Our new fee structure

Everything you need to know about Flattr fees for creators, and why we charge them: a transparent breakdown.

Everything you need to know about Flattr fees for creators, and why we charge them: a transparent breakdown.
Picture by Daniel Maleck Lewy, CC-BY_SA 3.0 https://commons. wikimedia.org/wiki/ File:Israel_6_016_ Hand_with_Anarchy- Tattoo_and_ money.jpg

We are changing our fees and we want to do it in the most transparent way.  We have split the fee in two: Creators that receive money will be charged a monthly fee of 7.5%. This is our fee for running Flattr. Plus, to start, a payment processing fee of 9%. This is our costs for the payment processing that is carried over to everyone that receives money. This will increase the fee of 10% we had prior to 2016* We would like to explain  the reasons for this increase.

Historically we never communicated what payment processing fees we had to pay as they were a part of the general 10% we took, but as we have changed currency and implemented credit card subscriptions the payment processing fees are now substantially higher. We didn’t just want to increase the general fee but rather handle them separately to add transparency.

Fee breakdown
The 7.5% is similar to our historical cut of the fees. That leaves 2.5% for payment processing which we now claim is 9% Why is that? Switching to USD and implementing subscription payments increases the fees. Non credit card payments like EU IBAN bank transfers (something that can’t be used for USD) are much cheaper than card payments. Then, European card transfers have lower fees than transfers from cards for the rest of the world. The biggest factor however is that small credit card transactions are expensive. It’s because a payment processing fee consists of two parts. A relative fee based on the transferred amount and a fixed fee. In our case is the fixed fee about 30 cents, regardless of transaction size. 30 cents on a $3 USD transaction is 10%, to that we need to add the general 2.5% fee. If you do your math this is well above 9%. It means that 9% is lower than we project the average fee to be, but we decided 9% is enough.

That said, fees go down with payment volumes, and if we can get users to increase their subscription amount the relative fee will also drop. Once it’s less than 9% this will of course be reflected in our Flattr fees.

Going forward
It might seem counterproductive to increase the fees for our creators, when our business is to generate revenue for them. But it’s not. As described in other blog posts is one of our main problems to create a product that scales away complexity so we can focus on what Flattr actually is and tries to achieve. By using USD and subscriptions we will have a more user-friendly product. Being user-friendly is what will make more people use Flattr. In the end that is what generates revenue. Getting more people in easily outweighs the minor increase in costs. Even though it instinctively might feel counter productive.

Finally, Flattr is a commercial product and has always been. We cannot guarantee the system or the safety of our contributors’ and our creators’ money if we do not make money ourselves. We hope you agree with this and understand that our vision is to create a better internet for creators and the people enjoying their content.

Update: We won’t charge any fees for the first month after launching the new Flattr. Any flattrs you make or receive until November 30th will be free of fee!

Learn more about becoming a Flattr creator/publisher here.

* As you might have noticed have we not charged you any fee since the beginning of 2016.

35 thoughts on “Our new fee structure

  1. “This will increase the fee of 10% we had prior to 2016*”
    IMHO, this is not a problem. You are a monopolist. Even 50 % fee would be okay.

  2. So, if SEPA debits are much cheaper, why not support them as well? (Plus, at least in Germany credit cards are not that widespread, whereas everyone has a bank account and so can authorize direct debits.)

  3. SEPA transactions can’t be used for USD. And we need to switch to USD as many US banks don’t accept Euro transfers. It’s one of those one things forces another thing situation.

  4. are you kidding? no sepa anymore?
    Sorry – I don’t see the benefit for me or the people I support anymore. Everything is worse now, and it wasn’t shiny before. I will start to support the creators I like directly (SEPA!) and will have to do the micromanagement myself.
    good luck in the $ market. You lost a member who supported you for many years.

  5. Unfortunately i have to agree with Raymond.

    I don’t have a credit card and i am not interested in getting one. If you identified the US as the “market” to be, then so be it. Also the decision to push more money into financial institutes is likely not the best idea at this point in history…

    Why not support low-fee transactions with SEPA and in parallel the expansive credit-card based thing at the same time?

    I really regret losing this option to support creators…

  6. Raymond said exactly what I want to say.
    There is no real advantage in using flattr in Europe any more.
    Good bye and good luck!

  7. So you want to focus on the US market and no longer take my Euros? Sad. Good luck then – I guess you will loose most European supporters then. At least you lost me. I’ll close my account. Bye, Florian.

  8. Why not multiple currencies?
    Contributors pay what ever they want anyway, isn’t it. So I love to pay Japanese Yen so let me pay Japanes Yen. And my brother loves the Swiss Franc. So let him pay Swiss Francs. That local money stays local as long it is my account.
    If I flattr someone, well then here is an exchange rate the moment I contribute and my money leaves my account and reaches the publishers account. Done.

  9. So, basically, you’re saying F* YOU to all of your european users? I can’t really believe this.
    I really think you should re-examine your USP. There _is_ already a patreon. That spot has been taken. There is also paypal. Those are not going anywhere.
    There was, however, a spot for a europe-centric payment method. I guess that is now up for grabs?

    I was always OK with you making money (and you were always transparent about it), in fact this was/is one of the strong advantages. I am not fond of adding _another_ middle man and a currency conversion.

  10. Souleyes. We opted to switch to USD because that is the currency the majority of people in the world knows and are familiar with. Cryptocurrency might be a great technical solution, but it rather scares people than anything else. (besides the fans of course)

  11. Linus,

    this statement is ridiculous “Souleyes. We opted to switch to USD because that is the currency the majority of people in the world knows and are familiar with. ”

    it was not already working that well, but now, like any european, user i say goodby and closing my account

    Cheers

  12. I understand your dilemma, which is a new challenge, Olson. But I wish you success, anyway. Amyrnes

  13. Switching to USD and cards not only increased fees to creators to a whopping 9%, but also adds fees for EU supporters (50 cents per non-Euro credit card transaction in my case).

    Also, with a total fee of 16.5% this is just a worse version of Patreon, which takes 10% and also allows PayPal.

    If the fees are so much of a concern, you should really consider pre-paid balances. That way I could load up my account with like $50 and support projects over many months without incurring additional fees. Heck, if done like this you could also enable Bitcoin payments. In addition, a pre-paid balance would protect me from spending too much: if my funds run out, send a warning e-mail and automatically pause my subscriptions!

  14. Mortier. Sorry to hear that. And as you say, it was not working well enough, in most cases because what we had was not familiar enough for the majority of internet users. We are trying to make it more approachable for all, then drastic changes are sometimes needed. And you are always welcome back.

  15. Thorbjørn. You are absolutely right. The problem here is though that prepayment of larger amounts does not benefit the user paying. That means it’s a hard sell and makes things more complex. In the end everything that counts is to make it as simple as possible to start to use Flattr as that what generates money for the creators. That said, we obviously want to lower the fees in all ways we can, this is just the start. And we don’t like to do the “silicon valley” model where we would have (too) low fees to begin with and then increase them once we are big enough to be able to change things to the worse. We rather do the opposite.

    Bitcoins are obviously intriguing, but way less people uses (or wants to use) bitcoins that the news around bitcoins indicates. It also scares non tech savvy people.

  16. Please consider bitcoin. Yes few people use it, but it provides an option for people who don’t like to use a credit card. I don’t think the option to pay in bitcoin scares normal people at all. They just look for the credit card option.

    PayPal integration is also great.

  17. I would expect that fees would decrease over time not goes up.

    Creators would get more if I pay them directly once per year. From now on that is what I gonna do. Flatter is charging too much for micromanagement service, now and before change.

    Flattr team, did you consider Bitcoin?

  18. I love Flattr and the idea behind it, but you will destroy it. :-/

    Please understand the rest of Europe is NOT like Sweden, especially in Germany only few people have credit cards. Or in other words, we mostly pay in cash and love it.

    Please change Flattr at this important point, otherwise Flattr will fail. And that would be very unfortunate.

    And yes I have a credit card for the whole Internet nonsense, but I am also not the normal German. *lol*

  19. If you want to save on fees, give customers multiple options for making payments and if a certain type can only be used for one time payments, don’t allow it for subscriptions. Also, you got screwed on credit card fees. Did you know that for microtransactions you can negotiate a lower per transaction fee and a higher percentage, which results in a lower overall fee? Obviously not, if you’re still paying the standard 30 cents per transaction. I’d shop around a bit more if I were you. It is possible to get better rates. (Why do you think they lock you into a contract. It’s because any independent agent can shave off a bit and beat the standard rate.) And multiple ways to pay is better than one. You may want to see if you can do better.

  20. These fees are unacceptably high.

    Why not allow fee conscious users still pay larger sums into their Flattr wallets? Everyone (except MangoPay and Visa) benefits from this model.

    I also think Flattr should lower their cut from 7.5% fee to 1 or 2 %. Hiding this fee from users by charging it to the recipients is a total dick move.

  21. If you don’t listen to customers you will soon listen to a lawyer explaining you the details of chapter 11 (or whatever number bankruptcy is in Sweden).

    For europeans you just did it wrong, very wrong. And 17% is a greedy amount of cash. You are not apple.

    I’m out and you will be out too,
    Bye bye

  22. I don’t understand why Europeans should subsidize the higher US credit card fees. I’m a European but outside the Eurozone, so Mangopay charges the same high rate for me as for US citizens. That being said, fees should reflect the actual costs. Having one flat fee nicely camouflages the complexities of international credit card transactions, but you’re not really doing anyone any favors.

    If this was a democracy, I’d vote for keeping the wallet system. As least as an option. It does reduce payment processing fees and is a better option for cost-sensitive users.

    The new fee structure isn’t all that bad, though. It’s actually pretty much the same as Patreon’s; so I find it weird that people compare the two as they were wildly different. Let’s see, a $12 subscription leaves roughly $10,88 for creators on Patreon or $10,10 USD on Flattr. The 0,78 USD difference isn’t great, but it’s still less than the Bitcoin transaction fees these days 😂.

    If Flattr were to drop their middleman fee to 2.5 %, creators would get an additional $0,55 per month from a $12 subscription. I don’t expect Flattr to sacrifice their own revenue to drive up publisher profits, but it would be the right thing to do for the first year or two to keep fees low and incentivize creator, publisher, and user adoption.

  23. Fabio. You are correct and if we can do it in the future we should. Paypal though does not allow integration into a service (they have to be used “stand” alone.)

  24. Scott. Yes, it’s something we should and will look into, but we want to start with a very simple use case to make it easier to communicate how Flattr works. And yes there are lots of potentials to push our payment fees down, and we will work on that. This is just the starting point!

  25. Daniel. You are completely right that it hides the complexities of card fees. But sometimes is that was is needed, to much complex information makes people go numb. But absolutely do we not want to keep the transaction costs as high as 9%, but we want to be transparent and instead lower them when we can.

  26. On the one hand, I respect the users and individuals who are not seeing a benefit after these changes. However, on the other hand, this ENTIRE explanation could’ve been tucked into the fine print if Flattr’s ENTIRE goal was to screw over creators or make a cash grab.

    No, increased fees don’t sound enticing but if Flattr speaks truly about fees lowering as volume increases, then the incentive is to spread the word. Again, for EU contributors or creators, the switch to USD (and the multiple suggestions of BitCoin/cryptocurrency) I can see where they are coming from.

    But…but…This is a business, they’re being transparent enough to engage anonymous comments rudely and unnecessarily telling them how to run the business they built. If they DID want to say “F U” to European users, they could’ve done that…but they didn’t, and changing their fee structure isn’t “like” anything other than a change in fee structure.

    It’s beyond me that some how credit card usage isn’t extremely saturating Germany or other places but there’s still that Internet grown sense of entitlement and disrespect because people like the Flattr team went out and did the work, agreed with investors (assumably), users, and are trying to grow.

    We may all agree that Flattr had/has unique opportunities in the space but if your idea is so much better, open a new browser tab and let us all know when you’re done building an international transaction system that seamlessly links the world’s financial systems and most importantly how end users would like to support creators. Maybe in the future I’ll have enough money to go buy some BitCoin, but if that’s your only suggestion…you’ll never get far. .

    To those that had constructive suggestions, even those who will walk away because of this change, as just a citizen of the web, thank you for being reasonable.

    To Flattr, since I am getting 0% of $0 in my current setup, I can certainly test the waters and be happy to know you’ve gotten your profit, banks and card companies get their fees, and my someday subscribers can not have a janky, untrustworthy system that keeps them from helping.

    Feel free to delete this if it’s responding to your users, Flattr. I’m sorry that you’re seeing any loss in support but I know that for what you’re offering, there are plenty of creators not yet ready for a Patreon type system…Kudos for continuing to evolve your ideas and making hard choices to grow your business, not disappear like others have.

    All the best!

  27. Ryan. Thanks for your feedback, it warms my heart and mind to see someone respond with that kind insight. There is not much to respond too besides saying thanks for not just keeping it to yourself!

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