illegal for one party to dictate the pricing of another party) and that they "discourage" using of difference pricing (Where I actually agree as this is not the best option. But when a party is around 6% I'm willingly to charge more to clients around 3% extra for new clients. It's a bit more subtle 🙂 I know it's common practice in my country to charge more for clients that wish to use paypal. 

(Note: It's not that something is wrong with a party having a fee, I'm happy to pay it. But at a certain point it can be too much. At around 6+% for all transactions that's definitely the case). 

Here the google translate version of the local user agreement:

 

 

Quote

 

PayPal does not encourage surcharges because it is a business practice that can punish the consumer, creating unnecessary confusion and rubbing and causing purchases not to be made.

You may only charge additional fees/surcharges for the use of our Services in accordance with laws that apply to you and do not exceed the additional fees you charge for using other payment methods.

If you take additional fees/surcharges from a buyer, you will, and not we, inform the buyer of the cost. We are not responsible to buyers you have failed to disclose any charges. You understand that it may be a criminal offence to charge an additional fee and/or not disclose the supplement to a buyer.

 

 

 

 

Edited by Sauren
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  • 2 months later...
On 1/30/2021 at 4:27 PM, Sauren said:

It states in my local version of the user agreement that it may only be done if law allows

If anybody using WHMCS, they have it in their marketplace

https://marketplace.whmcs.com/product/1294-payment-gateway-charges-for-whmcs

 

The other workaround for this transaction fee could be only allow user to buy using their account credit.

User can choose available payment method to top up. 

When they top up $100, we only credited them in their account the amount after the transactions fee. So if transaction fee is 6% + $0.30, user will be credited $93.70 into their account.

In this case users are not purchasing any goods or services from us and are merely opting to add funds in their debit account with us. They can choose to request a refund from this debit account at any time without ever making a purchase. These type of transactions can not be termed as a sale since the users is not buying anything from us at this point. Therefore, we can pass on the Transaction Fee levied upon us by PayPal to the users.

😊

Edited by Umaar
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  • 1 month later...

Let's take PayPal out of the view, It would be still very good to implement this, I could use it with Stripe(or any other Gateway).
Maybe even a "discount" for certain payment methods like "Crypto" so they get a 5% cheaper.
Yes, it would be already possible with Coupons and multiple products, but that would clutter the store full of duplicated products...

In general, it would be a perfect addition to IPS.
I tried adding TAX to certain Products/Payment methods, but it's just a mess in general.

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  • 3 weeks later...

I managed to solve it 🙂

Please note that I don't use products but only one subscription type, which opens up a bit more flexibility in terms of a quick purchase process if you are a bit creative. 

Basically the idea is to set up a page (in pages) with two different subscriptions in the front of the flow that looks like this: 

Capture.PNG.1bd6966b1954567601417a696e8a430a.PNG


 

Each checkbox effectively generates an invoice of a specefic subscription. (The select is to promote the preferred route...)

I am aware that this implementation has it's downsides, but it's what works best for me. 

Here is the code that is behind every checkbox (and the select button) to make it possible to subscribe though it 🙂

<a href={url="app=nexus&module=subscriptions&controller=subscriptions&do=purchase&id=<SubscriptionID>" csrf="true"} alt="Subscription">

Some things to watch out for:

  • Do not add those options to the paymentForm for guests... Clicking the button generates a new invoice, guests will be required to re-enter their details as that is invoice based. (It works well for registered users though).  This was the reason why I created an extra step. 
  • Do not have more than one payment method active for a subscription where you use this method. Otherwise people will have the option to chose between these later which is messy. 
  • Add the page where you sell it to robots.txt to prevent google from crawling the links (prevents some invoice spam 🙂 ). 
  • Be aware that users might drop off with a higher price. 
  • A user can only have one active subscription at once, otherwise things go kaboom... (I have an access check in place to prevent subscribers from accessing the buy button 🙂 ). 
  • IPS will obviously not support this 🙂 Use at your own peril. 
  • I do not recommend implementing this if you do not know what you do.  Tinkering around with billing systems can definitely either improve your bottom line, or simply ruin it if you screw up (Both technically and legally).
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  • 6 months later...
On 1/29/2021 at 10:46 PM, Jordan Miller said:

Hey @Sauren, Jordan here. Thanks for putting in the suggestion! Would love to try and get a better understanding. Wondering... why not adjust the cost of your item to account for the fee(s)? 

Explanation is straight forward WHY NOT. Taxing.. including the fees directly in product complicates putting it in costs or removes your ability of excluding it from taxing if your company is on lump-sum tax rates rules. In result? It puts selling company on loss. There are ways to workaround it but it is costly accounting service.

I know selling in US is much simpler but EU and rest of the world have much more complex taxing rules. Therefore need to consider that.

Edited by PatrickRQ
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Since some in this topic are probably in the EU, I add this relevant information:

Quote

Please note that EU Directive 2015/2366 bans surcharging payment fees for most common payment methods within the European Union. Depending on the payment method, this might affect selling to consumers only or to business customers as well. Depending on your country, this legislation might already be in place or become relevant from January 2018 the latest.

 

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1 hour ago, opentype said:

Since some in this topic are probably in the EU, I add this relevant information:

 

The EU can't even keep up with their GDPR law, not to forget the countless cookie popups where most of them don't even have any logic behind them. I think as long as this isn't enforced more strictly, I don't think anyone has to worry about something like surcharging payment fees unless you're a multi-million company, if even that.

That's just my personal opinion though and doesn't represent the law obviously.

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