Home – New Forums Starting your journey PayPal vs Payment Gateway?

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  • #983626
    billyslater
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    Hi guys, tossing up the pros and cons of using a paypal account vs a banking payment gateway like this one from Westpac – Payment Gateway

    I’ve heard some horror stories about PayPal shutting down or putting a freeze on accounts and people losing recurring income.
    Like this:
    http://www.kotaku.com.au/2011/10/frozen-account-sours-paypals-reputation-with-indie-devs/

    Any advice/insight/help appreciated :)

    Thanks

    #1143399
    LucasArthur
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    Billy,

    Interesting article and interesting question..

    Although it really does depend on your requirements. volumes, business model, what are you selling etc etc… reason i say this is that some banks will not even provide a merchant facility to some industries unless already well established and the likes…

    Personally, due to fees, value of my items, processing etc etc i go for a direct merchant ‘gateway’/facility as i pay less than half what paypal fees are and even calculating monthly fees it is still in my favor due to the average sales cost etc etc (you’ll have your own break even point to establish this)…

    It also means i am in control of the facility, as opposed to paypal having the right to block/freeze my account or even refund as client not happy etc etc….

    Will be interesting to read others replies who have greater experience than me and to hear your digested thoughts on this as well.

    Cheers
    Jason ;)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1143400
    DME
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    As long as you can find competitive payment gateway rates ie no or low annual fees and reasonable transaction rates it may be useful to provide both. Just ask for quotes from all providers as it is likely you will get turned down by at least a few if your current or projected sales are relatively low, at times some won’t touch new businesses at all. This also means you can avoid most of the potential issues with PayPal as you will still have another option for payment. This is particularly relevant if you are selling to the public as opposed to commercial sales as many people use PayPal and find some comfort in the “protection” it offers. You can use your payment gateway for direct credit card payments and the PayPal link will allow the customer to choose how they want to pay either from money in their PayPal account, direct deposit or credit card. Initially it is unlikely that you will be able to secure significantly better transaction rates via a payment gateway than through PayPal. If you get to a position that you can negotiate better rates through a payment gateway then at that point it would make sense to look at phasing out PayPal.

    If your number of sales won’t be particularly high you should also consider offering direct deposit via regular banking. This becomes slightly more complicated with a higher number of sales as you need to put in place a system that can automatically reconcile payments between your e-commerce system and your bank account so you don’t have to manually validate that you have received the payment and that it is for the correct amount for every single DD transaction. You will still run into issues when customers send the incorrect amount or don’t include an order number but those are usually few and far between and relatively quick to rectify in most cases.

    Personally I can’t wait until there are a few more providers similar to Stripe: https://stripe.com/. Particularly something that is actually available in Australia.

    #1143401
    MatthewKeath
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    I would recommend you use both, people can pay via Paypal and they can use a credit card directly on the site.

    DME, post: 164066 wrote:
    Personally I can’t wait until there are a few more providers similar to Stripehttps://stripe.com/. Particularly something that is actually available in Australia.+100

    Certainly need for a service like this. Business opportunity perhaps?

    #1143402
    billyslater
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    SimplyReplica, post: 164005 wrote:
    Billy,

    Interesting article and interesting question..

    Although it really does depend on your requirements. volumes, business model, what are you selling etc etc… reason i say this is that some banks will not even provide a merchant facility to some industries unless already well established and the likes…

    Personally, due to fees, value of my items, processing etc etc i go for a direct merchant ‘gateway’/facility as i pay less than half what paypal fees are and even calculating monthly fees it is still in my favor due to the average sales cost etc etc (you’ll have your own break even point to establish this)…

    It also means i am in control of the facility, as opposed to paypal having the right to block/freeze my account or even refund as client not happy etc etc….

    Will be interesting to read others replies who have greater experience than me and to hear your digested thoughts on this as well.

    Cheers
    Jason ;)

    Yeah it’s the fees etc that are doing my head in.

    Who are you with? How do you go direct? Sounds good

    Thanks,

    Billy

    #1143403
    billyslater
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    MatthewKeath, post: 164084 wrote:
    I would recommend you use both, people can pay via Paypal and they can use a credit card directly on the site.

    +100

    Certainly need for a service like this. Business opportunity perhaps?

    Yeah that sounds like a solid option too

    Thanks Matthew.

    Is there any payment gateway in particular you would recommend?

    #1143404
    eWAY
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    Hi Billy,

    Something important to remember is PCI compliance. You’ve probably seen a lot of chat lately, including on FlyingSolo, about how important PCI compliance is and it’s finally getting the attention it deserves now.

    One key point with WestPac’s PayWay is that the card data is sent over a HTTPS server side connection. This means your servers are handling credit card data and you will have to meet PCI compliance (can be expensive).

    There’s two ways around it:

    1. Use their Hosted Payments option. This way, the card data is only taken in Westpac’s environment. This causes issues with cart abandonment though. To maximise your successful purchases you need to make the checkout phase as easy as possible, ideally through one simple page. Transferring customers introduces extra steps.
    2. Use a transparent redirect method. Transparent redirect means that although you host the payment form (on an SSL encrypted page) the credit card data is sent client side, straight from your customers browser to the payment gateway. This means your server never touches the card data and you have much lower PCI compliance issues. At eWAY we offer this through our new ‘Rapid 3.0’ API. It also includes free fraud prevention.

    Which shopping cart/platform are you using? This will be a big influencer in your choice of gateways as not all platforms support all gateways.

    Maclean

    #1143405
    MatthewKeath
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    billyslater, post: 164139 wrote:
    Yeah that sounds like a solid option too

    Thanks Matthew.

    Is there any payment gateway in particular you would recommend?I would call your bank and see what they can offer, then hook up with the good guys from eWay to sort you out.

    As Machlean says, using eWay means that take care of the PCI headache.

    #1143406
    LucasArthur
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    Billy,

    As Matthew suggested, definitely chat with your current provider (bank) to see what they offer.. although to take it a little further, i beg you to speak with the right person first.. ie, not the counter staff, not the merchant services team (initially) although go through a small business banker and share with them your knowledge.. these guys/gals have some good contacts you can sometimes leverage to your advantage depending on how much they buy into your objective/requirements…

    Also, depending on your delivery platform, some of the big 4’s (banks) offer a service that will integrate easily (very easily) with your delivery method through ecommerce which can sometimes mitigate the need for a middleman such as eWay (or other and apologies Maclean). Although in saying that, sometimes eWay is required with some solutions and can assist you with the handshake etc on some platforms and work with your bank as well…. Some of the ecommerce solutions do not offer payment gateways for aussie banks although do work with eWay as a sort of gatekeeper and allowing your own merchant service to hook through them to operate.. Gee i hope that makes sense, it barely does to me :)

    Anyways, lots of possibilities.. If you still want more info re what i use, feel free to bounce me a PM.. I am with CBA and happy to advise how to query this if you wish..

    Cheers
    Jason ;)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1143407
    billyslater
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    • Total posts: 9
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    eWAY, post: 164142 wrote:
    Hi Billy,

    Something important to remember is PCI compliance. You’ve probably seen a lot of chat lately, including on FlyingSolo, about how important PCI compliance is and it’s finally getting the attention it deserves now.

    One key point with WestPac’s PayWay is that the card data is sent over a HTTPS server side connection. This means your servers are handling credit card data and you will have to meet PCI compliance (can be expensive).

    There’s two ways around it:

    1. Use their Hosted Payments option. This way, the card data is only taken in Westpac’s environment. This causes issues with cart abandonment though. To maximise your successful purchases you need to make the checkout phase as easy as possible, ideally through one simple page. Transferring customers introduces extra steps.
    2. Use a transparent redirect method. Transparent redirect means that although you host the payment form (on an SSL encrypted page) the credit card data is sent client side, straight from your customers browser to the payment gateway. This means your server never touches the card data and you have much lower PCI compliance issues. At eWAY we offer this through our new ‘Rapid 3.0’ API. It also includes free fraud prevention.

    Which shopping cart/platform are you using? This will be a big influencer in your choice of gateways as not all platforms support all gateways.

    Maclean

    Thanks Maclean, I had no idea about the PCI compliance issues or the drop off that processing on their site would cause.

    Really appreciate it.

    Billy

    #1143408
    billyslater
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    • Total posts: 9
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    SimplyReplica, post: 164175 wrote:
    Billy,

    As Matthew suggested, definitely chat with your current provider (bank) to see what they offer.. although to take it a little further, i beg you to speak with the right person first.. ie, not the counter staff, not the merchant services team (initially) although go through a small business banker and share with them your knowledge.. these guys/gals have some good contacts you can sometimes leverage to your advantage depending on how much they buy into your objective/requirements…

    Thanks Jason, good advice about heading to the small banking guys to catchup first!

    #1143409
    LucasArthur
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    billyslater, post: 164356 wrote:
    Thanks Jason, good advice about heading to the small banking guys to catchup first!

    No problems,,, a word of advice (not a sage though :p)… keep it relatively ‘informal’.. act like you are interviewing them, that you are doing them a favor (not in a cocky way) as they also appreciate the business..

    Ask them questions about how they can help you, what can they bring to the table, how do the business banking relationships work and be frank… at the end of the ‘interview’ ask them how if they feel they are the right ‘partner’ for you.. This will give you the opportunity to clarify that they actually listened and genuine understood your business model and what you are trying to achieve.. this is important if you need a bank that will GROW with you…

    One small criteria… as per all interviews, the more prepared you are the more you will get out of the process… Have a list of questions, thoughts and services you want to understand.. This will allow you to either ask them directly or at least navigate them towards the answers you are seeking…

    A banker, should, cover the basics like:
    What is your business…
    How did you start…
    Where are you going..
    What services do you need…. (they tend to ask both business and personal)
    Growth opportunities…

    Good luck.. hope it travels well..

    Cheers
    Jason ;)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1143410
    rees websites
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    If programming costs is not a great concern, I would suggest you take the time to test what your customers prefer. There are good arguments on both sides for payment options, however, I assume that another question you would consider first is: ” What payment option will make me more sales? “.

    Maybe more of your users will prefer Paypal because they recognise and it is safe.

    If there was a 10% different with sales… would it be forth testing? Test your sales conversion and then decide.

    #1143411
    eWAY
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    billyslater, post: 164353 wrote:
    Thanks Maclean, I had no idea about the PCI compliance issues or the drop off that processing on their site would cause.

    Really appreciate it.

    Billy

    No problem at all Billy, please let me know if you have any specific questions and I’ll be happy to spend some time on the phone with you or answer via email etc.

    Maclean

    #1143412
    Gaurav -FabHomeXpo.com.au
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    Hi

    I have been looking for ways to accept recurring payments online and as a start-up, I need a low cost and easy to set up solution.

    MY REQUIREMENT: I will be offering memberships on my website starting from $20/month to various clients. I need a way to accept these payments and set-up automatic recurring payments.

    PAYPAL: As per my understanding, to get the above done, I need to get Paypal Website payment pro ($30/month) and Paypal recurring billing ($29.95/month and set up $110). If I get an internet merchant facility, I can use Paypal payflow ($20/month) instead of Paypal website payment pro. But other costs remain the same.

    OTHER PAYMENT GATEWAY: To set up recurring function in services like eWay, SecurePay etc. I definitely need to get an internet merchant facility.

    ISSUES: As a start-up, I want to get my site working ASAP. I don’t want to get an internet merchant facility due to various reasons like the process involved, fees and charges, SSL certificate cost & many more.

    Paypal pages are not mapped properly. On some pages they quote the price in USD and some pages in AUD for same plans. As well as they use the words ‘Website payment pro’ and ‘Paypal payflow’ interchangeably although these are different plans.

    ANY SOLUTION: Do you know of any other way to accept recurring payments online without setting up internet merchant facility? I have searched on the web intensively and can’t find an answer to this specific question.

    Thanks
    Gaurav

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