How to save on online payment service fees
When you accept online payments for your events, they are subject to online payment service fees, which are always composed of credit card processing fees and usually some kind of an online service fee. In order to process any credit card payment, whether online or in a physical location, merchants always have to account for payment processing service fees. If you are new to this process, learn How Credit Card Transaction Processing Works — Steps, Fees & Participants.
These payment service fees are directly deducted by banks or credit card companies during the payment transaction, and cannot be avoided. Payment processing fees and online service fees are part of running a business and are considered a business expense. However, if you would like to save on these fees, you can try to minimize them or pass them on to your customers to pay. Described below are three ways of how you can achieve this to save on these fees.
Minimize Fees: Find the most cost-effective online registration service.
- Some event registration platforms provide services based on monthly plans that you would commit to, based on your business needs. These can range from moderate to very high monthly costs and are usually not a good idea if you don't offer events regularly or if you offer small-sized or low-cost events.
- Some event registration services take a percentage fee per transaction of your total event price. This may be a good option if your event price is very low but will add up significantly if your event price is moderate to high.
- Some event registration services charge a flat fee per transaction without any monthly commitments and irrespective of your event ticket price. As long as this fee is low and your event price is not too low (less than $10), this option will usually provide the most savings and flexibility. This is how Corsizio operates, as we aim to provide the most flexible and cost-effective solution with our low-cost flat $1 service fee for online registration payments.
Minimize Fees: Use a deposit feature for high-cost events.
- $10 event = $0.59 in credit card fees
- $100 event = $3.20 in credit card fees
- $500 event = $14.80 in credit card fees
- $1000 event = $29.30 in credit card fees
- $10,000 event = $290.30 in credit card fees
Pass the Payment Fees Onto Your Customers
1. Mask the fees, and bundle them as part of the event cost
Using this method you would include the online payment processing fees as part of the total cost of an event registration.
This is the preferred choice if you think your attendees may be discouraged from registering for your event if they see an extra cost. To do this you need to raise the price of the event by the amount needed to offset the payment processing fees.
Here is the formula that you would use, as an example, with Corsizio's $1 service fee and the US and Canada Stripe rates of 2.9% + $0.30 credit card fees:
Total price that should be charged = (funds you want + flat service fee + flat credit card fee) / (1 - credit card percentage rate)
Here is how this looks like on a practical level if your event is $500, and you want to ensure that you receive this full amount in your bank account after service fees:
Total price that should be charged = ($500 + $1 + $0.30) / (1 - 0.029) = $516.27
Therefore, you would charge $516.27, or round up or down depending on your preference, to present your attendees with a round number like $515, $517 or $520.
You will notice that this amount is slightly more than the $500 plus $14.80 if you would do a straight-forward calculation, as you must keep in mind that the fees, in this case, need to be adjusted in a way that gives you the full $500 in the end.
2. Expose the fees, and make them an additional cost
Using this method you would add the online payment processing fees as an extra cost to the price of your event registration.