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Stripe Terminal Cost Effectiveness: How Stripe Terminal Saves Businesses Thousands In Fees

Stripe Terminal Cost Effectiveness: How Stripe Terminal Saves Businesses Thousands In Fees

by Mike Ricotta - May 27, 2020

If you’re wondering about Stripe Terminal cost effectiveness, read on…

How can small businesses maximize Stripe Terminal cost effectiveness to reduce credit card transaction fees and save thousands? How do you reduce Stripe fees? These are all important questions. In this blog we’ll explore how Stripe can help save you money.

With a structure that offers discounted fees for in-person transactions, Stripe Terminal can save you thousands on credit card transaction fees each year. When comparing to Stripe’s online payment fees, you can see how making the switch is the right business decision.

Small businesses can expect to pay anywhere from 2.6% to 3.5% per transaction as well as an additional small fixed cost 5¢ to 30¢ per transaction. While these may seem like a small price to pay in order to take credit card transactions, these fees can add up to thousands by the end of the year. The average small business on Stripe can save up to $3,000/year in fees by switching to perform in-person transactions on Stripe Terminal.

The Three Fees

There are generally three types of fees you will pay for using a payment gateway solution like Stripe; Transaction fees, Flat fees, Incidental fees. 

Transaction fees are typically a percentage of the bill plus a fixed amount. With Stripe Terminal you will pay a 2.7% + 5¢ fee per transaction. These are reduced from Stripe’s normal transaction fees of 2.9% + 30¢ per transaction. Flat fees are paid to the gateway or merchant provider. You can think of Flat fees as your subscription to use the payment solution software, costing anywhere from $25 to $50 a month. Incidental fees are charged in the event of a problem with a transaction. Chargeback or non-sufficient funds are the most common here.

As Transaction Fees have the biggest impact on a business, we are only going to focus on these in our breakdown.

Where Stripe Terminal Fees Saves You

According to an analysis of 2018 in-person transactions of over 52,000 US small businesses conducted by Womply, small businesses conduct, on average, 13 daily transactions, costing $74.65 per. With the Low-End being 9 daily at $50.30 per and the High-End at 19 daily transactions costing $91.70 per. 

To help show how much these small fees add up over a year we will map out the Low, Average, and High range yearly costs.

Low-End Yearly Transaction Fees

9 transactions/day = 3,285 transactions/year and $50.30 per transaction

Switching to Terminal Stripe Stripe Terminal Savings
% of Total / Year $4,791.83 $4,461.36 $330.47
Fixed Cost / Year $985.50 $164.25 $821.25
Total Fees / Year $5,777.33 $4,625.61 $1,151.72

Average Yearly Transaction Fees

13 transactions/day = 4,745 transactions/year and $74.65 per transaction

Switching to Terminal Stripe Stripe Terminal Savings
% of Total / Year $10,272.21 $9,563.78 $708.43
Fixed Cost / Year $1,423.50 $237.25 $1,186.25‬
Total Fees / Year $11,695.71 $9,801.03 $1,894.68

High-End Yearly Transaction Fees

19 transactions/Day = 6,935 transactions/year and $91.70 per transaction

Switching to Terminal Stripe Stripe Terminal Savings
% of Total / Year $18,442.25 $17,170.37 $1,271.88‬
Fixed Cost / Year $2,080.50 $346.75 $1,733.75‬
Total Fees / Year $20,522.75 $17,517.12 $3,005.63

As you can see there are dramatic increases in saving as both the number of transactions and the price or each transaction increases. So whether you are only conducting 10 in-person transactions a day or 30, switching to Stripe Terminal to reduce credit card transaction fees will pay for itself multiple times over.

If you have any questions about how to make this change feel free to give us a call at (541) 649-2508 or email us at Stripe@ArcaneStrategies.com.

We have written a lot about Stripe Terminal cost effectiveness in our blog, you can read more here!

And remember, be sure to check out our Stripe Terminal for WooCommerce plugin offering.



About The Author:
Mike Ricotta

Mike is a veteran of Madison Avenue digital media, with over a decade of professional experience. As an expert in digital media, Mike has been a partner in founding several web and apps products, has built 3 international development teams through acquisition, and appeared on media networks and publications such as CNBC, Fox Business, Bloomberg, Business Insider, and CIO Magazine, among others. More information on Mike may be found on his personal website: https://www.michaelricotta.com/