Determine standardized volume pricing for card processing

[matin]

Balanced currently charges 2.9% + 30¢.

The 30¢ can't change since the card networks and acquiring banks charge this amount to Balanced. The 30¢ is a direct passthrough.

The pricing would work in the following way (per month). This is the standard model for tiered pricing:

1. up to tier 1 amount: 2.9%
2. for transactions that exceed tier 1 amount in that month: x%
3. for transactions that exceed tier 2 amount in that month: y%

There are two steps required for this task:

1. determine the tiers (no more than what is listed above)
2. determine the pricing for each tier

[matin]

PayPal pricing

I don't think it makes sense for Balanced to match this pricing. It's more difficult to provide card processing for marketplaces. Regardless, it's a reasonable benchmark from a large processor.

[kieftrav]

I agree that it's difficult to match pricing at those volumes, but what if you did it at a larger scale? Say $100,000+ monthly volume match 2.2% + $0.30?

I like the waterfall approach because then it removes issues when volume fluctuates significantly between months.

[matin]

@kieftrav waterfall model is definitely the way to go. In general, I think your going in the right direction.

PayPal's internal cost is also different. One, it's pure merchant processing. Two, they have such large scale.

Balanced has done discount pricing for early customers on an ad hoc basis, but I want to make sure anything standardized is sustainable for us. If it doesn't make business sense, then it's hard to ... well ... sustain it.

@mahmoudimus is working through different models right now.

[kieftrav]

Awesome. Looking forward to seeing an update on this.

[matin]

The main blocker on working on the models is getting Chase to give us full insight into everything. We're pushing them to move faster

[kieftrav]

Ahhh.... That makes sense and is understandable. Appreciate the explanation.

[jkwade]

@matin would we offer volume discounting for payout fees (25¢) as well?

[matin]

You can create a separate issue for that if you like, but I think 25¢
is very reasonable for next day.

[kieftrav]

Agreed.

[matin]

It hasn't been possible to standardize pricing; though, this is the ultimate goal.

Some customers process a disproportionately high number of American Express or international cards, which have a much higher cost than 2.9%. It's not possible to provide a discount for those customers. As a result, it's not possible to provide standardized volume pricing across all customers.

PayPal has been able to work around this issue through massive volume, which averages out the cost for all customers and by receiving discounted pricing from American Express and cost optimizations with international cards. Balanced is growing quickly, but we're still not at the same scale as PayPal.

[matin]

Closing out this issue until it can be revisited in the future.