How to reduce credit card processing fees?

Minimizing credit card processing fees

It's super convenient to have students pay you online with a credit card. On Ubindi, payment processing happens with Stripe, where money flows directly into your bank account. For this service, Stripe charges "processing fees" that are actually put in place by the credit card companies themselves (Visa, Mastercard, AmEx, etc). These fees are unavoidable for any merchants anywhere in the world that accept credit cards, until we all start using crypto-currencies and transacting in Bitcoin. Of course, that's why credit card companies are very profitable. You can minimize your credit card processing fees by understanding how they work.

Stripe fees vary from country to country — find your country in the table below:

Country

Stripe Fees

US

2.9% + $0.30 per successful card charge
UK
1.4% + 20p
for European cards
2.9% + 20p
for non-European cards
Europe
1.4% + €0.25
for European cards
2.9% + €0.25
for non-European cards
Australia
1.75% + 30c
for domestic cards
2.9% + 30c
for international cards

Mexico

    3.6% + 3 Mex$ per successful card charge, excluding IVA 

Brazil

3.99% + R$0.50 per successful card charge

    Singapore    

3.4% + S$0.50 per successful card charge

Canada

2.9% + CA$0.30 per successful card charge

Japan

3.6% per successful card charge



As an example, if you're in the US, regular credit card fees are 2.9% + 30 cents. At a glance, this might seem pretty small... but things can add up. In addition to the regular fees, there can be additional charges. For example, sometimes clients will pay for different things in different currencies. Thankfully, Stripe will automatically convert all funds into your "home currency" — but will also charge you extra for this convenience. 

To help you reduce credit card costs as much as possible, here are some guidelines and tips: 

A) Encourage students to buy passes and memberships

Credit card processing fees are actually larger when the cost of something is smaller. That's because the "+ 30 cents" in the Stripe fee structure adds up to a larger percentage of the total payment amount
For example, on a $10 yoga class, 2.9% is only 29 cents. But the "+30 cents" amounts to an additional 3%! This means that Stripe will collect 59 cents, or nearly 6%, on a single class booking.

Things get worse for classes that are priced even lower. Many teachers are pricing their online classes much lower than their in-person classes, which can make sense: for online classes, your overhead is very low, you can accommodate lots of students in one "room", and perhaps the online experience is not as great as a live, face-to-face thing. Or, another common scenario where small transaction amounts happen is with "donation based pricing": on Ubindi you can set your classes to be 'by donation', where clients might choose to pay a very small amount for a class, for example $2.

Well, for a $2 charge, Stripe will take 20% of your earnings! And when someone pays you $1, more than a third of it goes to Stripe. The following chart illustrates this:


In short, if you have lots of people paying you small amounts for many individual class registrations, you might be handing a big part of your revenue over to the credit card companies. This is just one of many reasons why it's a good idea to offer packages to students, and to encourage their usage by offering people discounts in your packages. 

B) Make sure your currency is set correctly 

Additional credit card fees happen whenever currency conversions are involved. Ubindi payments work in most countries, but the default pricing currency for your classes and passes is in US Dollars. So, if you're outside of the USA, you can and should change the currency that your offerings are priced in. In addition, some teachers might connect their Stripe account with a bank that's located in a different country from where they or most of their students are located... this can lead to additional costs.

If the bank account for your Stripe account is in one currency, but you've set the currency of your offerings to another currency, Stripe will convert all payments into your "home" currency automatically. That's a great service — but they will charge you 1% for it. And if a student pays for something using a card that's normally in a different currency from the currency you accept, Stripe charges ANOTHER 1% (since the student is using an "international card").

This means if you set up Stripe with a UK bank account, but your classes are in US Dollars, and then your clients are in the UK paying with a UK card, you will end up paying an additional 2%, on top of the normal fees in the UK (1.4% + 25p). And for no reason: the student payment in Pounds is converted to US Dollars which is then converted back into Pounds to get to you!

C) Memberships (subscriptions) carry a small extra fee

Recurring (subscription) charges carry an additional 0.5% in Stripe processing fees.
This is really just for your information — we still highly recommend that you offer memberships to your students, where they are billed automatically each month or each year. Recurring revenue generally is a great way to boost to your business, and the monthly payments amounts are (usually) large enough for the extra 0.5% processing fees to only make a small dent in your bottom line.

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