What Happened

In the month of Sept 2021, it was brought to our attention that the fees that Stripe takes for processing transactions and the invoice item that Coworks appends when you want to pass those fees onto your member were different.

This is partly due to how Stripe calculates the fees. They process the invoice and after all invoice items are added, the fee is then applied (as it's the cost of processing the entire transaction. The Coworks system is built to offset that fee by applying an invoice line item that allows you to move that fee onto your member. Due to how Stripe calculates the fee being a percentage of the total, it difficult to add a invoice line item that accounts for the percentage total (as part of the percentage) - confusing we know.

So in order to properly offset the fee that Stripe adds, we have to run through a equation that predicts what the final total will be after the fee is added (even though the fee is part of the total fee calculation Stripe does).

⚠️ Math ahead ⚠️

How to calculate the payment amount to include the Stripe fee

To include the Stripe fee in the final charge, calculate the gross amount, taking into consideration that increasing the final amount also increases the Stripe fee: the Stripe fee is a flat fee plus a percentage of the total charge.

stripe-fees-to-customers.png

The flat fee and the total charge percentage must be factored into the final charge amount to ensure that you receive the desired amount, after Stripe deducts the fee from the charge.

In short, we need to shift the way our system calculates the fee, so that entire fee is passed on to your members, instead of you still eating a small percentage still, because after all, the idea is to pass all the fees.

Our Solution

Invoices

Our system has been updated to now properly run the equation above for communities that want to pass transaction fees on to the members. This requires no change on your part.

What you can expect to see is a slight increase in the fees that your members will get on their invoices. While statistically insignificant, we always want to be transparent when talking $.

While the change should be cents, we still wanted to bring it to your attention so that we can be prepared for conversations with members.

Before updates

After updates

You can see the change here would be an increase by 23 cents.

Reporting

If you are a community that passes fees onto your members, then you can expect to see slight increases in the invoice totals. It's important to note that we're not charging more for any of your plans. This is simply an increase to off the fees that Stripe takes so that you aren't paying out of pocket when the intention is to pass fees on.

This change will also help by making sure the fees in the payments report properly reflect what Stripe has taken so that it will be easier to match up while balancing your books.

This column in your Billing report will now both match the transaction fee on the invoice, but also the true net amount that's deposited into your bank.

Invoice Status Changes

This change to how we calculate invoice fees has also presented us the opportunity to improve the lifecycle of invoices for your convenience.

Previously, if you community has transaction fees enabled, you didn't have the option to automatically finalize and pay the invoice when a card is present when you submit the form. This leads to memberships that are set to "email" and not automatically draft. We've now enabled that feature for your community so that you can "set and forget" the membership and don't need to continuously process the invoices. They happen automatically.

Before Update:

After Update:

This change will allow you to collect & set the membership to automatically draft in one step. If you would not like this setting, you can either not collect the payment source, or once the membership is created, you can change the billing to send an email instead of charge automatically. You can do that by going to the team's membership tab and updating the billing type.

It is important to note that when selecting to "charge automatically," the invoice will be finalized and charged immediately. This means that you will not be able to edit it before it charges the included card. This is a change on how it used to work, where you would have an hour to update the membership. If you would like to still be able to edit the invoice, please select "No send an invoice to be paid manually by email."

In Summary

You can expect (with communities that pass fees to your members):

  1. Member's invoices to slightly increase

  2. The line item on the invoice is now exactly what Stripe removes

  3. Billing report transaction fee column to match exactly the amount from the invoice.

  4. Memberships now have the option to be automatically drafted

  5. Invoices from memberships that "automatically draft" will be finalized & will charge the payment source on file immediately.

While we recognize that an abrupt change in invoice fees isn't ideal, we're confident that this is how the system should have worked from the beginning.

We sincerely apologize for any confusion this has caused, but we're happy to be able to act swiftly and provide your a more accurate automated billing system.

Happy Coworking!

The Coworks Team

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