Problem being that the credit card processor already takes 1%, so that won’t happen.

Yes.

The disruption has to come from bypassing credit card companies like Visa and Mastercard.

In India, almost every merchant is using UPI which saves them fees of credit card processing.

The world banking is getting more advanced and technical and I am sure payment gateways can bypass the credit card and currency conversion fees with direct bank to bank transfer.

For larger Amount, we are asking our customers to use Wise instead of stripe or PayPal as the saving for us is significant.

Could crypto help here, at least for customers who have some in a wallet ready to use?

When I checked about 2 years ago, transferring bitcoin from one wallet to another was negligibly cheap, although I think it took about 20 minutes for the seller to be certain that the bitcoin had been sent to them (too slow for most website payments).

Curious to know if crypto could solve this problem though, if not now, maybe in the future. If some of the 9% fees were passed on to customers in the form of lower prices, it could be quite appealing and give a price advantage (if only a few %) over competitors.

Crypto is too volatile to really make day-to-day purchases realistic.

USDC + L2 would be a suitable protocol for day-to-day purchases and nearly 0% fee, at least for those already in the system. But most of this tech is still basically in beta.

I saved your comment to reply to when USDC collapsed - sooner than expected!

USDC hasn't collapsed, and it never should (or at least, no more than any other financial services you use daily) if it is properly regulated by US enforcement agencies.

Depending on where you're located you should potentially consider a solution that looks more like Payment Processor -> Hold in Currency -> Bulk Fx to Local currency. Typically business level Fx processing is 2% - with 3% for credit card fees.

At scale your Fx fees can be less than 2% of the conversion amount, I know that at scale the fees can get down to <0.2% if you're moving multiple millions (USD) in a month.

I know that both Adyem and Braintree will capture into local currency, so you can avoid Fx fees by the payment processor themselves.

Are there any companies arbitraging this % difference by collating lots of different businesses transactions into larger sums to then move into a particular currency for business owners who transact in non local currencies?

I’m pretty sure Wise does something like this. Protip, you can get a Wise business account and collect stripe payments in a local currency, then bulk fx it to your local currency.

Why Stripe isn’t partnering with them, I don’t know. My bank partners with Wise to get the best exchange rate possible (Bunq) when I’m out of the EU. It’s fantastic.

Does stripe restrict payout currency to INR in India?

Can you add a bank account which can handle alternative currency payout and let your bank handle do conversion?

I'm not an expert, I think by default they payout in the currency of the country that your business is located in.

In not sure about India, but in AU, we have the option to receive USD payouts to USD accounts in Australian banks, so you can avoid Stripe's conversion fees. But now you have USD in an AU bank. What are your options? Convert to AUD at the bank's terrible exchange rate. Or send the money to a US bank (or Wise), paying horrendous international transfer fees.

I hope I'm missing something but I don't see this offering from Stripe as being very useful.

> In not sure about India, but in AU, we have the option to receive USD payouts to USD accounts in Australian banks, so you can avoid Stripe's conversion fees.

I tried that, didn't work. I opened a local USD account in my non-US country and tried to add it for payout to Stripe. Stripe only allows (at the time I checked, please correct me if that has changed) US based USD accounts with ACH routing information.

I don't know about AU banks but in India, most big banks allow you to convert at 0.3-0.4% + FIRA and interbank charge which is around $10. Not great but it's better than stripe for bigger amount.

You can also get a multi currency bank account. There are some options available to Indians which provide US based ACH and IBAN. Be careful with FEMA compliance.

Not sure about wise's offering in AU but CA and UK you could just receive the USD into your AU Wise account and pay basically nothing <.5% for FX when compared to spot.

But wise.com is not a card processor?

Yes. They only do bank to bank. But there is definitely a business model here.

If you can offer subscription model and can do bank to bank transfer with 0.5% fees, you will disrupt the whole subscription industry relying on visa/Master card monopoly. Not only this, banks also charge very high currency conversion fees which you can disrupt.

You of course need to build lot of things from scratch but with most of the banking now a days going online with new APIs, it is possible.

Thanks, I don't doubt that, just wanted to know more wise.com or if I misunderstood something.

You're right also, I live in Germany since a couple years and and businesses taking money off your bank account is definitely a thing here, I don't know for how long. But mostly it's done by your electricity utility or by the tax man, various fees e.g. the fee for public tv etc. I don't know if there are costs to it, but probably yes.

From my understanding, they are not. They provide payment cards but don't process payment by cards.

I think what Merek meant is:

A workaround to Stripe fees for FX card payments would be to have a set of Wise accounts to receive the money in the local currency (one account or wallet for each currency) but then you'd still need to pay Wise conversion fees, once you want to gather the money from the different wallets into a master account

I really like how wise.com made themselves #2 in that chart instead of #1. Very clever.