­Stripe finds itself at the center of a growing controversy. Mark Carney, former Bank of England governor and Stripe board member, faces criticism from Canadian businesses over the company’s fee structure.

This uproar sheds light on a critical issue that affects countless merchants: the hidden costs of payment processing.

As a business owner, you can’t afford to ignore the impact of these fees on your bottom line. Every transaction chips away at your profits, and the difference between payment processors can mean thousands of dollars saved or lost each year.

This controversy raises an important question: Are you getting the best deal on your payment processing?

SWITCH FROM STRIPE

Understanding Interchange Plus Pricing

To grasp why interchange plus pricing could benefit your business, you need to understand how it works. Interchange plus pricing breaks down your payment processing fees into two main components: the interchange fee and the processor’s markup.

“Interchange”

Interchange fees form the base cost of processing a transaction. Card networks like Visa and Mastercard set these fees, which vary depending on factors such as card type and transaction method. Your payment processor can’t control or negotiate these fees.

“Plus”

The “plus” in interchange plus refers to the processor’s markup. This is a transparent, agreed-upon fee that the processor charges on top of the interchange rate. You’ll typically see this expressed as a percentage plus a flat fee per transaction, such as “interchange + 0.3% + $0.10.”

The Difference

This pricing model differs significantly from flat-rate structures like Stripe’s. Flat-rate processors bundle all costs into a single, simplified fee, often around 2.9% + $0.30 per transaction for online sales. While this approach simplifies billing, it can often result in higher overall costs for merchants.

Interchange plus pricing offers several advantages:

1. Transparency: You see exactly what you’re paying in interchange fees and processor markup.
2. Cost-effectiveness: For many businesses, especially those with higher average transaction values, interchange plus often results in lower overall fees.
3. Flexibility: As your business grows, you can negotiate better rates on the markup portion of your fees.

NEGOTIATE YOUR RATES TODAY

The New Stripe Controversy Explained

Stripe’s decision not to pass on savings from reduced credit card interchange fees to many of its small business customers. The Canadian government reached a deal with Visa and Mastercard in December 2023 to lower these fees, which took effect in October 2024.

However, Stripe informed its customers that it would not pass along the savings to those on its flat-rate pricing plan due to increases in other fees and charges. This decision has drawn criticism from the Canadian Federation of Independent Business (CFIB), which estimates that over 60% of its 97,000 members qualify for the reduced fees.

Adding to the controversy is the fact that Mark Carney, an economic adviser to Prime Minister Justin Trudeau and a prominent Liberal party member, sits on Stripe’s board of directors. The CFIB has called on Carney to use his influence to push Stripe to reconsider its decision and pass on the savings to small businesses as intended.

The federal government has made it clear that it expects all players in the credit card industry, including payment processors like Stripe, to pass on the reduced fees directly to small businesses. While most major processors have committed to doing so, Stripe remains the only one to publicly state it will not pass on savings to merchants on its flat-rate plan.

START SAVING ON YOUR PAYMENT PROCESSING TODAY

How Shopify Makes It Harder to Reap the Benefits

Shopify’s relationship with Stripe creates a complex situation for merchants seeking alternative payment options. While Shopify powers its native Shopify Payments with Stripe’s backend, it simultaneously limits direct access to Stripe as a third-party processor.

This arrangement poses several challenges for business owners:

• Limited Payment Flexibility: Shopify restricts your ability to use other processors if Shopify Payments is available in your region. This limitation forces you to use Shopify Payments, even though you can choose from a narrower selection of alternative payment processors.
• Feature Discrepancies: When you opt for a non-Stripe processor on Shopify, you may lose access to certain features. Shopify often reserves its most advanced tools and integrations for users of Shopify Payments, potentially hampering your store’s functionality if you choose an alternative.
• Switching Difficulties: Shopify doesn’t make it easy to switch away from their native payment solution. The platform’s design encourages you to stick with Shopify Payments, creating friction if you decide to explore other options.
• Higher Fees for Alternatives: If you choose to use a different payment processor, Shopify imposes additional transaction fees (2%). These fees can significantly impact your bottom line, especially for high-volume sellers.
• Integration Challenges: While Shopify allows integration with some third-party processors, the process often requires more technical know-how than simply activating Shopify Payments. This complexity can deter less tech-savvy merchants from exploring alternatives.

MORE FEATURES, FEWER FEES, SAFER PROCESSING

The Best Alternative to Stripe for E-commerce Businesses

When searching for a payment processor that offers interchange plus pricing, consider merchant account providers as your top solution. Merchant accounts give you more control over your payment processing costs and provide greater transparency compared to all-in-one solutions like Stripe.

By opting for a dedicated merchant account instead of an aggregator like Stripe, you gain more control over your payment processing and can benefit from lower fees, customizable solutions, and a direct relationship with your provider.

DirectPayNet is a high-risk merchant account provider, working with businesses who will inevitably get shut down by Stripe and Shopify Payments. With us, you can secure your checkout for the long term.

OPEN YOUR DEDICATED MERCHANT ACCOUNT NOW