How can I add a fee/service fee to cover transaction costs etc?
Service Fee
A fee can be added to participants' invoices to cover costs incurred by the campaign.
It's frequently used to cover transaction fees charged by Stripe.
Checkout Interface
This is the Checkout user interface when the service fee is enabled. By default it's toggled off.
Service Fee Setup
Step 1) To set up a fee that applies to all payments or all donations go to Setup > Payments then select the pencil icon below 'Actions' on the right hand side of the page. Alternatively, you can enter the flat Fee and percentage Fee directly into the corresponding fields within the table. Once saved, the configured fees will automatically apply to all applicable payments or donations.
Step 2) Enter the flat fee component and the percentage as required and the service fee label is editable and can be modified as required.
Step 3) Determine if the fees should be optional or mandatory. Check local laws. Mandatory fees are illegal in the UK.
Step 4) Check the box Apply Fee to the Final Charge to enable GalaBid to adjust the percentage to compensate for the fact Stripe fees are charged on the new invoice amount.
How is the Stripe Service Fee Calculated?
When a participant covers the Stripe processing fee, the service fee is added to their subtotal so the organisation receives the original subtotal before any other applicable fees or adjustments.
The service fee is calculated using this formula:
Example
If the subtotal is $100:
Service Fee = ($100 × 0.029 + $0.30) ÷ (1 − 0.029)
Service Fee = $3.30
Note: This example uses a 2.9% processing fee plus fixed $0.30. Actual fees may vary depending on the applicable Stripe pricing and transaction settings.
Why isn't the service fee calculated directly from the subtotal?
Stripe charges its fee on the total amount paid(US$103.30), not just the subtotal(US$100). Once the service fee is added, the total amount paid is higher, so Stripe's fee is higher too.
If we added exactly 2.9% + $0.30 to the subtotal, Stripe would also charge 2.9% of the service fee itself, leaving the organisation slightly short of its original subtotal.
For example, suppose the subtotal is $1,000 and the processing fee is 2.9% + $0.30.
Simple calculation:
- Service fee: ($1,000 × 2.9%) + $0.30 = $29.30
- Total paid: $1,000 + $29.30 = $1,029.30
- Stripe processing fee: ($1,029.30 × 2.9%) + $0.30 = $30.15
- Amount received by the organisation: $1,029.30 − $30.15 = $999.15
The organisation receives $0.85 less than the original subtotal.
GalaBid's calculation:
- Service fee: ($1,000 × 2.9% + $0.30) ÷ (1 − 2.9%) = $30.18 (rounded up to two decimal places)
- Total paid: $1,000 + $30.18 = $1,030.18
- Stripe processing fee: ($1,030.18 × 2.9%) + $0.30 = approximately $30.18
- Amount received by the organisation: $1,030.18 − $30.18 = $1,000.00
GalaBid uses this formula to account for the percentage fee charged on the service fee itself, helping ensure the organisation receives its original subtotal before any other applicable fees or adjustments.
