Intuit has created an ACH-based payment network where merchants pay a flat fee of $0.50 per transaction (link). This is fast work on Intuit's part, coming less than 3 months since they acquired PayCycle for $170 million (link) Intuit, based on its Quickbooks franchise, has relationships with 3.7 million small businesses. The 170 million dollar question is, will this offering gain critical mass where we will see the Intuit bug in enough payment pages?
To contrast this offering, let us look at other similar offerings. NACHA's SVP charges a flat $0.745 per transaction for their transactions (link). There seems to be some transaction for this product at universities, with government agencies opting in as well. PayPal charges merchants a discount rate of approximately 3.9%, which is comparable to what Amazon and Google Checkout charge.
I was talking with a long-time industry insider, who sees the trend towards flat-fee based discount rates. Where do you think the industry is heading?
Showing posts with label ACH. Show all posts
Showing posts with label ACH. Show all posts
Thursday, August 20, 2009
Saturday, November 22, 2008
Merchants may get real-time access to funds at lower rates
Typically, if a merchants wants to pay low fees, they get access to their funds later (e.g., ACH payments received after 3 days). If the merchant wants to get access to their fund immediately, they would have to pay a higher rate (e.g., credit/debit cards payments are received overnight).
This seemed to be an immutable reality that merchants had come to expect. Lower rates/fees and 'immediate' access to funds seemed to be a contradiction.
There is light at the end of the tunnel. Digital Transactions reports that PayPal is piloting a payment method where the merchants can have access to fund immediately (overnight). The rails are different from ACH and payment card rails. The disruptions keep on coming.
It will be interesting to see how this innovation plays out. All the best to PayPal for continuing to move the ball forward. Innovations that reduce online merchant's cost of accepting payments cannot come fast enough, especially in the current economic conditions.
This seemed to be an immutable reality that merchants had come to expect. Lower rates/fees and 'immediate' access to funds seemed to be a contradiction.
There is light at the end of the tunnel. Digital Transactions reports that PayPal is piloting a payment method where the merchants can have access to fund immediately (overnight). The rails are different from ACH and payment card rails. The disruptions keep on coming.
It will be interesting to see how this innovation plays out. All the best to PayPal for continuing to move the ball forward. Innovations that reduce online merchant's cost of accepting payments cannot come fast enough, especially in the current economic conditions.
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