Processing Payments

Credit Card Processing Fees. We all hate them. Below are the current (as of May 10 2020) fees for some of the most popular processing companies

These all have programs/offers to receive free readers (or readers not needed) for their payment services.

Stripe: 2.9% + $0.30

Square: 2.6% + $0.10

Square (type in manually): 3.5% + $0.15

Paypal (online): 2.9% + $0.30 (4.4% if outside US)

Paypal (in person): 2.7% (4.2% if outside US)

Paypal (manual entry): 3.5% + $0.15

Clover was excluded due to the membership fee/product fee required to process payments

I’ve included manual type in and online transactions because we are in times of COVID-19. Alternative payment methods (ie over the phone or online) are increasingly popular to help stop the spread of the virus

The Best

Physical Card Present

  • $100 or less: PayPal

  • over $100: Square

Manual Entry:

  • $25 or less: Square or PayPal

  • over 25: Stripe

Online:

  • Square

These fees do not take into consideration any other “hidden” fees. For example: I sell tee shirts and gear on my website. My website is hosted on squarespace. The type of account I have on Squarespace has additional fees which are essentially end up doubling the amount of money you are paying in fees. Stripe is integrated into Squarespace’s platform (and not Square-which would be better) but collects its own fees as outlined above. I can pay more per month to get rid of these Squarespace fees but choose not to because it’s not worth it for us.

Alternative Options:

There are plenty of options out there to accept payment that don’t require a card at all. Many of these are free of charge (that’s right…no fees!)

  • Good ole US Government Issued Legal Tender ie CASH (IS KING)

  • Venmo

  • CashApp

  • PayPal (transfer rather than cc processing)

  • Apple Pay

  • Zelle

  • Google Pay

These are the most common ones you will come across. Of course, you can utilize different features on every one of these app/services listed (in the entire article, not just immediately above) to cut down on fees. For one example: you can send people “Invoices” on Square". This costs you 2.9% = $0.30 per invoice (lower than the manual type in) but you run the risk of people just simply not paying them. There’s also the scenario where the invoice goes to spam, or the wrong number, or the number doesn’t get texts, or you mistyped the email address etc etc. I simply skip the Invoice feature altogether since it has caused me MANY headaches while working at International Travelers House in San Diego.

Side note: i try very much to avoid any service (mainly reservation software) that automatically/requires a deposit charge. For example the reservation software “HostelSnap” requires a deposit. This costs you a cc processing fee. The guest then pays the remainder when they get there (another cc processing fee if they use their card) [Additionally HostelSnap charges per transaction—rather than having a monthly fee] so you can weigh your options and see what works for you. It doesn’t work well for Barn Door Hostel as most of our guests are paying cash, our rates are already low, and hate fees.

For anyone interested in my methods of calculations: I graphically plotted each function and found the intersecting point to figure out the $25 and $100 price points stated above.

The functions I used were

Stripe: y=x-(x(0.029)+0.30)

Square: y=x-(x(0.026)+0.10)

Square (type in manually): y=x-(x(0.035)+0.15)

Paypal (online): (same as stripe)

Paypal (in person): y=x-(x(0.027))

Paypal (manual entry): (same as square manual type)

To find the intersecting points just set the Y functions equal to each other. If the intersection is negative on x axis, then the upper function is always better

Let me know what you think in the comments below. Did I miss something? Mess up on maths? (its been a long time since plotting functions)

Looking forward to your input!!