Pass on Stripe Fees + VAT

[Martin McInnes]

Hey guys.

We run a Stripe Connect Application. We take a commission on each transaction on top of Stripe fess. We allow our clients to pass this fee onto their customers.

We use the formula included in the Stripe documentation (https://support.stripe.com/questions/can-i-charge-my-stripe-fees-to-my-customers)

This method works for us perfectly. 

We are launching our product in Ireland in June, and are currently preparing our software to work with Euros. 

We altered our formula to use the modified one provided at the bottom of the Stripe doc however we always seem to be 1 cent out. See the explanation below.

When this charge goes to Stripe, a €5.40 fee is taken.

At what point does our calculation go wrong?

Martin

[Peter Raboud]

It sounds like you're collecting an application fee somewhere in here - I'm assuming that's what the 0.031 in the percent fee is about. Could you provide a bit more context on how you're collecting that application fee? If this is what you're doing, it's worth noting that since Stripe takes the application fee as an integer number of cents, rounding is important. Generally, it makes the most sense to figure out the application fee that you want to charge, round it to an integer number of cents, include it as part of the goal, and then do this calculation. If you include it as part of the percent fee, from the formula's point of view, you're possibly charging some fractional number of cents as the application fee, which isn't quite true.

If I'm completely off-base, and that 0.031 isn't something application fee-related, could provide some more detail about where that number comes from?

Cheers,

Peter

[Martin McInnes]

Yeah, the 3.1% is our commission.

We collect it using the application_fee params in the api when creating charges. We only calculate the fee amount based on the original £100.

Please note that the formula we use works perfectly when the VAT is excluded. We just can't get it right when including VAT 

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Best Wishes

Martin McInnes

Lead Software Engineer @ Class4Kids

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[Peter Raboud]

If you intend to only take 3.1% on the original 100 EUR, that's not what this formula is going to calculate. That formula is assumes that you're taking 3.1% of the entire charge, including the bit that you're adding to account for the fixed & variable Stripe fees.

If that's the case, your target amount should be 103.1, so the formula would be:

total = (target - fixed) / (1 - percent) = ((100 * 1.031) + 0.3075) / (1 - 0.01722) = 105.2193

If you submit a charge with that total, the amount left over after the Stripe fees is 105.22 * (1 - 0.01722) - 0.3075 ~= 103.10. From the connected account's perspective, your application fee is also deducted, leaving them with exactly 100.00.

I'm a bit confused, though, since this formula will yield fairly different results that the one you're using - ie: off by tens of cents, not fractions of a cent that will often be rounded away. I may have misunderstood how you're setting this up. To confirm, my understanding of what you're doing is that you're creating a charge with amount=10539, application_fee=310 - is that correct?