Our new fee structure · 2017-10-06 11:55 by Laura Dornheim
Everything you need to know about Flattr fees for creators, and why we charge them: a transparent breakdown.
We are changing our fees and we want to do it in the most transparent way. We have split the fee in two: Creators that receive money will be charged a monthly fee of 7.5%. This is our fee for running Flattr. Plus, to start, a payment processing fee of 9%. This is our costs for the payment processing that is carried over to everyone that receives money. This will increase the fee of 10% we had prior to 2016* We would like to explain the reasons for this increase.
Picture by Daniel Maleck Lewy, CC-BY_SA 3.0
Historically we never communicated what payment processing fees we had to pay as they were a part of the general 10% we took, but as we have changed currency and implemented credit card subscriptions the payment processing fees are now substantially higher. We didn’t just want to increase the general fee but rather handle them separately to add transparency.
The 7.5% is similar to our historical cut of the fees. That leaves 2.5% for payment processing which we now claim is 9% Why is that? Switching to USD and implementing subscription payments increases the fees. Non credit card payments like EU IBAN bank transfers (something that can’t be used for USD) are much cheaper than card payments. Then, European card transfers have lower fees than transfers from cards for the rest of the world. The biggest factor however is that small credit card transactions are expensive. It’s because a payment processing fee consists of two parts. A relative fee based on the transferred amount and a fixed fee. In our case is the fixed fee about 30 cents, regardless of transaction size. 30 cents on a $3 USD transaction is 10%, to that we need to add the general 2.5% fee. If you do your math this is well above 9%. It means that 9% is lower than we project the average fee to be, but we decided 9% is enough.
That said, fees go down with payment volumes, and if we can get users to increase their subscription amount the relative fee will also drop. Once it’s less than 9% this will of course be reflected in our Flattr fees.
It might seem counterproductive to increase the fees for our creators, when our business is to generate revenue for them. But it’s not. As described in other blog posts is one of our main problems to create a product that scales away complexity so we can focus on what Flattr actually is and tries to achieve. By using USD and subscriptions we will have a more user-friendly product. Being user-friendly is what will make more people use Flattr. In the end that is what generates revenue. Getting more people in easily outweighs the minor increase in costs. Even though it instinctively might feel counter productive.
Finally, Flattr is a commercial product and has always been. We cannot guarantee the system or the safety of our contributors’ and our creators’ money if we do not make money ourselves. We hope you agree with this and understand that our vision is to create a better internet for creators and the people enjoying their content.
Update: We won’t charge any fees for the first month after launching the new Flattr. Any flattrs you make or receive until November 30th will be free of fee!
* As you might have noticed have we not charged you any fee since the beginning of 2016.