Complacency with Payment Processing on the Web

Question

Stripe's pricing for payment processing on the web is 2.9% + 30&cent; per successful card charge. Paypal's is 2.9% + $0.30 per transaction within the US.It's disappointing that a per transaction pricing model is accepted as the status quo. It adds up.- Shouldn't an online transaction be a digital exchange of currency between two individual's bank accounts? Does it really cost that much?- Is there a good resource to view a breakdown of the fees at each step in the journey of a transaction?- What businesses are taking a cut that could be removed from the transaction?- Is there a possibility for disruption here similar to the way that Robinhood.com disrupted the "fees per trade" status quo?Thanks

smarri · Accepted Answer

This is a great question because there should be a more cost effective way. The current payment rails have a number of counterparties all taking a cut. I assume Stripes process is something like; stripe take a fee, stripes sponsoring bank takes a fee, the card network takes a fee, the other parties bank takes a fee. Card networks are more expensive than bank to bank payment networks (e.g. ACH in the USA, Bacs Direct Debit in the UK, SEPA for Eurozone). While there are the same number of parties taking a cut, the costs are cheaper. Plus payment companies get better rates based on bigger volumes. The disruption could be eliminating these middle men one by one, at the end of the day, money doesn't really change hands, it's just data being exchanged. And the banks accounts are settled at a net basis at the Central Bank.