I remember stopping by the office back during the fireplug days and having a chat with Travis and the team! Happy to hear of the ambition progress in the press
Typical credit card fees are 2.9% + 30c. Assuming that they have regular fees at not non-profit rates(which tend to be lower), it would make their average donation amount to be around $7.14
With that many transactions they should be able to negotiate a lower fee than that. My company did a bit over 4 million in CC transactions last year and our rate is 1.9% and I believe the flat rate per transaction is 25 cents.
It does make sense, but it is not factually correct.
Typically, (big) payment processors deal with different interchange fees for different card types (based off the BIN number-- premium cards, debit cards, reward cards).
Processors commonly group fee percentages into an easier scheme to sell to people.
"2.9% + .30" is a lot easier to reason and understand than "2.2% for Debit, 3.5% for AMEX, 2.9% for Bank of America" and so on.
So yes, different cards charge different interchange rates -- but the answer to the question lies in the fact that with small enough purchases, the 30 cents on top of the 2.9% could effectively increase the percentage to a higher rate.
The simple formula to calculate fees as a percentage of purchase would be y= (x*.029+.30)/x and it intercepts with 5% at about $14.28, which would suggest that the minimum contribution would be set around $15 to make their statement correct. A a much higher contribution of $300 would have a lower rate of approx 3%, as the cents become a rather unimportant part of the fee.
Why do processors like doing this? It's a way to subsidize micro-payments without creating convoluted fee schedules. They can collect ~33% of a $1 payment without advertising it as such.
