- Chapter 2 becomes the fastest-selling Solana product
- Zero transaction fees on over $20 million in sales with Solana’s Shopify Integration
- Traditional sales incur over $600,000 in fees.
Credit card fees have long been a point of contention for merchants. While seemingly small on individual transactions, they accumulate a significant financial burden over time. Most recently, the success of the Solana phone highlighted this issue.
Solana Mobile’s ‘Chapter 2’ sales reached astounding figures, leading to significant fees. This prompted Yakovenko to spotlight the significance of these fees and highlight blockchain alternatives. Hefty credit card fees have increased interest in alternative payment methods offering cost savings and efficiency improvements.
Solana Phone Sold With Credit Cards, Zero-Fee Alternative
On Tuesday, February 13, Solana Mobile reached a significant milestone with 100,000 preorders for its Web3 phone. While ‘Chapter 2’ registered over $45 million in sales, it also highlighted a significant cost in credit card fees.
In a tweet following the milestone, Solana founder Anatoly Yakovenko highlighted this cost. He compared the $20 million in transactions they did through Shopify’s integration for USDC stablecoin on Solana to a similar sales volume through credit cards.
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The results are startling, as according to Yakovenko, credit card fees amounted to $600,000. This converts to a 3% fee for $20 million in payments. Conversely, fees through the Solana network, on the other hand, amounted to near zero.
Why Merchants Hate Credit Card Fees
Credit card transactions have become ubiquitous in the global payment ecosystem, especially in the United States. While facilitating ease of payment and broad acceptance, these transactions come with a significant cost burden for merchants.
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On average, credit card processing fees in the US can range between 1.5% to 3.5% per transaction. Specific fee depends on the card network, the type of card used (debit vs. credit), and the merchant’s payment processor. For high-volume sales, as highlighted by Solana’s founder, these fees can accumulate to substantial amounts.
The most frustrating aspect for many merchants is that credit card companies can charge high fees due to their large market share and lack of competition. For instance, in 2021, Visa controlled 61.6% of the credit card transactions, followed by Mastercard at 25,7%. The two dominant players combined accounted for almost 90% of the market.
For that reason, many merchants are looking at crypto as a potential alternative. However, despite its potential advantages in cutting costs, crypto payments face significant barriers to adoption, which likely means that credit cards are here to stay soon.
On the Flipside
- Consumers still face transaction fees with crypto, particularly when converting digital assets to fiat currency.
- Unlike in the US, credit card fees are capped in most jurisdictions. This means there is a less pressing demand for alternative payment methods in those countries.
Why This Matters
The comparison between the costs of traditional credit card transactions and the potential savings with blockchain-based payments presents a compelling case for adopting cryptocurrency payment solutions. However, overcoming the barriers to adoption is crucial for these technologies to reach their full potential in e-commerce.
Read more about Solana’s Shopify Integration:Â
USDC Takes Center Stage in Solana Pay’s Integration with Shopify
Read more about Solana’s Chapter 2 sales:Â
Unpacking Solana’s Second Smartphone’s 100K Phone Preorders
