Payment processors

[japancool]

I'm having a look around at payment processors, but for the life of me, I'm struggling to find one that offers more benefits than Paypal.

* In cost terms, Paypal seems to me to be comparable to most other alternatives once you add the cost of using their payment gateways on top of transaction fees.
* No withdrawal fees, which some processors charge.
* Freedom to withdraw at any time.
* Reduced transaction fees for higher volumes.
* No additional credit card processing fees, although the basic fee for debit cards is higher.
* No foreign currency conversion fees.
* Seller protection.
* No minimum monthly fee.

The only thing I can see that you don't get is fraud screening and of course, there is a perception that using Paypal means you are smaller and less professional, which could put some customers off.

Am I missing something? I'm trying to find better alternatives but nothing jumps out at me.

I know Paypal can suspend your account or impose a rolling chargeback buffer, but this seems to be a risk with many other payment processors as well.

 

[Nexolutions]

I would agree, PayPal are fantastic, if your'e looking to turnover less than £500 per month.

An lot of the features you've listed can be found across other providers, ie;
* No withdrawal fees, which some processors charge.
* Freedom to withdraw at any time - However with this, i think Paypal is5 days and merchant accounts are 3 days.

The reduced transaction fees for high volumes, you may want to check their terms to see exactly what they define as high volume and see if that relates to your business.

If i was rule of thumb it, Less than £500 they are great. Over £500 you'll be looking to be charged double what a merchant account would.

 

[japancool]

I would agree, PayPal are fantastic, if your'e looking to turnover less than £500 per month.

An lot of the features you've listed can be found across other providers, ie;
* No withdrawal fees, which some processors charge.
* Freedom to withdraw at any time - However with this, i think Paypal is5 days and merchant accounts are 3 days.

The reduced transaction fees for high volumes, you may want to check their terms to see exactly what they define as high volume and see if that relates to your business.

If i was rule of thumb it, Less than £500 they are great. Over £500 you'll be looking to be charged double what a merchant account would.

Higher volume meaning £1500, at which point the fee drops to 2.9%+20p. As for freedom to withdraw, with Paypal, you can withdraw the money instantly.

Say you're doing £1000, with an average transaction amount of £50. With Paypal, this will cost you £38 a month.

With Sagepay, if you use their merchant account, it will cost you £25 plus £3.20 if everybody paid by debit card with 3D secure. If everyone paid by non-secured credit card, it would cost an extra £30, not £3.20. Plus foreign exchange fees if they pay with a non-UK card.

With Worldpay Business Gateway plus, it would cost you £19.95 plus £18.50 in transaction fees, with a £75 setup fee.

With Skrill, it would cost 19.95 euros a month plus £33 in transaction fees, plus a withdrawal fee 1.80 euros per withdrawal.

With HSBC's IMA, it's about 1.65% per transaction, but there is no payment gateway (AFAIK), so you'd have to pay around another £20 for a gateway.

Maybe I'm not understanding it correctly, but it still seems to me that Paypal is more cost effective.

 

[joshgeake]

Maybe I'm not understanding it correctly, but it still seems to me that Paypal is more cost effective.

I see where you're coming from but because you're only doing £1000 per month and with your sums that's only 20 transactions (at £50 each) then the merchant account providers don't really want your business anyway. They're going to hammer you to pieces.

But...lets say you have 500 transactions at £25 each, then PayPal will be bashing you for £420 that month in merchant/gateway fees. By comparison, CharityClear and CardSave are both almost half that.

 

[japancool]

I see where you're coming from but because you're only doing £1000 per month and with your sums that's only 20 transactions (at £50 each) then the merchant account providers don't really want your business anyway. They're going to hammer you to pieces.

But...lets say you have 500 transactions at £25 each, then PayPal will be bashing you for £420 that month in merchant/gateway fees. By comparison, CharityClear and CardSave are both almost half that.

Yes (although it would be £400 for Paypal, rather than £420, as you'd be on their 2.4%+20p rate). I was working it out on £1000 based on the previous poster's comment about it being cheaper if you're doing more than £500 a month.

It does seem to me that up to around £5000 of revenue (depending on the average transaction value), there doesn't seem to be a great deal of advantage cost-wise.

My options are limited anyway, as my cart software doesn't integrate with a lot of UK providers, being German and all. The gateways it does work with (Paypoint, Sagepay, Worldpay) are much of a muchness as far as fees are concerned, so I'd have to look for competitive IMA fees. With that combination, I'm not seeing a lot of difference.

 

[joshgeake]

Ah remember it's not that simple though, they don't automatically put you on a lower band when you pass the threshold, they apply it the following month...

Hence, if you're seasonal, it can cost a fortune.

 

[LMDServicesUK]

Hi Japancool

I think you will find that there is a LOT of difference between PayPal and most of the conventional Merchant Account Providers, in three key areas as long as you are trading over £ 500 a month as mentioned by other posters.

Customer Service - Is nearly always better

Settlement Terms - PayPal are well known for freezing funds with no explanation -This rarely happens with a Conventional Merchant Account Provider

Far better rates - A conventional Merchant account provider will charge you based on your t/o and card type, so if you sell products that are well priced and attract a lot of debit card usage, you would be far better off not using PayPal. More importantly the more you put through the more chance you have of negotiating better acquiring rates, and in our case the rates are CAPPED so they would never go up unlike PayPal which varies them depending on your monthly throughput..

In our case a Merchant account with payment gateway could cost as little as £ 30 a month to run, and that would allow you to process up to £ 4,000 in transactions before you had any more fees to pay.

We can have you up and running in 24 hours (once approved).

Re your own observations about PayPal I would advise accordingly:-

* No withdrawal fees, which some processors charge.
Now very rare as the funds are paid direct to your nominated bank account.

* Freedom to withdraw at any time. -
Not applicable to a conventional Merchant account

* Reduced transaction fees for higher volumes.
Same applies to a conventional account

* No additional credit card processing fees, although the basic fee for debit cards is higher.
Acquiring rates on individual card types are always lower than PayPal for a conventional Merchant account (our highest fees are 2.5% per Credit card and 40 p per Debit card transaction..)

* No foreign currency conversion fees.
Agreed put you pay a far higher transaction fee per transaction instead and get worse conversion rates..

* Seller protection.
Have you ever tried to resolve a dispute with a buyer with PayPal, you will always lose..

* No minimum monthly fee.
Agreed but if you are trading healthily and not a Seasonal business why would this be a problem ?


So if you are comparing Payment Processors for use in an e-comms environment, there ARE BIG differences between PayPal and the conventional providers.

Do not take my word for it, go and visit www.paymentbrain.co.uk and www.cardswitcher.co.uk for further information, and of course I would be happy to offer an indicative quote to you if you are interested, just Pm me and we can discuss further for you.

Rgds

Mark

 

[japancool]

I haven't had an issue with Paypal so far, and the couple of times I've had to deal with their customer services, it's been fine.

As for the currency conversion fees, when someone pays me, they pay the price in £, ensuring I receive the amount I've priced it in. This is important for European sales, as it impacts the VAT I pay. European sales are going to become a much more important part of my sales going forwards.

Seller protection - no, I haven't had to dispute a transaction with Paypal. The seller protection I'm referring to covers item not arrived, for which I have to obtain proof of postage, which I do as I always send items tracked, and post to the address as shown on the payment. Almost all of the stories I've heard and read about protection not being provided is when the seller has failed to do one of these two things and rendered themselves open to fraudulent claims.

As for credit vs debit card usage - I have no control over what people will use to pay. My products are not extremely high value, the average price being around £50. But equally, foreign buyers may choose to buy using credit cards for the additional protection they offer.

You say that if I'm trading healthily, I don't need to worry about minimum monthly fees. OK, but if I'm trading healthily and not seasonal, then I should need to worry about ebay varying my rates either, unless I'm right on the margins of the rate bands.

Having said all of that, I'm quite prepared to go with alternatives if it's cost-effective. I'm always looking to cut costs, so any reduction is worthwhile. I'll contact you to discuss.

 

[CharityClear]

Using the figures you provided it would be cheaper to use CharityClear and a merchant account with reasonable transaction rates. That's only based on 20 transactions a month though, the more transactions the bigger the saving. There are 350 transactions included with the £18 a month tariff, and 50 free with the £10 per month tariff.

Also, the level of integration support and customer service is night and day compared to PayPal.

 

[japancool]

Using the figures you provided it would be cheaper to use CharityClear and a merchant account with reasonable transaction rates. That's only based on 20 transactions a month though, the more transactions the bigger the saving. There are 350 transactions included with the £18 a month tariff, and 50 free with the £10 per month tariff.

Also, the level of integration support and customer service is night and day compared to PayPal.

I'm sure customer service is great, but I've only needed to uses Paypal's CS once, and it was fine.

I'm still new to this, but with almost any service I buy, whether business or personal, my point of view is the less I actually need to use customer services, the better. If I need to contact customer services, no matter how good it is, then the more is going wrong.

As a small business, cost - whether that's monetary cost or my time - is king.

Also, my German ecommerce cart seems to only work with a very limited number of gateways, so my cost savings will have to come through the merchant account rates.