In mobile gaming, every dollar counts. With platforms like Apple and Google taking a 30% cut, understanding alternative payment methods and their fees is crucial for maximizing profits and fueling growth. This guide simplifies payment processing fees.

Key Takeaways:

1. Fees range from 2% to 20% of the transaction amount.

2. Fees vary by payment method and payer location.

3. Multiple parties are involved, each with their own fee.

4. Choose webshop providers with clear, all-inclusive pricing

Understanding of payment processing

Game developers are used to Apple and Google handling payments, but webshops and alternative methods are now essential. Every developer should understand payment processing basics, even though providers like Sanlo handle the details. So, let’s take a closer look!

What are payment processing fees?

Payment processing costs can range from 2% to 20% (commonly 2% - 5%), depending on the method and payer location. These fees go to various entities ensuring funds transfer, overall security, and fraud protection.

These fees are deducted from each transaction, with the net amount deposited into the seller’s bank account. For example, selling a battle pass for $19.99 might yield $19.38 after a 3% fee.

Payment Processing Fee Examples

Buyer uses a Visa credit card in the US

• Total amount paid: $19.99

• Visa interchange fee: 2.22%

• Scheme processing fee: $0.0195 + $0.10

• Visa Credit Assessment fee: 0.14%

• Acquirer processing fee: 0.21% + $0.10

• Total fees (rounded): $0.73 / 3.65%

• Total earnings for seller (rounded): $19.26

  
  

Buyer uses regulated Mastercard debit card in the US

• Total amount paid: $3.99

• MasterCard interchange fee: $0.21 + 0.05%

• MasterCard Debit Assessment fee: $0.004

• Acquirer processing fee: 0.21% + $0.10

• Total fees (rounded): $0.32 / 8.02%

• Total earnings for seller (rounded): $3.67

  
  

As you can see from the examples above, there are several payment players who take a small fee for having a hand in facilitating the transaction. These are hard costs that can’t be avoided and are typically deducted from the transaction automatically.

So what now?

When using alternative payment methods via a webshop, opt for providers who simplify things with a transparent, all-inclusive fee. Avoid vendors with varying rates or trial periods promising 0% fees, as these costs will eventually be deducted.

Want to nerd out? Let’s keep going

Here’s a breakdown of payment processing fees and who gets paid:

1. Payment Processor Fees: Payment processors (and in some cases payment gateways) act as the bridge between the gaming company’s website and the card networks / alternative payment methods. They securely transmit payment information and authorize transactions in real-time. Popular payment processors include Worldpay, Adyen, Chase Paymentech, and PayPal. These providers typically charge a combination of fixed fees per transaction and a percentage of the transaction amount. For example, Stripe charges 2.9% + $0.30 per successful transaction, while PayPal charges a similar rate.

   1. That fee has two components, the % fee is an interchange fee from card networks like Visa and Mastercard that is passed-through the processor. The fixed fee, is a per transaction fee that is the primary source for the payment processor’s revenue. Typically, these fees are difficult to negotiate down even at extremely high transaction volumes.

2. Acquirers: Acquiring banks, also known as merchant banks, partner with merchant account providers to facilitate the processing of credit and debit card transactions. They play a crucial role in underwriting, risk management, and settlement. Acquiring banks typically charge interchange fees, which are determined by the card networks (Visa, Mastercard, etc.), as well as additional fees for their services.

3. Merchant Account Providers: Merchant account providers facilitate the transfer of funds from the customer’s bank to the gaming company’s bank account. They often work in conjunction with payment gateway providers to streamline the payment process. Merchant account providers may charge various fees, including setup fees, monthly fees, and transaction fees. These fees can vary widely depending on the provider and the volume of transactions.

4. Card Networks: Card networks, such as Visa, Mastercard, American Express, and Discover, establish the rules and standards for processing card payments. They also facilitate the transfer of funds between issuing banks (the customer’s bank) and acquiring banks (the merchant’s bank). Card networks charge interchange and schema fees, which are a percentage of the transaction amount and/or a flat fee. These fees vary depending on factors like the type of card used (debit, credit, rewards, etc.) and the risk associated with the transaction.

5. Debit Card Fees: In countries like the US, debit card transactions incur regulated fees. In some countries, both credit and debit cards incur regulated fees. These fees are often charged by the card networks and are usually around $0.21 per transaction in the US and varies greatly in other countries. Gaming companies should be aware of these additional fees when estimating the total cost of payment processing.

6. Regulatory Compliance and Security: In addition to the fees charged by payment gateway providers, merchant account providers, acquiring banks, and card networks, gaming companies must also consider the costs associated with regulatory compliance and security. Compliance with regulations such as PCI DSS (Payment Card Industry Data Security Standard) is essential for protecting customer data and avoiding costly fines.