Whether you’re already using Stripe to process payments or are considering doing so, there’s important news you should be aware of. So, what’s the scoop? Stripe has announced that it will be increasing its international card fee from 1% to 1.5%. Additionally, Stripe is altering its dispute policy, deciding not to refund sellers the $15 dispute fee, regardless of the dispute outcome.
In this blog post, we’ll delve into the specific pricing changes and their effective dates. Furthermore, we’ll explore how these adjustments will impact your business and offer strategies to navigate this new landscape. Read on for the full details.
The Current Pricing Model: What Are Stripe’s Current Charges for Merchants
Currently, Stripe offers a flat fee of 2.9% plus 30 cents for every successful card transaction when the card is issued within the United States. For international cards, issued outside the United States, an additional 1% fee applies, making it 2.9% plus 30 cents plus 1%.
The Escalation of Pricing in Cross-Border Payments Stripe is introducing the following changes to its pricing structure:
International Card Fee
Stripe has decided to raise the fee for international card transactions from 1% to 1.5%. This increase will take effect for all merchants starting in June 2023. The standard pricing for all U.S. card transactions will remain unchanged, set at 2.9% plus $0.30 per transaction.
Previously, merchants were charged a $15 fee when a customer filed a chargeback. In cases where the merchant won the dispute, this fee was refunded. However, Stripe’s recent update states that, starting from June 2023, no dispute fees will be refunded to sellers, irrespective of the dispute outcome.
What Does Stripe Suggest to Its Sellers to Minimize Costs Amid the Price Hike?
Stripe advises its customers (sellers) to consider offering alternative payment methods to their customers, as these methods are often less costly than card transactions. With Stripe, businesses have the flexibility to choose various payment methods and provide a localized checkout experience, ultimately reducing overall costs.
What’s the Reason Behind This Price Hike and Policy Change?
International Card Fee
Stripe, as a payment gateway, is closely aligned with various card networks, including VISA, MasterCard, AMEX, and more. These card networks have been imposing higher fees on Stripe for international transactions for an extended period. To offset the costs it has been bearing, Stripe is increasing the additional transaction fee, effective from June 2023.
Parallel to the international card transaction fees, card networks have raised other existing fees and introduced new ones. In response to these adjustments, Stripe has opted not to refund $15 to merchants, regardless of the dispute outcome, in order to cover these increasing expenses.
Despite the rationale behind these price changes, they can have significant implications for businesses of all sizes. Let’s explore how these changes may impact your business:
1. Increase in Pricing
The most immediate impact of the fee increase is the higher costs that merchants will have to bear. If your business processes a significant volume of international payments through cards, this fee hike could substantially affect your revenue, ultimately impacting your bottom line.
2. Impact on Customer Experience
Should you decide to pass on the increased costs to your customers, you might inadvertently impact their experience negatively. While this may seem like a prudent financial decision, it could lead to customers migrating to competitors, resulting in decreased sales and revenue loss.
3. Unnecessary Revenue Loss
Chargebacks, designed to protect consumers against fraud, can inadvertently be exploited for fraudulent purposes. For merchants, this can lead to substantial revenue losses, as chargeback fees apply regardless of the dispute’s resolution.
4. Overall Business Impact
For businesses heavily reliant on a single payment gateway like Stripe, these changes may have a detrimental impact. As a response to cost-saving pressures, you may begin searching for alternative payment gateways, a transition that can be time-consuming and costly. During this period of transition, there’s potential for lost sales and financial impact on your overall business.
How Can Web Technology Experts Stay Resilient to Such Price Hikes or Policy Changes?
Web technology experts can mitigate the impact of pricing adjustments through the following strategies:
1. Reduce Dependency on a Single Payment Gateway
Leverage a payment aggregation platform like Web Technology Expert, which connects you to more than 30 payment gateways, providing multiple options. If one payment gateway experiences a price hike or service interruption, you can seamlessly transition to a more reliable and cost-effective alternative, enhancing flexibility and resilience.
2. Reduce Payment/Transaction Fees
An advanced platform like Web Technology Expert allows you to route transactions through the most cost-effective payment gateway with a simple configuration. This can lead to a reduction in transaction fees, ultimately saving your business money.
3. Reduce Overall Costs
Promote alternative payment methods (APMs), such as digital wallets and UPI, which are often more cost-effective than credit and debit cards. Web Technology Expert, with its extensive network of payment gateways, enables you to offer a wide range of local and global payment methods, reducing reliance on traditional card payments and lowering overall costs.
4. Optimize Checkout Experience
Web Technology Expert provides the tools to customize and optimize your checkout process based on your customers’ preferences, enhancing the overall experience and reducing churn, which can improve conversions.
Price hikes and policy changes are common occurrences in the finance and payments industry. Businesses can effectively navigate these changes by leveraging payment orchestration solutions like Web Technology Expert. The primary advantage of integrating a payment orchestrator is the reduced dependence on a single payment gateway. With access to multiple options, sudden pricing or policy changes have minimal impact on your payment operations.
Web technology experts can ensure business continuity, financial resilience, and a superior customer experience by embracing flexible payment solutions, such as Web Technology Expert, which provide adaptability and cost-efficiency in an ever-changing payments landscape.