Google is making the transition from a flat rate fee to a tiered fee structure. Google first launched it’s payment processing service for free to gain market share, then evolved to a percentage plus per transaction. The tier pricing applies only to what rate category you’ll fall into, not that you’ll have tiered price levels.
NEW PAYMENT PROCESSING PRICING EFFECTIVE MAY 5, 2009
|Monthly Sales Through Google Checkout||Fees Per Transaction|
|Less than $3,000||2.9% + $0.30|
|$3,000 – $9,999.99||2.5% + $0.30|
|$10,000 – $99,999.99||2.2% + $0.30|
|$100,000 or more||1.9% + $0.30|
ANALYSIS FOR GOOGLE
All companies must pay interchange, which is determined by what type of card is presented. If you have low volume, Google could get stuck owing more in fees than it is collecting under the old plan. For example, let’s say you have 5 orders totaling $1000. With so few transactions, the odds are against Google getting a wide variety of cards presented, increasing it’s risk. Â If you have high volume, then Google is spreading it’s risk as they are likely to get a wider variety of cards, more reflective of societies purchasing habits today.
ANALYSIS FOR MERCHANTS
It’s not a bad deal. For small merchants, you’re going to pay that much to any company. For big merchants, you probably need Google because you have customers that want to pay with that method. Plus, by having Google payments, you improve your potential Google search results becuase they have a separate list of stores that use Google payments. Even at the highest level, it’s still a pretty good deal when you consider that debit ecommerce interchange starts at 1.6% and $.10 per transaction and credit ecommerce interchange starts at 1.8% and $.10 per transaction. As a business owner, Google Payments is never a sole solution for the largest businesses because their customers don’t want to be locked into one option, among other factors.
Merchants shouldn’t gripe too much. The costs are in line with what you pay through other sources, though that per item fee is pretty high and could be awful for high volume, low average ticket merchants.