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Fees along the stack
A single digital transaction passes through about 40 parties, and together they split somewhere between 2 and 2.5 percent, depending on where the payment comes from. Shopify takes roughly 2.5 to 3 percent, Amazon takes upwards of 10, and Apple takes 30 percent on in-app purchases.
Free for users
Instinct is free for users, and its plan is a blanket take rate charged to merchants, the way Apple Pay is free to cardholders while merchants pay to be on it. Where Instinct lands on that curve depends on how much distribution it provides. Apple's 30 percent is unrealistic for most businesses, and no number is set.
Travel margins
Travel is where the numbers already exist. Half of the transaction volume on the platform is travel, and the platform is approaching a billion dollars a year across a small, invite-only user base. Flights leave room for only a single-digit percentage, while some boutique hotels offer upwards of 30 percent for each booking delivered to them.
Why does Apple charge 30 percent?
The App Store opened in July 2008 with a 70-30 split in the developer's favor, a ratio that matched how digital music stores of the time divided revenue. The cut covers distribution, payment processing, and access to Apple's customers. In 2021, Apple lowered its rate to 15 percent for developers earning under one million dollars a year through its App Store Small Business Program. Larger developers still pay the standard rate on in-app purchases.
How is a card payment split among parties?
A card payment is divided among the bank that issued the card, the card network such as Visa or Mastercard, and the processor that handles the merchant side. The largest piece is usually the interchange fee paid to the issuing bank. In the United States, the Durbin amendment, passed in 2010, led the Federal Reserve to cap debit interchange fees for large banks. Credit card interchange has no such cap.
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