Beginning December 18, Patreon will charge patrons, the people giving money to the creators they support, a flat 35 cents plus 2.9% of the pledge. This means that if you decide to give $1.00 a month to YouTube creator Nerkish, Patreon will charge you $1.38 a month. Nerkish after Patreon’s five percent handling fee to the creator will rake in 95 cents.
Why is Patreon doing this? because that is what Patreon’s credit card processor is charging them to process credit cards: a flat 35 cents per transaction and 2.9% of the pledge. This is a standard fee structure charged by credit card processors to merchants. In this particular case, Patreon is the merchant.
Is Patreon allowed to do this? Yes, in fact, according to recently enacted credit card processing laws, they are expressly allowed to pass on the processing cost to the cardholder. Even if they wanted to pass this on to the creator, technically under the law, they wouldn’t be allowed to. This can only be passed on to the cardholder.
I should note the flat 35 cents per transaction is charged whether the transaction is approved or declined. It’s an authorization fee. It’s what the processor charges the merchant for each card that is run. Technically, it’s what MasterCard and Visa charges for each card run and this cost is passed over to the processor. If the card is approved, the Patreon passes this over along with the other 2.9% fee. If the card is declined, they eat the cost.
This new change should decrease the number of $1 pledges people have made. Knowing that a $1 pledge costs a $1.38 a month might make people think twice before pledging money to their favorite YouTube creators.