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Who to charge payment gateway fees

by Claire1990
8 replies
Hi there,

I am looking to start a marketplace and require a payment gateway that allows the customer to pay a total for their basket, but then funds are split between the vendors associated and myself.

This is fine, I have a list of payment gateways that do this.

Could you please advise who should pay the payment gateway transaction fees?

As you know the transaction fees vary depending on the card/ currency. The annoying thing about them is that whilst some do not have a refund fee, they still do not refund the processing fee. So someone must pay.

I was thinking to charge the vendor? But this can become discouraging.

Or increase my commission to cover the costs? That way when a refund does take place they do not get frustrated?

Please help!
#avoiding #charge #fees #gateway #marketplace #payment
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  • Profile picture of the author GordonJ
    Originally Posted by Claire1990 View Post

    Hi there,

    I am looking to start a marketplace and require a payment gateway that allows the customer to pay a total for their basket, but then funds are split between the vendors associated and myself.

    This is fine, I have a list of payment gateways that do this.

    Could you please advise who should pay the payment gateway transaction fees?

    As you know the transaction fees vary depending on the card/ currency. The annoying thing about them is that whilst some do not have a refund fee, they still do not refund the processing fee. So someone must pay.

    I was thinking to charge the vendor? But this can become discouraging.

    Or increase my commission to cover the costs? That way when a refund does take place they do not get frustrated?

    Please help!
    Build that cost into your gross profit, it eliminates a lot of hassle down the road, just have it as a cost of your business and you pay for it, one way or the other, getting third parties involved, can get messy.

    Just one opinion.

    GordonJ
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    • Profile picture of the author Claire1990
      Hey Gordon,

      Thanks for that, very strategic! However like I mentioned to Ashkay, i cannot seem to include these fees as of my own using Stripe. Also, when a customer returns an item, the processing fee is not returned. If I try covering these fees with a higher commission and without the vendor realising, when a customer returns an item, the processing fee is not refunded however the vendor will expect their full commission paid, back.

      So lets say my commission is 10% originally. Transaction fees vary anywhere between 1.4 to 2.9% + 20/30p. If I raise my commission to 13/15% (average for a marketplace is 10%) to cover the processing fees, and a customer decides to return an item. The vendor will expect the full 15% back and I incur a loss.

      How do you suggest I go about this.
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  • Profile picture of the author akshay7
    That's a very subjective question. Depends on your relationship with the vendor. If you can markup your products without losing sales, that is the best. (You don't have to give breakup of the cost to buyer).
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    • Profile picture of the author Claire1990
      Originally Posted by akshay7 View Post

      That's a very subjective question. Depends on your relationship with the vendor. If you can markup your products without losing sales, that is the best. (You don't have to give breakup of the cost to buyer).

      Hey ashy,

      thank you for your reply! Thats what I thought but I cannot seem to take on vendor fees with the standard stripe connect account. It seems all a little much for the vendor, i'm worried about how I can convince them to join even, now!
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  • Profile picture of the author Claire1990
    [Threads merged by moderator]


    I had posted something similar to this however not addressing exactly the same issue. As you probably know, payment gateways charge a fee ontop of the commission I charge vendors, nevermind the currency conversion fee vendors may also incur, and the risk of not getting the transaction fees back when a refund is to take place. It all seems a little too much for vendors. I was wondering whether anyone knew of a way to reduce/ avoid these fees where possible.? PLEASE HELP. I am running out of ideas
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  • Profile picture of the author Oziboomer
    Are you talking about a drop shipping situation where you are selling a number of products from different vendors?

    If it is your payment gateway account that is processing the sale then the fees and associated charges are your responsibility.

    You should increase your margins to allow you to cover those expenses as they are an everyday component of doing business.

    Best regards,

    Ozi
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    • Profile picture of the author Claire1990
      Hi, thank you for your message Ozi!

      No, its not a dropship marketplace. Its a multi-vendor marketplace where I act as an agent between customers and vendors; when customers place an order, the vendor is responsible for posting those items to the customer.

      The payment gateway I have chosen is STRIPE. They impose the fees on the vendor. I 'm worried this can get a little discouraging for vendors as they must pay my commission + transaction fees + any currency conversions.

      I was thinking of not using a payment gateway to avoid these fees but that is the only way I can get split payments as well as the fact that they provide fraud protection + onboard vendors. Is there anyway you suggest to reduce these costs/ make it less financially heavy for the vendor/ know of a software that does split payments but does not include the fees?
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  • Profile picture of the author Brent Stangel
    How do other marketplaces handle it?

    I would assume it is in their vendor TOS.

    Brent
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