ONLINE PAYMENT SOLUTIONS
The Best You Want To Select For Your Business
Are you planning to setup an online business? Or extend the setup of your current traditional business to be digital? An Online Payment Solution is inevitable for you in order to receive payments online.
Online payment solutions are typically a combination of Payment Gateway and Merchant Account.
A payment gateway allows you (i.e. merchants) to securely pass customer’s financial information (credit card info) to the merchant and then to payment processor. The payment gateway is also the middleman between the merchant and their acquiring bank. They protect credit card details by encrypting sensitive information and have guaranteed fraud protection mechanism in place.
A merchant account is an online identity (account) given to the merchant that is further connected with their acquiring bank.
A payment solution helps you instantly bring your shop online without worrying about any security issues or customer data. Payment solutions are Payment Card Industry Data Security Standard (PCI DSS) compliant. If you are storing the customer payment data on your portal, you need to make your portal PCI DSS compliant.
Based on growing global e-commerce market, many companies are competing in this space by offering their payment solutions. Primarily they are competing on transaction rates and specific demands of certain businesses. Interested to look at a comprehensive list of payment solutions, read here.
To be more focused, we have picked Top 5 that are commonly used by startups and businesses that launch for the first time and scale.
- Stripe
- Paypal
- Dwolla
- Authorize.net
- Google Checkout
HOW TO SELECT A PAYMENT SOLUTION
Before you make a decision for a payment gateway, its recommended to do some research around your business needs. One should consider the setup and transactional fee, security, multi-currency and international availability, customer service and other factors while finalizing the payment gateway. Our analysis below is based on a comprehensive and critical list of factors that you may want to consider.
Below are some key factors around which we based our comparison for the solutions listed above.
- SET UP FEES
They are the one time initial setup fee when you subscribe with a payment solution and integrate it with your online store.
Stripe: Its free, $0 setup cost and no monthly recurring fee
Paypal: Basic version is free of cost. However PayPal pro has a fixed monthly recurring fee of $30 per month
Dwolla: Its free, $0 setup cost and no monthly recurring fee
Authorize.net: It has a one-time setup fee for $49 as well as monthly recurring fee of $25.
Google Checkout: Its free, $0 setup cost and no monthly recurring fee
2. TRANSACTIONAL FEES
It’s the most important factor to consider. All the payment solutions are primarily competing on the transactional charges. This pricing tier refers to the cut being charged on every transaction made by the consumer.
Typically pricing is offered in two ways, Tiered pricing (bundled or bucket) and Interchange Plus (cost plus or pass through).
Any pricing is divided into two costs (interchange costs + processor costs)
Interchange costs are same for everyone and charged by Visa or Mastercard. No special situations, it’s a flat rate that a payment processor charges.
Processor Cost is the cost charged by the Merchant Account provider like Paypal. This is the only negotiable cost based on which you can make your choices.
Stripe: 2.9% of the transaction + 3 cents ($0.03) per transaction
Paypal: 2.9% of the transaction + 3 cents ($0.03) per transaction
Dwolla: 25 cents ($0.25) flat per transaction. Free for any transaction less than $10.
Authorize.net: 2.9 % + 30 cents per transaction
Google Checkout: Basic is 2.9% of the transaction + 3 cents ($0.03) per transaction. This percentage reduces upto 1.9% based on transaction volume. Additional 1% is charged if the merchants country is different from buyers billing country
3. EASE OF INTEGRATION
Typically these solutions are providing their API’s for your development team to integrate it with your online store. They also provide a SANDBOX account, for testing purpose. Using the Sandbox account you can make dummy transactions to confirm if the integrations are done right nor not. These transactions are not charged to anyone.
Stripe: Fairly simple
Paypal: Fairly simple
Dwolla: Fairly simple
Authorize.net: Simple but needs to go through documentation as there are extended features
Google Checkout: Fairly simple
4. SECURITY OF CUSTOMER INFO
Regulatory authorities have imposed a PCI DSS compliance on all the payment providers to safe guard the customer financial data. Its mandatory for anyone storing financial information.
Stripe: PCI DSS compliant
Paypal: PCI DSS compliant
Dwolla: PCI DSS compliant
Authorize.net: PCI DSS compliant
Google Checkout: PCI DSS compliant
5. CUSTOMER SUPPORT
It’s an important consideration, especially in case of conflicts or issues. The quickly you can reach out to get support, its better.
Stripe: Email support only
Paypal: Phone and Email support available
Dwolla: Email support only
Authorize.net: Phone, Email support as well as Live chat available
Google Checkout: Phone, Email and Chat support available
6. TIME TO PROCESS TRANSACTIONS
It’s important to understand how much time it takes to get money from customer to your merchant account and then from merchant account to your bank. How quickly you can get the cash in hand is an important consideration in some business processes.
Typically the customer to merchant account is instantaneous. It depends on how much time it takes for withdrawl.
Stripe: First transfer from Stripe to your bank takes 7–10 days. Subsequently it takes 2 days for followon transactions.
Paypal: Takes about 3–5 business days to transfer money from US Bank account to Paypal or vice versa.
Dwolla: It takes about 1–2 days from Dwolla account to the bank account.
Authorize.net: 2–3 business days
Google Checkout: It takes about 3–5 business days from your Google Wallet to your bank account.
7. INTERNATIONAL AVAILABILITY
If your consideration is to have your clients pay from outside USA, you may want to consider the solutions that covers your geographical region.
Stripe: US, Canada, UK and some countries in Europe.
Paypal: 190 Countries
Dwolla: US Only
Authorize.net: USA, UK, Canada, Europe
Google Checkout: USA, UK
8. ACCEPTANCE OF VARIOUS CARDS
At times consumers doesn’t have the account with the same service but they can pay via their credit cards online and the payment solutions have the flexibility to accept the payments.
Stripe: Major credit cards, JCB, Diners Club
Paypal: Major Credit Cards
Dwolla: No Cards
Authorize.net: Major Credit Cards, Diners club, JCB, Bank Account Payments
Google Checkout: Major Credit Cards
Apart from the factors above, you might want to consider some more aspects based on your business needs. This may include:
- Available support in various e-commerce systems that you may be using like Magento, Shopify etc.
- Available support if you have any specific business needs like handling certain limit of transactions or customization support on your portal.
- Available support for debit card processing.
- Available support for integration to your bank.
- Available support for accepting multiple currencies.
For startups, considering the ease of use and integrations, Stripe and Paypal remains the best choice especially when they are testing their business hypothesis.
