WooCommerce payment gateway based fees and discounts are an excellent way of incentivising or discouraging users from choosing certain methods of payment. They’re also an important way for you to ensure you don’t lose out through charges imposed by certain payment gateways.
WooCommerce payment gateway based fees and discounts
In this article, I’m going to look at two ways to apply WooCommerce payment gateway based fees and discounts:
- Use a plugin to apply fees and discounts according to the payment gateway
- Programmatically apply fees and discounts according to the payment gateway
By the way, if you’re looking specifically for adding a cash on delivery fee, take a look at this article.
What is a WooCommerce payment gateway?
The payment gateway is the method used by the customer to pay for their order. Examples are PayPal, Stripe (for credit card payments), bank transfer, cash on delivery, and many more.
Which payment gateway should I choose?
Which payment gateway you choose is going to be down to a number of factors, including:
- Where you’re based – not all payment gateways are available in every country
- How much you’re prepared to pay in fees – each gateway has a different fee structure
- How much you want to spend on initial costs – some payment gateway plugins are free, others will cost you just to install them on your site
The most popular and trusted WooCommerce payment gateways.
What do payment gateways cost?
Costs vary. For instance, PayPal can charge you up to 3.4% per transaction. That’s a big chunk of your profits.
On the other hand, if you offer BACS payments, Cash on Delivery, or other local pickup or collection options, you may not have any cost associated with the payment gateway.
This is the main reason you might want to levy a WooCommerce payment gateway based fee or discount – either to add a surcharge on the payment gateways that cost you extra. Or to offer a discount to customers if they use a cheaper payment method.
Not all gateways have costs attached
A really simple way of saving costs for yourself, as the business owner, and for your customers is to offer a collection option. Of course, this depends on the nature of your business but it works really well for stores that sell locally.
You can also offer bank transfer or cheque options. This increases the amount of manual work you need to do, and it slows down the overall process – but it does allow you to save some money.
Why use multiple gateways?
You might be thinking that it would just be simpler to only offer the cheapest payment gateways. Up to a point, that might be true. But there’s a good chance that you’ll miss out on sales if you don’t offer customers payment options that they’re familiar with.
For instance, although it’s expensive, PayPal is a really convenient option for many people to use for payment. They don’t need to find their credit card, they only need to click a button.
So having choice on your site can be to your benefit.
Why apply different charges according to the payment gateway used?
There are several reasons to apply different charges based on the payment gateway, including:
- Credit card providers usually charge you a percentage of each transaction. You can recoup this fee by adding the equivalent amount to the cost of the order and therefore passing the transactional fees from your bank on to your customer.
- PayPal charges you a fee on every transaction. You can add a flat fee or a percentage of the overall order total to recover this cost from the user.
- With PayPal and credit card gateways, you can often find that you are subject to disputes or chargebacks. The costs for these vary between gateway providers but by adding a small surcharge to users who check out through one of these gateways, you can provide a small insurance for yourself against future disputes.
- If you accept payment via BACS or bank transfer, you might be charged per transaction by your bank. You can add a small fixed fee to the cart to cover these bank charges.
- You can offer incentives to your customers to pay by your preferred payment gateway by applying a discount. For instance, if you would like to encourage users to pay via bank transfer, you can offer a fixed or percentage discount.
Which is better – fee or discount?
Should you cost your products at a lower price, then add an extra fee for certain payment gateways? Or should you build the fees into your product price, then offer a discount if the customer chooses a less expensive payment gateway?
Good question – I wish I had the answer. I think this will depend on the type of business you’re running:
- Pricing products lower is always a good encouragement for customers; but seeing an extra fee imposed at checkout can be a cause of cart abandonment
- Having slightly more expensive products but a discount at checkout could be a pleasant surprise for customers
Using a plugin to apply fees and discounts based on payment gateway
However you decide to approach WooCommerce payment gateway based fees and discounts, you’ll need an extension to WooCommerce.