summary
- Chapter 2 emerges as the speediest-selling Solana product, boasting zero transaction fees on sales surpassing $20 million through Solana’s Shopify Integration.
- In contrast, conventional sales incur over $600,000 in fees.
Merchants have long grappled with the vexing issue of credit card fees. Though seemingly inconsequential on a per-transaction basis, they amass into a substantial financial strain over time. The recent triumph of the Solana phone underscored this predicament.
The ‘Chapter 2’ sales of Solana Mobile soared to remarkable heights, resulting in considerable fees. This spurred Yakovenko to underscore the importance of these fees and advocate for blockchain alternatives. The burgeoning credit card fees have intensified curiosity in alternative payment methods that promise cost savings and operational enhancements.
Solana Phone Sold via Credit Cards alongside Zero-Fee Option
Solana Mobile achieved a notable milestone on Tuesday, February 13, garnering 100,000 preorders for its Web3 phone. Despite the impressive sales of ‘Chapter 2’, totaling over $45 million, it also brought attention to the substantial expenses incurred from credit card fees.
In a tweet after reaching the milestone, Anatoly Yakovenko, the founder of Solana, emphasized this expense. He juxtaposed the $20 million worth of transactions processed via Shopify’s integration for USDC stablecoin on Solana with a comparable sales volume through credit cards.
The findings are striking, as per Yakovenko, credit card fees totaled $600,000. This translates to a 3% fee for $20 million in payments. In contrast, fees incurred through the Solana network were nearly negligible.
What Makes Merchants Dislike Credit Card Fees
Credit card transactions have become widespread in the global payment landscape, particularly in the United States. While offering convenience and wide acceptance, these transactions impose a significant financial burden on merchants.
In the US, credit card processing fees typically range from 1.5% to 3.5% per transaction. The exact fee varies based on factors such as the card network, card type (debit vs. credit), and the merchant’s payment processor. As highlighted by Solana’s founder, these fees can accumulate to substantial amounts for merchants with high sales volumes.
One of the most frustrating aspects for merchants is the ability of credit card companies to levy high fees due to their dominant market share and limited competition. For example, in 2021, Visa held a commanding 61.6% share of credit card transactions, followed by Mastercard at 25.7%. Together, these two giants controlled nearly 90% of the market.
Consequently, many merchants are exploring cryptocurrency as a potential alternative. However, despite its potential cost-saving advantages, crypto payments encounter significant barriers to adoption. This suggests that credit cards are likely to remain a staple in the payment landscape for the foreseeable future.
