What's the best online payment processing solution? [closed]

Should be available to non-U.S. companies, easy to setup, reliable, cheap, customizable, etc. What are your experiences?

Solution 1:

You can't really answer this kind of question with a "I like 'insert provide name here'" type answer because like so many things it is a balance and the reasons for choosing a payment processing solution tend to be complex.

Volume / Value

The most important factor in choosing a secure payment clearance service (the people who will connect to the banking networks and clear the money for you - will refer to them as SPCS) is how many widgets will you be selling at what cost. The pricing models of all the SCPS providers is based around this equation. This dictates the economics of using the service, which is nearly always the most important factor.

For example, in the UK securetrading.net have a large annual fee and high minimum transaction values (been a while since I've seen the exact numbers and they don't make it immediately obvious on the site, but this is for illustration only anyway) making it one of the most expensive solutions to use if you are selling high value low volume. Most smaller clients will fall into this model. High value is really anything over a couple of dollars. Low volume is typically anything less than tens of thousands of units per month. However, if you are running a donations service in the aftermath of an international environmental disaster (relatively low value very high volume) then they become one of the cheapest.

Factor in to this the setup costs (relatively high), and the cost to tie the service into the site (in SecureTrading's case it's very easy to do, but still a lot harder than adding a PayPal button) and you start to build up a true picture.

On the flip side, a service such as PayPal has very low setup costs (no fee to pay, and trivially easy to integrate), but relatively high transaction costs. It is great for high value / low volume transactions.

The Bank

There are two main categories of payment clearance service - Bureau and Bank Acquired.

In the UK at least NetBanx, SecureTrading and WorldPay offer both bank acquired and bureau services. ProtX and SecPay offer only bank acquired services. PayPal and its ilk operates slightly outside both definitions (see Protection below).

A Bank Acquired service plumbs into your normal banking merchant account and clears the funds straight into it. As well as charging you for this service, your bank will also take a slice, typically this is more than the SPCS provider will charge and so it actually is the bank that becomes the deciding factor.

Some banks will only work with their preferred provider. In the UK, most banks want you to have a separate Internet Merchant Account even if you already have a Merchant Account with them.

I always tell clients to shop around, as this will make a huge difference to how much their e-commerce venture can bring in. All banks are not created equal.

Bureau services effectively act as your bank at the same time as providing the clearance service. They were popular in a time when banks hadn't grasped the concept of the Internet and would prefer transactions be chiseled into stone tablets if they got their way. Often the choice between a bureau service and a bank acquired service is made for you based on circumstances.

Trading History

In many countries (including the UK), most banks won't give you a merchant account until you have been trading for a particular period of time (2 years in the UK). Your only option is then a bureau service.

Cash flow

Most bureau services will hold onto your cash as security against "charge backs".

If you sell me a Ferrari and I am horrified to learn that you've sold me a small metal toy rather than the 1.5 tonnes of Italian automotive passion I was expecting, I will complain to my credit card company who will refund me and then chase your merchant services provider for a refund. They will have to give them the refund and then chase you for the money.

It's therefore in their interests to hold on to your money for a period of 4-6 weeks to protect against this. If you sell services or goods with no capital outlay (software for instance), then you can afford this. If on the other hand, you really are having to pay your luxury car importer to provide you with stock, then cash flow becomes very important and you're going to need a bank acquired service where you can be paid immediately.

Protection

One major downside to PayPal and similar services is that it is not covered under the same regulations that govern credit cards.

Simply put, if you buy something on a credit card your card provider is liable for ensure you get what you paid for (broadly speaking, in most countries, does not constitute legal advice etc.) and if you have a problem with your purchase they will refund you very quickly and then will go and chase the person that you paid.

This is the kind of protection you hear about when Leo Laporte advertises American Express on his podcasts. It is a "Good Thing"TM. You don't have that protection with PayPal because when you use your credit card on PayPal, you are actually buying PayPal's service. So, even if you are mis-sold a product, the person you paid for the service (PayPal) didn't mis-sell, they provided the service you paid for. This breaks the chain.

PayPal don't have a legal obligation to protect you in the same way, and their record on refunding ripped off customers is less than spangly. I'm guessing they have "Caveat Emptor" writ large on the walls of their head office. :)

I'm not dissing PayPal, they are way ahead of the curve on many other security features, but just another factor to bear in mind.

End to end integration

Different services differ in their ease of integration. Oh boy do they differ. I'm sitting on some work right now to do an HSBC integration. I'd rather have a root canal. Some of the systems make big assumptions about the way you have to work with them, and are poorly designed or inflexible. Retro-fitting them to an active site can be very painful. Some of them are beautiful and easy to work with (and not necessarily less secure). The biggest difference is how you choose to integrate though.

Most services integrate by allowing you to redirect to a secure site where your customer fills in his / her details. They are finally redirected back to a page on your own site with the results of the transaction. This works well in most cases and is easiest to integrate.

When you buy something on Amazon, you don't get redirected to WorldPay, or PayPal however. If you want end-to-end integration, most services now will let the communication happen behind the scenes. Your own site has to have a decent secure server certificate of course, and the integration is necessarily more complex.

Reputation

It used to be that PayPal was used on dinky sites. You wouldn't catch Amazon using it. That perception has changed a lot, and in fact in some senses PayPal does security better than most. If your audience expects to see PayPal and you give them some other service then you may lose custom, or vice versa. These days many merchants offer a choice to customers.

UK Providers

• WorldPay. Well established. Bureau and bank acquired. Relatively high transaction costs and annual costs. Fairly easy to integrate. Owned ultimately by Royal Bank of Scotland.
• SecPay. Bank Acquired. Low per transaction cost and low annual cost and flexible payment models.
• ProtX. Bank Acquired. Low per transaction cost and low annual cost, flexible payment models. Can be quite demanding to integrate.
• HSBC. Bank Acquired. Low per transaction cost. High set up and annual costs. Very inflexible to integrate.
• SecureTrading. Bureau and Bank Acquired. Low per transaction cost but high setup and annual costs. Was a doddle to integrate last time I used it (9 years ago!)
• NetBanx. Bureau and Bank Acquired. Haven't used since 1996 so can't comment!

And of course PayPal, Google Checkout and Amazon FPS are well worth looking at and worth a whole answer on their own!

Summary

Told you it wasn't that simple! Usually, as developers, we're not in the position to choose for ourselves, and these decisions should be driven by the business needs of our employer / client.

Most e-commerce projects would start with PayPal or similar. When the business gets enough orders that they could save money by switching to another service, then they've got enough money to pay for the switch.

Disclaimer: I am UK based, and have performed many integrations with a whole slew of these services over the years, however the market changes all the time and things may have changed and your mileage may vary! I am not a lawyer or accountant, and if you take my advice it's not my fault :)

Solution 2:

I'd say paypal or GoogleCheckout.

Google Checkout is either 2% + .20USD or free depending on how much you spend on adwords. If you spend a dollar on adWords, your next $10 on Google checkout is free.

Paypal is 1.9% to 2.9% + $0.30 USD (2.9% for up to $30,000/month, 1.9% for more than $100,000/month)

Without factoring in the 20/30 cents, Paypal is just barely cheaper if you sell more than $100,000 per month, and spend nothing on adwords.

Solution 3:

http://www.authorize.net/ works well. This type of solution would allow your customer to enter his/her credit card directly.