Intro
For many small businesses and charities, platforms like Stripe and PayPal are a convenient way to collect payments or donations. But behind that simplicity lies a growing cost: transaction fees that silently eat into your profits.
The good news? You can reduce these costs significantly — sometimes by 30–60% — without changing your entire system.
Understand Where the Fees Are Coming From
While 1.5% (UK) might sound minor, for high-volume businesses or growing charities, it can amount to thousands per year.
Before you can reduce fees, you need to understand them. Stripe and PayPal both charge:
• A base transaction fee (e.g. 1.5% + 20p or 2.9% + 30p)
• Currency conversion fees
• Cross-border fees
• Dispute/chargeback fees
Review your monthly statements and identify where the bulk of your charges are coming from. Are you receiving lots of international payments? Do most customers use credit cards?
Let’s say you process £10,000/month through Stripe:
• £10,000 x 1.5% = £150 in fees
• Add 20p per transaction = even more
Now, imagine cutting that to 1.1% or less.
Optimise the Way You Accept Payments
You may be paying higher fees simply due to how you accept payments. For example:
Card-present vs. card-not-present: Virtual cards often incur higher fees.
High-risk vs. low-risk MCCs: Your business category (Merchant Category Code) affects how much you’re charged.
Recurring billing: Stripe charges less for some subscription-based transactions.
You can often save by tweaking how payments are collected or classified.
Why Businesses Don’t Switch (and Why That’s Okay)
The fear is usually:
“I don’t want to disrupt my checkout flow.”
“It’s too technical to migrate.”
“My web dev isn’t sure how to integrate others.”
But the truth is — with the right gateway (like Knarkz Gateway — you can keep your front end while connecting a cheaper backend via API or SDK.
Better Alternatives with Lower Rates
Knarkz Payment Gateway – Works behind the scenes, integrates via SDK or hosted payment page.
We support:
Apple Pay / Google Pay
Pay by Link
Subscription billing
Tokenised repeat payments
PCI compliance
Add a Low-Fee Payment Processor Behind the Scenes
Here’s a smart solution: Use a lower-cost processor in the background while keeping Stripe or PayPal on the front end.
For example, platforms like Knarkz Payment Gateway integrate seamlessly with your existing checkout flow. You can route payments through a cheaper processor while still offering the same familiar experience to customers.
Encourage Cost-Effective Payment Methods
Not all payment methods cost the same. Cards often come with high fees, but:
• Bank transfers
• Direct debits
• Digital wallets like Apple Pay
…may offer lower rates.
Encourage customers to use cheaper methods by highlighting them at checkout or offering small incentives.
Pass on the Fees Transparently
Some businesses choose to pass on part or all of the processing fee to the customer, especially for large transactions.
This works best when it’s done transparently — for example:
“A small 1.5% processing fee will be added to cover third-party payment costs.”
Be sure to check local regulations and consumer protection rules before doing this.
Offer Membership or Subscription Models
Recurring billing often attracts lower fees than individual transactions and gives you predictable revenue.
Consider offering:
Monthly memberships
Subscription boxes
Access-based pricing models
Monitor, Analyse and Review Regularly
Use reporting tools (either your own or from your payment provider) to:
Track fees by transaction type
Compare different payment methods
Identify trends over time
Don’t just set and forget — by reviewing your setup regularly, you’ll catch fee leaks early and stay efficient.
Case Study – How We Helped a Client Save 47%
One of our retail clients was processing around £1.5M/month through Stripe. After reviewing their setup:
We switched backend processing to Knarkz Gateway
No disruption to customer checkout
Result: Over £8,000 saving in fees per year
Key Takeaways
You don’t need to ditch Stripe or PayPal entirely — you can build around them
Significant savings can be achieved by switching the processor, not the interface
The setup is technical but manageable with the right support
Most businesses recover migration costs within 1–2 months
Conclusion: Save More Without Changing Everything
Reducing Stripe and PayPal fees doesn’t have to mean abandoning your platform or confusing your customers. With a few strategic adjustments, you can keep your existing setup and still save hundreds — or thousands — every month.
If you’re looking for help implementing a low-fee payment processor behind the scenes, we’d love to show you how Knarkz Payment Gateway can help.
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