6 Payment Processor Overviews: which will be the most valuable to you?

mobile payment QPYTB4C

Believe it or not, many sales are lost at the point of purchase. The wrong payment processor could lead to lost sales and angry customers.

The quick lifecycle of technology has led to credit card processing to be a commodity to the end-user who expects a “fast, frictionless experience” according to 92% of consumers surveyed for an Ekata report.

Mobile, Near Field Communication (NFC), and contactless technologies offer new ways to achieve this and will be bettering their processes to more efficiently collect payments in the near future.

Online stores need to make their experiences mobile-friendly and tie into saved cards on desktops or wallets as 32% of the $9.4 billion in sales made on Cyber Monday in 2019, were made using smartphones, according to Adobe Analytics.

Brick and mortar businesses recently upgraded to card chip readers, but now they need to upgrade again for contactless payments, with nearly one-third of adults using a mobile wallet or app to make payments or transfer money in 2019, according to Mobile Payments Today.

Contactless payments are growing quickly as Visa hopes to issue 300 million contactless cards by 2020 and public services like New York City’s MTA now offer payments by phone at subway turnstiles and bus fare boxes.

The COVID-19 pandemic has only sped up the adoption of contactless payments as few want to handle the same public keypads and writing devices.

According to Square, 5.4% of sellers were cashless in February 2020 but that jumped to 23.2% in April as the lockdown persisted.

In addition, security has become more robust, yet retailers will lose $130 billion to fraud, from 2018 to 2023, according to Juniper Research.

With so much on the line, here’s a quick primer on which payment processor to choose (if you are based in the US; an international guide is in the works!)

You are a selling newbie and want to use an inexpensive payment processor in order to test the market demand for your products.

PayPal, which has been around since 1998 and has 220 million active accounts globally, is a great choice for low volume newbies that are not sure where their next sale will be coming from.

With 200 countries and 26 currencies supported, PayPal offers flexibility to sellers with a variety of options including the ability to integrate checkout on their websites, process payments via the browser, app, or reader, or even extend credit to customers.

A large number of integrations ensures that you will find something for all occasions. If not, PayPal provides APIs and developer tools that allow deeper integration and customization.

There are no monthly minimums or other hidden fees, other than the transaction cost (2.9% + 0.30 (2.20% + 0.30 for nonprofits)).

Of course, PayPal gives you the flexibility to offer additional services like recurring billing at $10 per month or a dedicated hosted payments page for $30 a month.

PayPal has been reviewed to have inconsistent support even though they tout 24/7 phone and email support.

However, unless account-specific, the deep developer community has most likely determined a solution.

From a security perspective, PayPal is the best with features like fraud prevention, a seller protection program, and transaction monitoring.

You are a small to medium-sized business with a small technology budget. Sales are heavily reliant on analytics and funnel optimization.

Stripe, which allows you to accept credit, debit, or bitcoin payments in 130 currencies and 34 countries, offers the simplest yet most powerful analytics out there.

With flexible billing and a fee of 2.9% + 0.30 (no monthly fee, no minimum, no hidden fees), it is the best for anyone that wants a simple yet robust customizable payment solution. (Stripe offers better rates to European merchants of 1.4% + 20p per transaction).

While it has hundreds of plugins and integrations, including WordPress and Squarespace, it is not an “out of the box” solution with varying levels of complexity from a five minute set up to employ a team of developers.

However, you decide to employ your set up you will find that the simple developer tools and community are unparalleled in the space.

Subscriptions, marketplaces, one-click checkout, mobile, or crowdfunding specific functionality are also available.

Stripe also offers ACH debit at 0.8% (capped at $5 per month) or $1 per ACH credit.

Other tools include Stripe Billing for subscriptions and recurring billing and Sigma, its SQL-based custom reporting tool. Stripe analytics allows users to visualize transactions and inspect each metric across several variables and time frames and is completely customizable for marketing managers.

You are a small brick and mortar business that is starting to move a portion of sales online.

Square allows you to accept payments on the go, with its technological innovations like the magstripe reader, contactless and chip reader, and stand that transforms your mobile device into a powerful point of sale terminal.

Square’s hardware and software versatility allow it to participate in a variety of businesses, including everything from restaurants to professional services.

Square is as simple as signing up, downloading the application, plugging in the card reader, and swiping the customer’s card.

While Square has this simple solution, the Square eCommerce API lets you build a custom solution into your website, thus allowing you to manage both your online and in-person sales in one place.

Other features from Square include the ability to manage inventory and employees, same-day deposits for a 1% fee, or next day for free.

Square pricing is competitive at 2.9% + $0.30 per transaction, with some card present transactions as low as 2.6% + $.0.30 per transaction.

You are a medium to large business doing lots of volume internationally.

Amsterdam based Adyen, with 250 payment methods and 150 currencies, is used by big Fortune 500 companies such as Uber, eBay (which moved over from PayPal), Microsoft, and Uber.

The software lets you accept every payment from a variety of methods into a single platform, giving you risk management, data insight, and buyer behavior tools.

Fees vary depending on the method of payment but are pegged primarily to Interchange++ fees and about $0.12 per transaction.

However, despite this pricing advantage, there is a monthly minimum that many small merchants will not be able to reach.

payment processor

 

 

You are a medium sized business that does a low margin high volume number of sales or has cyclical demand.

Helcim has the best pricing options for businesses that have variable sales or thinner margins.

The service provides Interchange++ pricing plus 0.50% + $0.25 per transaction and volume-based discounts.

It also allows you to protect your margin with a rate lock option.  Helcim offers in-person, online, and mobile processing, as well as advanced solutions like invoicing, recurring payments, eCheck, ACH, and level 3 and multicurrency processing.

The company offers flexibility with month-to-month billing with no long term commitments, no monthly minimum, no early termination fee, a simplified setup process, and fast approval time.

In addition, the Commerce platform offers a customer information database, tokenization, inventory management, and highly rated 24/7 phone support.

You are a small medium sized business focused on subscriptions.

Chargebee is ideal if your business involves recurring payments, memberships, or subscriptions.

This makes Chargebee most suitable for creators and bloggers as they are able to process nearly all of their subscription transactions and processes.

Customers should not have to re-enter their information every month.

Chargebee’s dashboard lets you manage all of your subscribers, upsell free trial customers to a variety of subscription tiers, and tie online payments with in-person access subscriptions or in-person payments with online subscriptions.

Chargebee charges a flat rate of $249/month for up to $600,000/year in revenue.

There’s a lot of different options out there for many different ways to make money. While this post touches upon the basics, the easiest solution is to sign up for the Famecast Beta where we’ll optimize on your behalf.

Related Articles

Share via
Copy link
Powered by Social Snap