Introduction
As a business owner using Stripe Connect, you’re probably wondering if it’s possible to split the Stripe fees between your connected account and their customers. After all, why should you bear the entire burden of transaction costs when you’re providing a valuable service to both parties? In this article, we’ll dive into the world of Stripe Connect fee splitting, exploring the possibilities, benefits, and implementation details. So, buckle up and let’s get started!
What are Stripe Connect fees?
Before we dive into fee splitting, it’s essential to understand what Stripe Connect fees are and how they work.
Stripe Connect fees are the transaction costs associated with using Stripe’s payment processing services. These fees are typically a percentage of the transaction amount, plus a fixed fee. For example, Stripe’s standard payment processing fee is 2.9% + 30ยข per successful charge.
Can I split Stripe fees between a connected account and their customers?
The million-dollar question! The short answer is yes, you can split Stripe fees between a connected account and their customers. However, there are some important considerations and limitations to be aware of.
Understanding Stripe Connect’s fee structure
Stripe Connect uses a platform-centric approach to fee calculation, which means that the platform (you) is responsible for paying Stripe’s payment processing fees. This is because the platform is the one facilitating the transaction between the connected account and their customers.
By default, Stripe Connect deducts the payment processing fees from the connected account’s earnings. This means that the connected account receives the net amount after fees have been deducted.
Splitting fees: The alternatives
So, how can you split Stripe fees between the connected account and their customers? There are two main approaches:
- Split fees on the platform side: You can absorb the fees on your platform side, effectively reducing your revenue share. This approach is suitable for platforms that want to maintain transparency and avoid passing on fees to their connected accounts.
- Pass on fees to customers: You can pass on a portion of the fees to the customers, either by adding a small surcharge to their transaction or by increasing the price of the product or service. This approach is suitable for platforms that want to maintain their revenue share and shift the fee burden to the customer.
Implementing fee splitting
Now that we’ve discussed the alternatives, let’s explore how to implement fee splitting in your Stripe Connect integration.
When creating a charge using the Stripe API, you can specify the `application_fee_amount` parameter to define the amount of fees that should be deducted from the connected account’s earnings. This parameter allows you to split the fees between your platform and the connected account.
curl https://api.stripe.com/v1/charges \
-u YOUR_STRIPE_SECRET_KEY: \
-d "amount=1000" \
-d "currency=usd" \
-d "source=tok_visa" \
-d "application_fee_amount=50" \
-d "description=Example charge"
In this example, the `application_fee_amount` is set to 50, which means that $50 will be deducted from the connected account’s earnings as fees. The remaining $950 will be transferred to the connected account.
Benefits of fee splitting
Splitting Stripe fees between the connected account and their customers can have several benefits, including:
- Increased transparency: By splitting fees, you can provide a clear breakdown of the transaction costs to both the connected account and their customers.
- Improved customer satisfaction: By passing on a portion of the fees to customers, you can maintain your revenue share and avoid increasing prices for your connected accounts.
- Better revenue distribution: Fee splitting allows you to allocate revenue more fairly between your platform, connected accounts, and customers.
Conclusion
Splitting Stripe fees between a connected account and their customers is a viable option that can benefit all parties involved. By understanding Stripe Connect’s fee structure and implementing fee splitting using the `application_fee_amount` parameter, you can create a more transparent and equitable payment processing system.
Remember to weigh the benefits and limitations of fee splitting carefully, considering the specific needs of your business and your connected accounts. With the right approach, you can maintain a healthy revenue stream while providing a better experience for your customers.
Scenario | Fees Paid By | Benefits |
---|---|---|
Default (no fee splitting) | Connected Account | Simple implementation, no revenue share impact |
Split fees on platform side | Platform | Maintains transparency, no customer impact |
Pass on fees to customers | Customers | Preserves revenue share, customer awareness of fees |
We hope this article has provided a comprehensive guide to Stripe Connect fee splitting. If you have any further questions or need assistance with implementing fee splitting in your Stripe Connect integration, please don’t hesitate to reach out.
Frequently Asked Question
Get the scoop on Stripe Connect fee splitting – we’ve got the lowdown!
Can I split Stripe fees between a connected account and their customers?
Yes, you can! With Stripe Connect, you have the flexibility to split fees between the connected account and their customers. This way, you can distribute the fees in a way that makes sense for your business model.
How do I set up fee splitting in Stripe Connect?
Easy peasy! You can set up fee splitting in Stripe Connect by specifying the fee split when creating a payment or a transfer. You can also update the fee split later if needed. Just head to the Stripe dashboard, navigate to the relevant payment or transfer, and adjust the fee split to your liking.
What types of fees can I split in Stripe Connect?
You can split a variety of fees in Stripe Connect, including payment processing fees, transfer fees, and more. The specific fees you can split may vary depending on your location, the type of payment, and other factors. But don’t worry, Stripe’s got you covered – you can always check the Stripe documentation for the most up-to-date info.
Can I split fees differently for different connected accounts?
Absolutely! With Stripe Connect, you can set up custom fee splits for each connected account. This way, you can tailor the fee split to the specific needs of each account, and ensure that fees are distributed fairly.
Will my connected accounts see the fee split?
Yes, your connected accounts will be able to see the fee split in their Stripe dashboard. This way, they’ll have full transparency into how fees are being split, and can plan their business accordingly.