[ccollins]

In a marketplace model (e.g. ebay, airbnb, amazon, seamless / any food delivery), the take rate generally falls between 10%-20%.

Credit card processing fees are somewhere around 2% - 3%, so in a marketplace with all credit card transactions, impact on margin will be 6% - 30%.

If that marketplace can implement alternative payments (e.g. ACH, bitcoin, etc), impact on margin can get down below 5%. Not sure how the ebay / paypal integration influences this - would be interesting data.

One additional method to reduce margin for marketplaces is to allow transactions to occur offline and then invoice the seller based on a % of the total amount. Then your impact on margin will be exactly what your processing fees are.

There will be much different dynamics for different revenue models (e.g. as patio11 said, in SaaS, it is basically irrelevant).

So, I argue that % impact on margin is not a very useful metric unless you are comparing a specific revenue model in a narrow vertical.

Would you rather have $10B of margin with 50% going to processing fees or $1M of margin with 0% going to processing fees?

[tomasien]

Good point, but for me right now this is a more useful question.

2-3% is incorrect - it's 2-3% + $.30 a transaction. Keep that in mind - for anything under $30 the $.30 is a bigger deal than the 2-3%, anything over $200 the $.30 has largely ceased to matter and the % is what is relevant.

[pochi]

There are some processors that don't have a fixed cost (the 0.30/transaction), like Square. That should shave a lot of pain off taking card, no?

[tomasien]

2.75% for in person transactions is what Square does, and it's a disaster. That's higher than they're generally paying. They're ostensibly doing that for online payments too, but that's only for Square Wallet, which is proximity and in-person as well.

You can't take Square online and only pay 2.75% - if you could though, that'd be amazing!