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Comment by jwilliams | Hacker News Reader

I love that this is happening and this innovation is extremely important in the Australian market.

However, if you're an Australian company that wants to deal exclusively or largely in USD -- then you need to keep an eye on the cost.

Pin is offering $50/month ($9 promo atm) - then 3% and $0.30 on every transaction. Then for foreign exchange there is "a retail foreign exchange rate of 4% on top of the wholesale interbank rate at the time of the transaction" https://pin.net.au/pricing

Plus if you've got USD outgoings - e.g. paying for EC2 - you'll cop the foreign exchange on the way out too.

All of these things chip away & can add up to quite a considerable overhead.

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Th $50/month really is a trivial cost to any business larger than a couple of people, particularly for a service which eases the intake of money. It's the per-payment costs that you need to consider. A flagfall charge of 30c is meaningless when your invoices are $1k, and very high when they're $10. 3% on every transaction might sound a lot, but (I assume) that includes the credit card company cut, which usually comes in at around 2%, so effectively it's a 1% fee for the service.

Forex is beyond me, and that's where it does get complex :)

The problem is the FX - and as others have pointed out, this isn't a problem that is necessarily unique to Pin (However, Pin are providing a common retail rate).

It's $50/month. $0.30/transaction. Then 3% and then another 4% for the FX. Then maybe you pay your EC2 bill, or your Adwords account, or your oDesk freelancer and that's another 4-5% on the way back.

If you're doing a large volume of small transactions you'll be racking up ~15% just in fees. If you manage to change that to fewer larger transactions, you might get that to 8-9%. However, even though the % is slightly healthier it's now serious money ($1,000s). Once you get into that camp having a US entity (or whatever) starts to pay off.

Meanwhile, your US-based competitors are doing a flat $0.30 and 2.9% with Stripe (That's just off the bat! Your bigger competitors are using Braintree and probably getting sub 2% overall).

Sounds like I'm hating on Pin. I'm not. Genuinely embrace that they're on the scene. Payments in Australia have been a world of hurt for a long time. This is a great first beachhead and getting this capability out there is fundamental.

Forex can sting, true. Managing a foreign bank account is not great fun either though. I'm not going to underestimate the significance of this business, I think it's going to be great for the Australian market.

Yup. Thats well worth pointing out. Pin is awesome for Australian facing businesses, but if you want to trade in USD, better off elsewhere.

> Yup. Thats well worth pointing out. Pin is awesome for Australian facing businesses, but if you want to trade in USD, better off elsewhere.

"Better off elsewhere" - where? Braintree seems like the only similar option, and as discussed elsewhere in this comment thread: you need a merchant account if you want to engage with them.

(I'm happy to take suggestions, but there's just a dearth of them!)

Agree. There aren't a lot of great options.

At the low end (transaction volume/amounts), you just get murdered on costs. If you've got a niche or high margin business this might be fine.

At the higher end. Well. It seems that a US entity is the way to go. If you structure the vehicle according to some strict rules, you don't incur any US tax. The fixed costs are much, much higher, but the breakpoint is probably lower than people think. This is especially true if you have any kind of cost-base in the US.

There are a few other hacks too. If you're a SaaS business you might consider deeper discounts for annual payment. This is good for cash flow & bumps up your individual transactions. This can change the equation a little - and it's probably better for the $ to be in your customers' pocket rather than a bunch of intermediary financial institutions.

As you say. I'm open to hearing constructive suggestions too! It's frustrating how complex this still is.

Edit: One of the biggest bugbears is AMEX. Even if you get yourself a NAB USD account - AMEX only ever process in the home currency (i.e. AUD). It's easy to be ignorant of this in Australia as AMEX is considered reasonably rare. However, it's pretty much a requirement to operate in the US... So you get this expensive facility, then half your transactions come in AMEX and get processed to AUD anyway (damn). Very open to hear better solutions!

> At the higher end. Well. It seems that a US entity is the way to go. If you structure the vehicle according to some strict rules, you don't incur any US tax. The fixed costs are much, much higher, but the breakpoint is probably lower than people think. This is especially true if you have any kind of cost-base in the US.

Yeah, absolutely. There are Australians out there with US entities so they can use Stripe; that ultimately seems the way to go if you are doing volume/have thin margins.

I'm (about to) run a niche, high-margin service so Pin isn't too bad, esp. at the intro pricing. The good thing is that their API's are so similar that porting across isn't a lot of work if you need to do so down the track, and/or if Stripe launches a local offering.

I really like what Pin is doing, but clearly they only have so much push with the bank(s). Perhaps in time (when they get more volume) they can pass on some savings to end-users.

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