Running a French Holiday Gite in Rural Brittany

Thursday, December 03, 2009

"Checking out" Google Checkout (and Paypal) transaction fee structures for card payments

A few weeks ago I wrote about how Google Checkout had re-instated my seller account after they'd changed the rules about what was allowed to be sold and included timeshare and holiday rental properties.

Since then I've finally had a chance to look at the fees charged by Google Checkout to compare them to other electronic card payment mechanisms.

When Google Checkout launched in the UK the fees were a very reasonable flat rate of 15p handling fee plus 1.5% of the transaction amount.

Then in March 2009 Google Checkout revised the fee structure to a tiered structure, and depending upon your monthly revenue through Google checkout you pay a lower fee rate:

Monthly Sales Through Google Checkout Fees Per Transaction
Less than £15003.4% + £0.20
£1500 - £5999.992.9% + £0.20
£6000 - £14999.992.4% + £0.20
£15000 - £54999.991.9% + £0.20
£55000 or more1.4% + £0.20

So unfortunately a rather substantial increase unless you're already doing serious business with Google checkout.

How does this stack up against the competition? Well the lead alternative contender for taking credit card payments is of course Paypal and the Paypal transaction fee structure is amazingly absolutely the same as Google Checkout.
(Well it's not quite the same as Google Checkout, there's 1p difference on each transaction band, so it's 3.4% + 20p for transactions valued from £0.00 to £1500.00, then 2.9% +20p from £1500.01, etc, but I'm not quibbling over this 1p difference!)

So in this age of the internet driving an open marketplace and price transparency with the smaller, newer and nimbler players being able to compete on a level playing field with the established big boys, it's surprising to see that these two companies have decided to price exactly the same as each other.

Where Paypal does come out cheaper is cross-border card payment transactions (e.g. an American guest pays to stay in the Gite), the Paypal fee is then an additional 0.5% higher whereas Google Checkout add on a full 1%. A small but noticeable difference.

So although I've now re-instated Google Checkout on the rental rates page as a method for guests to pay for their French holiday, if truth be told I'd actually prefer that our guests didn't pay by credit card because I lose such a large chunk in commission.

Given the choice I ask guests if they can send me their holiday booking deposit and the final rental payment by cheque, and it's simply because then I end up with the full rental amount in my bank account and don't give away a chunk to an intermediary. Pretty much all our guests do pay by cheque, the exception being those that book our Gite direct from VillaRentals (aka RentalSystems) to whom I have to pay a 10% commission.

Of course for guests coming from overseas countries (and over the years we've had guests from Ireland, Sweden, Holland, the USA and Australia) it's not practical for them to pay by cheque so I generally ask them to book and pay for their holiday via RentalSystems, and as RentalSystems treat the transaction as a referral from me I pay just 2% commission - saving me roughly 2% over Paypal.

As well as Paypal, RentalSystems and now Google Checkout, we also can take debit/credit card payments from (who charge 2.9% + 20p) or (1.9% fee for transferring money from a credit card).

As a "small business" there seems to be a plethora of card provider options out there but with some high fees to match. For now both us and our customers have been quite happy with cheque payment and whilst we do offer all these card payment options we're never asked "how do I pay by credit card?".

What's your view - would you expect to pay by credit card or are cheques OK, and are there any cheaper payment engines that come recommended (and are easy for customers to use)?

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