5 ms·

Web apps, credit cards, merchant accounts and PayPal

107 points by adamcharnock 16y ago

rexreed 16y ago
I'm surprised it took this long and cost that much to get the merchant account and recurring billing setup. We have an Authorize.Net merchant account, use Recurly for subscription billing, and found our merchant bank using FeeFighters (ended up going with Merchant Focus). It took us less than 2 weeks from start to finish, paid $0 in setup fees, ended up with a transaction discount rate from 1.75% to 3.1% depending on card type (Merchant Focus uses interchange-plus pricing), and we accept all major card types. Not only that, there is no delay or holds placed on our account. We were able to accept paying customers within 2 weeks of setting up our accounts, and we only pay the Recurly monthly fee, a $15 Authorize.Net gateway fee, merchant account transaction fees, and a $7.95 a month Amex fee (their monthly minimum). All in all, I think we ended up doing well and wasting little time. I'm not sure why it would cost a few hundred dollars and take as many weeks/months as it did in the OP's case. Perhaps because it was a non-US company?
- sjs382 16y ago
  Care to do a write-up of your setup, the decisions you made, and your recommendations (which services you ended up using)? It would be pretty valuable, to me at least.
  - mcdowall 16y ago
    I think he pretty much has in his post already. Feefighters, Recurly, Authorize.net, Amex
  - rexreed 16y ago
    It's exactly what I just said: * We used FeeFighters to find a merchant account (ended up going with Merchant Focus). FeeFighters gets you a bunch of competitive bids. We only looked at the top three recommendations, read the reviews, and ended up going with the #1 recommendtion * The application took one hour to complete, and was done entirely online. We followed up with a phone call to Merchant Focus to help expedite the app. It was approved and completed within 24 hours. No set up fees. Very competitive rates. No monthly minimums. Just a gateway fee and an Amex minimum plus the per-transaction fees. * We had our Authorize.Net login within another 24 hours. We got any holds removed. I forgot how this happened, but it didn't seem that it was a huge hurdle. * Once we had the Authorize.Net login, we signed up for Recurly. It took one hour to sign up. * Integration with Recurly took a few days. That's it.
- petercooper 16y ago
  It's a different kettle of fish in the UK. It's a lot easier to get a merchant account for a non-established business in the US. While the British banking system has become incrdibly liberal in the last 20 years, it still lags in the merchant account department and you have to do a bit of legwork. It's not uncommon to need to send a business plan or spend time on the phone convincing a provider of your worth, for example.
  - primigenus 16y ago
    It's different in the UK but it's even worse for mainland Europe. Many subscription billing services don't support businesses that don't have a registered bank account or address in the US or UK. Many payment gateways won't work with you unless you're located in the US or UK, especially the larger American ones like Braintree or Authorize.net. And unfortunately, it's these larger ones that have solved most of the integration and vertical problems that you end up still having to face in Europe. So you end up having to settle for a second-rate, customer-unfriendly, enterprise-oriented, backwards payment gateway like Ogone or Atos Worldline (both of which we had to settle for). The only reason these guys are still in business is because the American services haven't spread to Europe yet. Thankfully, Spreedly does support European payment gateways, and that's why Spreedly kicks ass. I remain stunned that neither Google, Amazon, or PayPal have brought serviceable solutions to the continent yet. It's 2011, for Christ's sake!
    - rexreed 16y ago
      Maybe it's European banking regulations and laws that are the reason for a) the current sad state of affairs and b) the inability for Google and others to enter the marketplace? I don't know much about the situation, but given the size of the market, I wouldn't be surprised if that's what's getting in the way. The fact that there's such trouble in handling something as fundamental as getting payments from customers really imposes a significant impedance on tech startups in the region. I can see why some Euro companies are compelled to relocate when they want to seek significant, unimpeded growth. We techies live in a borderless world, but alas, the rest of the world doesn't. Sigh.
    - 16y ago
- pitdesi 16y ago
  Useful links: http://recurly.com http://recurly.com - great for recurring billing http://feefighters.com/paypal-calculator http://feefighters.com/paypal-calculator - easy comparison tool to see if PayPal makes financial sense for you (it might) http://feefighters.com http://feefighters.com - choose a merchant account (merchant account will set you up with a better deal with Authorize than you could get by going to them directly) (disclaimer, I'm with FeeFighters). Also though, I can help... drop me a line (email in profile) for more personal service.
lucindastokes 16y ago
We are just starting this process so this is a really useful article for us - thank you for sharing your experience. Payment systems are a minefield and a recommendation from a company that has 'been there and done that' really helps. We are PlayNice.ly customers and love your web app!
- adamcharnock 16y ago
  Thank you Lucinda, I hope things go well for you! From what rexreed says, it looks like we may not have taken the easiest route here, but I hope it provides some insight.
  - lucindastokes 16y ago
    Thanks. I think rexreed's comment may reflect the difference between the US and UK systems. We want this set up within a month though so I'll see how quickly we can do it!
jamesstokes 16y ago
Excellent advice from the guys at PlayNice.ly.
waterside81 16y ago
I've heard all the horror stories about PayPal and they probably do deserve the bad rep they get, but I've never had one issue with them. I've had business accounts setup within 48 hours with website payment pro with no problems, no faxes, no further proof of identification. I'm guessing a lot of this has to do with geography. We're in Canada and maybe PayPal deems us Canadians low risk? But I find once you give them your bank account details and you confirm it with them (they deposit two small charges to your account) then you're in and they have no problems with you. But alternatives are always nice and glad too see PlayNice.ly being able to get things up & running.
ulugbek 16y ago
rexreed is right, it shouldn't take long to set up the system. Most of the time is wasted waiting to get approved. I integrated Braintree api in half a day, while the application process was taking a few days. We had to drop them and go for paypal because it had a masspay option, otherwise we are looking for ways to avoid using paypal.
primigenus 16y ago
I've posted this on HN before but in case there's someone here who's not in the UK or the US, but in mainland Europe and facing the same challenge: we've been there, it was a headache, and we came up with Spreedly/Ogone/Atos Worldline. It can be done. Here's our writeup: http://blog.quplo.com/2011/01/looking-back-on-the-quest-for-payments/ http://blog.quplo.com/2011/01/looking-back-on-the-quest-for-... Thanks for sharing Adam, there should be more articles like this!
- kgtm 16y ago
  I've read your post recently, it is pure gold. I wish there were more resources for EU startups, including handling VAT issues/invoicing/taxes. If you have any insights for those areas, please, do share!
mmcconnell1618 16y ago
I'm not sure about the UK but in the US the major credit card companies are requiring merchants to pay for quarterly security scans on their site in order to stay PCI compliant. Personally, I think PCI is racket designed to collect more money while deferring losses to merchants but in the US it is another thing to think about when accepting payment. If you go with an off-site processor (like paypal express) you don't need to worry about PCI compliance because the card is not actually handled by your web app.
Breefield 16y ago
Related, but not about the actual article. I had quite a headache trying to find something affordable a while back: http://breefield.tumblr.com/post/849621934 http://breefield.tumblr.com/post/849621934 I'll be reading through these comments and links thoroughly to hopefully find something with no setup fee, and approx. $15/mo fee.
rguzman 16y ago
Sigh. I wish someone would solve this problem already. I mean, some startup to do to payments what heroku did to rails deployment. All the recurring-billing systems only solve half the problem: the logic for recurring-billing, but it is still fairly problematic to get the other pieces in place. There should be a way to collect payments on your site without having to setup a merchant account, et. al. Does anyone know what the regulatory hurdles to something like this are?
- thinkcomp 16y ago
  We're working on it. The hurdles are state money transmitter licenses and federal laws including but not limited to the USA PATRIOT Act and the Bank Secrecy Act, plus ad hoc regulations that come from the U.S. Treasury / FinCEN. Our site is http://www.facecash.com http://www.facecash.com.
- spyrosk 16y ago
  http://saasy.com http://saasy.com claim that they have solved this problem but I haven't yet used them. Does anyone else have any experience with them?
  - zefhous 16y ago
    Seems really expensive (5.9% plus $.95 or 8.9% flat per transaction). I've been getting setup with Stripe. They just lowered their rates to 3.5% (from 5%) plus $0.30 per transaction. Good API and no other fees. Seems great so far... https://eta.stripe.com/faq https://eta.stripe.com/faq
    - hopeless 16y ago
      That page seems to redirect to an incredibly minimalist welcome page saying: Stripe Payment processing for developers Get in touch I think I'd need a bit more information before I'd even investigate them!
    - norova 16y ago
      Everything was awesome up until this part of the FAQ: -- Stripe transfers money to your bank account at the end of the following month: that is, you receive June's payments at the end of July.
pavel_lishin 16y ago
Bug: "Hello there, fellow HN user! If you like this post, I'd really appreciate an upvote. Read more about hacker news by null" http://i.imgur.com/zXCGR.png http://i.imgur.com/zXCGR.png
- adamcharnock 16y ago
  Wow, thank you for pointing that out!
jroes 16y ago
I'm curious, why do people avoid Google Checkout? Same reason as PayPal?
- sjs382 16y ago
  I'd stay away due to the inability to get a hold of support personnel at Google, but that's just me.

107 points by adamcharnock 16y ago

I'm surprised it took this long and cost that much to get the merchant account and recurring billing setup. We have an Authorize.Net merchant account, use Recurly for subscription billing, and found our merchant bank using FeeFighters (ended up going with Merchant Focus). It took us less than 2 weeks from start to finish, paid $0 in setup fees, ended up with a transaction discount rate from 1.75% to 3.1% depending on card type (Merchant Focus uses interchange-plus pricing), and we accept all major card types. Not only that, there is no delay or holds placed on our account. We were able to accept paying customers within 2 weeks of setting up our accounts, and we only pay the Recurly monthly fee, a $15 Authorize.Net gateway fee, merchant account transaction fees, and a $7.95 a month Amex fee (their monthly minimum). All in all, I think we ended up doing well and wasting little time. I'm not sure why it would cost a few hundred dollars and take as many weeks/months as it did in the OP's case. Perhaps because it was a non-US company?

sjs382 16y ago
Care to do a write-up of your setup, the decisions you made, and your recommendations (which services you ended up using)? It would be pretty valuable, to me at least.
- mcdowall 16y ago
  I think he pretty much has in his post already. Feefighters, Recurly, Authorize.net, Amex
- rexreed 16y ago
  It's exactly what I just said: * We used FeeFighters to find a merchant account (ended up going with Merchant Focus). FeeFighters gets you a bunch of competitive bids. We only looked at the top three recommendations, read the reviews, and ended up going with the #1 recommendtion * The application took one hour to complete, and was done entirely online. We followed up with a phone call to Merchant Focus to help expedite the app. It was approved and completed within 24 hours. No set up fees. Very competitive rates. No monthly minimums. Just a gateway fee and an Amex minimum plus the per-transaction fees. * We had our Authorize.Net login within another 24 hours. We got any holds removed. I forgot how this happened, but it didn't seem that it was a huge hurdle. * Once we had the Authorize.Net login, we signed up for Recurly. It took one hour to sign up. * Integration with Recurly took a few days. That's it.
petercooper 16y ago
It's a different kettle of fish in the UK. It's a lot easier to get a merchant account for a non-established business in the US. While the British banking system has become incrdibly liberal in the last 20 years, it still lags in the merchant account department and you have to do a bit of legwork. It's not uncommon to need to send a business plan or spend time on the phone convincing a provider of your worth, for example.
- primigenus 16y ago
  It's different in the UK but it's even worse for mainland Europe. Many subscription billing services don't support businesses that don't have a registered bank account or address in the US or UK. Many payment gateways won't work with you unless you're located in the US or UK, especially the larger American ones like Braintree or Authorize.net. And unfortunately, it's these larger ones that have solved most of the integration and vertical problems that you end up still having to face in Europe. So you end up having to settle for a second-rate, customer-unfriendly, enterprise-oriented, backwards payment gateway like Ogone or Atos Worldline (both of which we had to settle for). The only reason these guys are still in business is because the American services haven't spread to Europe yet. Thankfully, Spreedly does support European payment gateways, and that's why Spreedly kicks ass. I remain stunned that neither Google, Amazon, or PayPal have brought serviceable solutions to the continent yet. It's 2011, for Christ's sake!
  - rexreed 16y ago
    Maybe it's European banking regulations and laws that are the reason for a) the current sad state of affairs and b) the inability for Google and others to enter the marketplace? I don't know much about the situation, but given the size of the market, I wouldn't be surprised if that's what's getting in the way. The fact that there's such trouble in handling something as fundamental as getting payments from customers really imposes a significant impedance on tech startups in the region. I can see why some Euro companies are compelled to relocate when they want to seek significant, unimpeded growth. We techies live in a borderless world, but alas, the rest of the world doesn't. Sigh.
  - 16y ago
pitdesi 16y ago
Useful links: http://recurly.com http://recurly.com - great for recurring billing http://feefighters.com/paypal-calculator http://feefighters.com/paypal-calculator - easy comparison tool to see if PayPal makes financial sense for you (it might) http://feefighters.com http://feefighters.com - choose a merchant account (merchant account will set you up with a better deal with Authorize than you could get by going to them directly) (disclaimer, I'm with FeeFighters). Also though, I can help... drop me a line (email in profile) for more personal service.

lucindastokes 16y ago

We are just starting this process so this is a really useful article for us - thank you for sharing your experience. Payment systems are a minefield and a recommendation from a company that has 'been there and done that' really helps. We are PlayNice.ly customers and love your web app!

adamcharnock 16y ago
Thank you Lucinda, I hope things go well for you! From what rexreed says, it looks like we may not have taken the easiest route here, but I hope it provides some insight.
- lucindastokes 16y ago
  Thanks. I think rexreed's comment may reflect the difference between the US and UK systems. We want this set up within a month though so I'll see how quickly we can do it!

jamesstokes 16y ago

Excellent advice from the guys at PlayNice.ly.

waterside81 16y ago

I've heard all the horror stories about PayPal and they probably do deserve the bad rep they get, but I've never had one issue with them. I've had business accounts setup within 48 hours with website payment pro with no problems, no faxes, no further proof of identification. I'm guessing a lot of this has to do with geography. We're in Canada and maybe PayPal deems us Canadians low risk? But I find once you give them your bank account details and you confirm it with them (they deposit two small charges to your account) then you're in and they have no problems with you. But alternatives are always nice and glad too see PlayNice.ly being able to get things up & running.

ulugbek 16y ago

rexreed is right, it shouldn't take long to set up the system. Most of the time is wasted waiting to get approved. I integrated Braintree api in half a day, while the application process was taking a few days. We had to drop them and go for paypal because it had a masspay option, otherwise we are looking for ways to avoid using paypal.

primigenus 16y ago

I've posted this on HN before but in case there's someone here who's not in the UK or the US, but in mainland Europe and facing the same challenge: we've been there, it was a headache, and we came up with Spreedly/Ogone/Atos Worldline. It can be done. Here's our writeup: http://blog.quplo.com/2011/01/looking-back-on-the-quest-for-payments/ http://blog.quplo.com/2011/01/looking-back-on-the-quest-for-... Thanks for sharing Adam, there should be more articles like this!

kgtm 16y ago
I've read your post recently, it is pure gold. I wish there were more resources for EU startups, including handling VAT issues/invoicing/taxes. If you have any insights for those areas, please, do share!

mmcconnell1618 16y ago

I'm not sure about the UK but in the US the major credit card companies are requiring merchants to pay for quarterly security scans on their site in order to stay PCI compliant. Personally, I think PCI is racket designed to collect more money while deferring losses to merchants but in the US it is another thing to think about when accepting payment. If you go with an off-site processor (like paypal express) you don't need to worry about PCI compliance because the card is not actually handled by your web app.

Breefield 16y ago

Related, but not about the actual article. I had quite a headache trying to find something affordable a while back: http://breefield.tumblr.com/post/849621934 http://breefield.tumblr.com/post/849621934 I'll be reading through these comments and links thoroughly to hopefully find something with no setup fee, and approx. $15/mo fee.

rguzman 16y ago

Sigh. I wish someone would solve this problem already. I mean, some startup to do to payments what heroku did to rails deployment. All the recurring-billing systems only solve half the problem: the logic for recurring-billing, but it is still fairly problematic to get the other pieces in place. There should be a way to collect payments on your site without having to setup a merchant account, et. al. Does anyone know what the regulatory hurdles to something like this are?

thinkcomp 16y ago
We're working on it. The hurdles are state money transmitter licenses and federal laws including but not limited to the USA PATRIOT Act and the Bank Secrecy Act, plus ad hoc regulations that come from the U.S. Treasury / FinCEN. Our site is http://www.facecash.com http://www.facecash.com.
spyrosk 16y ago
http://saasy.com http://saasy.com claim that they have solved this problem but I haven't yet used them. Does anyone else have any experience with them?
- zefhous 16y ago
  Seems really expensive (5.9% plus $.95 or 8.9% flat per transaction). I've been getting setup with Stripe. They just lowered their rates to 3.5% (from 5%) plus $0.30 per transaction. Good API and no other fees. Seems great so far... https://eta.stripe.com/faq https://eta.stripe.com/faq
  - hopeless 16y ago
    That page seems to redirect to an incredibly minimalist welcome page saying: Stripe Payment processing for developers Get in touch I think I'd need a bit more information before I'd even investigate them!
  - norova 16y ago
    Everything was awesome up until this part of the FAQ: -- Stripe transfers money to your bank account at the end of the following month: that is, you receive June's payments at the end of July.

pavel_lishin 16y ago

Bug: "Hello there, fellow HN user! If you like this post, I'd really appreciate an upvote. Read more about hacker news by null" http://i.imgur.com/zXCGR.png http://i.imgur.com/zXCGR.png

adamcharnock 16y ago
Wow, thank you for pointing that out!

jroes 16y ago

I'm curious, why do people avoid Google Checkout? Same reason as PayPal?

sjs382 16y ago
I'd stay away due to the inability to get a hold of support personnel at Google, but that's just me.