Enemy At The (Billing) Gates

An online payment of USD 150 generates USD 14 for the middlemen.

If you sell any product/service online, the journey of money from a paying customer to your bank account has a story to tell.

We launched Send With SES a few months ago. Currently Send With SES accepts only USD. This means, if you are a customer outside USA, you are charged in your local currency but your bank/card company pays us in USD. Send With SES is based in Singapore. So Stripe (our payment gateway) which receives this USD amount on our behalf, converts it to SGD and transfers it to our bank account.

Well, that’s the theory. Let’s see a real life case ...

A customer (and friend) from India recently subscribed to our Medium Plan ($150).

Expectations ...

Customer expects to pay USD 150 (INR 10,620) and Send With SES expects to receive USD 150 (SGD 204).

Reality ...

  1. Customers Bank adds its fees and charges Customer INR 11,049 (USD 156)

  2. Stripe receives: USD 150 (SGD 204)

  3. Stripe currency conversion charges: 2% x 204 = SGD 4

  4. Gross Stripe Amount: 204 - 4 = SGD 200

  5. Stripe charges: 3.4% x 200 + 0.5 = SGD 7.3

  6. Net paid by Stripe to Send With SES: 200 - 7.3 = SGD 192.7 (142 USD)

In effect, this is what has happened ...

  • Customer expects to pay USD 150 but pays USD 156

  • Business expects to receive USD 150 but receives USD 142

  • An online payment of USD 150 has generated USD 14 for the middlemen.

There is nothing wrong in this. Banks and Payment Gateways like Stripe play a 'valuable' role in the movement of money. This is the price we pay for the ease of doing business.

Bank and Payment Gateway charges can be significant. You need to account for these in any CashFlow Projections you do. I would suggest you calculate these charges at 5% of your revenue.

Just understand that when it comes to online payments, you always pay more ...

Customer bank statement

... or receive less than what you expect.

Stripe statement for Send With SES

There are few ways to reduce these charges ...

  1. Show and accept prices in local currencies so your customers know exactly how much they are paying. Stripe and most other payment gateways allow you to do this.

  2. Get a bank account which accepts the same currency as your settlement currency. This will help you avoid currency conversion charges.

  3. Register your business in a low-stripe-charge country.

  4. If you have a large payments volume, you can negotiate with Stripe (or your payment gateway) to reduce them.

Do you know of any other ways? Let us know .. hello<@>sendwithses<.>com.

Note: All currency conversions done using xe.com on 31-October-2019