On Thu, Oct 06, 2016 at 06:46:10PM -0700, Aaron Wolf wrote: > > First, the premise: As a financial system trying to get people focused > on how public goods actually work and are actually funded, we don't > want fees hidden and absorbed. We want people to see and experience > the costs of the tools they use.
I agree with this. Sharing the responsibility for fees is good.
Besides, it would be impractical to do anything else when there are many
projects.
> Is there a reason we can't just add the fee amount to the total
> that we charge everyone? That should be baked into our mechanism
> calculations. The charge is: base * patrons + fee.
Here's the problem: Stripe calculates the fee themselves. If we try to
charge the fee upfront, we effectively increase the fee by another 3%.
(math below).
I see four possibilities right now.
1. Charge up front to cover the fees.
This results in the increased fee percentage just discussed.
2. Swallow the fees.
There is only one project right now: Snowdrift. All donations are
going to Snowdrift. It is actually financially feasible to just
accept the losses on the Snowdrift side as long as all remaining
money is actually going to us.
But we don't like this option, since it sets poor expectations. It
also means that the crowdmatch amount is not equal to what the
project receives.
3. Set up a second, connected Snowdrift account using Stripe Connect.
With a second account, we can "charge through the platform"[1] and
add an application fee that is equal to the processing fee. This is
by far the cleanest mathematically. Conversely, it is the hairiest
legal option.
We will probably have to do this eventually, assuming it's even
possible. But it's a big barrier to "shut up and take my money".
[1]:
https://stripe.com/docs/connect/payments-fees#charging-through-the-platform
4. Charge the donation amount, but only register a 'crowdmatch' equal
to the net transaction balance.
The goal is that the patron is still paying exactly the minimum
fee. They are simply matching a "virtual" crowd that is slightly
smaller than the "actual" crowd.
The problem with this is that it's WAAYY confusing, and prone to
weird rounding errors converting backwards and forwards. I was
excited about this method until I realized how crazy it would be.
MY SUGGESTION:
As much as we want to set expectations, I think the most sensible course
for the Futurama milestone is (2). It is very easy to describe what it
is doing, as well as what our eventual goals are.
I am VERY WEAKLY against (1) just for the sake of principles, as well
because I think it's slightly harder to explain than (2). That's
subjective, and I'm open to consensus overruling.
I am against (3) because it adds trickiness and delay when we just want
to have some freakin' cash flow.
I am against (4) because it's a nightmare.
-------------
> Side-note: if we made it possible to use Dwolla instead or other
> no-fee options, this would be a non-issue for those cases.
This will happen many months from now, at best. We shouldn't think about
it until we have more than half a dozen projects being supported.
---- MATH LOL ----
Here's the math for my claim that we would increase the fee by 3% if
we charge the fee upfront.
Let's call the amount we charge the patron up front "epsilon". If we
want Snowdrift's net balance to be `original + crowdmatch`, the equation
we want is
(crowdmatch + epsilon) - fee = crowdmatch
or just
epsilon = fee (1)
But since we would charge `crowdmatch + epsilon`, the fee is:
fee = 0.029 (crowdmatch + epsilon) + 30 (2)
Combining (1) and (2),
epsilon = 0.029 (crowdmatch + epsilon) + 30
--> epsilon = 0.029 crowdmatch + 0.029 epsilon + 30
--> 0.971 epsilon = 0.029 crowdmatch + 30
Now the right hand side is equal to Stripe's original fee calculation,
`0.029 crowdmatch + 30`.
0.971 epsilon = original fee
--> epsilon = 1.030 original fee
QED.
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