This transcript was generated from the episode audio and may contain minor errors.
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Today's caller hopes to sell virtual items for gamers at very low prices. They're talking prices like a dollar or less. Now this creates a problem because most payment processors charge fees that make this whole business model unviable. They don't just charge a percentage fee, they usually charge like 25 cents or something, you know, as a flat fee on top of everything else. Normally 25 cents is not that big of a deal, but if your sale price is a dollar or less, it is.
So is there something that can be done? Well, first of all, welcome to Side Hustle School. My name is Chris Guillebeau. So glad you're here. I love getting questions from our listeners.
And I got to admit I was a little bit stumped with this one. And kind of what I came away with is, you know, sometimes it's good to make sure you're not missing the forest for the trees. So what I try to do is take a step back and just consider it from that perspective. I don't claim to always be right, just to be clear, but I do hope to at least provide that perspective and say, well, have you considered this perhaps? And I'll talk more about that in my answer, but we're going to hear from this caller first.
Is there a payment processor for very small transactions? That question is coming up after this quick sponsor message. [Music]
Hey Chris, this is Kelly from Chicago. I've been listening to the show for a couple of years now and still love the puns. I want to sell virtual items for gamers, including some that costs less than a dollar.
My concern is that most merchant accounts, including PayPal and Stripe, charge a per transaction fee in addition to a percentage. I understand them taking a three to 4% cut, but if you're selling an item for 50 cents and there's a 25 cent transaction fee, that's half the cost of the item. Is there a payment processor I can work with to solve this problem or perhaps some way to use cryptocurrency and have no charges at all since it's strictly peer to peer? What do you think? - Hey Kelly, thank you so much for the question.
So at first I was a little bit stumped. I'm gonna give you some perspective as well as a direct answer. So the good news is PayPal does have a microtransactions option now. I don't know that I was even aware of that before, but I did some research. So take a look again, they call it micropayments.
So just search for PayPal micropayments. And the way it works is you'll pay a higher percentage, but a lower flat fee essentially. So you won't be paying the 25 cents on each transaction. I think you'll pay something like five to seven cents and then the percentage may be five to seven percent as opposed to two to 4%. So it's just a different business model that can actually work pretty well for microtransactions or micropayments.
Now that said, Kelly also mentioned cryptocurrency. I do think blockchain of some kind in the future, this is one of the problems that blockchain promises to solve because transaction costs are so high. Most banks don't wanna do microtransactions because they're not making any money off them. And because there are so many middlemen that these systems kind of work through. But still, this is getting a little bit complicated because these days at least it's still pretty hard to use cryptocurrency for most routine transactions.
So as for the virtual items themselves, like we talked about this in another episode as well, most of that stuff is centralized by companies like Epic Games, the makers of Fortnite and other games. And the aftermarket is minimal or non-existent. If they don't actually want people making virtual items for sale, they wanna control that process themselves. Now there's probably some opportunity that I don't know about. So in case I just said something that's inaccurate or is inaccurate in the future, here's the greater point.
What I hope to teach through this show isn't so much like here's the latest and greatest thing. Like here's how you can go and sell virtual items and here's how you can get your percentage fee to be lower. My goal here is to make episodes and tell stories that are evergreen and helpful for a long time. So the much greater skill you can acquire from all this stuff here is where do opportunities come from? Like where do I find the opportunities in the first place because they will change from time to time, month to month, season by season, year by year and such.
But where do the opportunities come from? How can I learn to spot them and how can I take action once I spot one? So I think if you listen to this show for a while, like you'll kind of see that narrative that I'm trying to build up sometimes more successfully than others, I'm sure. But I'm trying to communicate that the greater skill is like learning to spot the opportunity, taking action on the opportunity, not just it's like here are the top three things you can do at this particular month. So just some general comments there, make sure you're not missing the forest for the trees.
It really is hard to make money, to make a good profit when you're selling items for so low of a cost. So you should always ask like, is this the best opportunity for me? Might there be something else I should consider as well? All right, just my two cents there, my two cents with no transaction fee. I hope it's helpful.
And listeners, if you have a question of your own, come to sidehustleschool.com/questions. Thank you so much for joining me. Thank you for listening. Be sure you're subscribed. More is coming up every single day.
Once again, my name is Chris Guillebeau and this is Side Hustle School. [Music]
From the Onward Project.
