
Need to process payments? - pg
http://ycombinator.posterous.com/need-to-process-payments#
======
subbu
I am not US based but still need a decent payment processing system. All
existing payment processing companies are US-centric. Any luck for us?

~~~
run4yourlives
Actually... since these guys are YC - I offer my .02Cents.

There are a number of us in this exact situation and it is a GIANT pain point.
This market is basically untapped... if you can/want to tackle non-US payment
processing, you will make a killing.

~~~
rit
I do consulting work for a friend who has a surprisingly common problem:

He needs to do card processing but only certain times out of the year. He goes
to conventions and sells merchandise, etc and wants to be able to take credit
cards but the monthly & inactivity fees would wipe him out.

So far all I've seen that could fix this potentially is Square, but they have
yet to ship out their swiping widgets to use to try it out.

If someone can find a way to make it affordable to process cards "When you
need it" it might be huge.

~~~
trafficlight
Have they shipped any of the swiping widgets yet? I signed up about a month
ago and still haven't heard anything.

~~~
thetrumanshow
Still waiting for mine. I setup my account on the day the app appeared in the
app store.

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bdickason
I just sent them an e-mail. I'm hoping this is a payment gateway :D Have a
call with Braintree, but they require monthly minimums and a setup fee. If
there was a scalable solution as follows, I'd jump onboard immediately:

-Create an account (Free)

-Start accepting payments at a slightly higher percent (3.5%?)

-Percentage goes down as volume increases

End the negotiation, setup fees, etc that are stuck in this archaic business
please :(

~~~
staunch
The big turn off for me with Braintree was the ridiculous application
requirements. You could imigrate into the US five times and provide less
documentation.

I know why they ask for that info (to cover their asses), but it was enough
for me to avoid them.

A really simple (and fast!) application process could be a very big selling
point. People are impulsive, and when evaluating processors I'd probably go
for the easiest/fastest all other things being roughly equal.

"Start processing credit cards today (really, seriously)!"

~~~
leftnode
People are impulsive, but businesses aren't. If you're some guy wanting to
start transaction, you might need a smaller solution. For businesses, I think
they want a big set up process because it makes the managers feel safer.

~~~
staunch
Businesses are run by people.

~~~
mkramlich
Small businesses are run by people.

Large businesses are run by processes and paperwork.

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nissimk
I don't understand why I need anything more than Paypal? Everybody else seems
to just charge more and I don't see what you get for that. Isn't credit card
processing online a commodity and using the least expensive solution the way
to go?

~~~
SwellJoe
At low volume, PayPal Payments Pro is as good as anything I've found, and it
is cheaper than almost every other merchant services provider (especially by
the time you factor in the gateway fees). But, it's definitely not cheap. I
ache every time I see how much of our revenue is going to PayPal, even if it's
better than the prior provider we were using. Our prior merchant services
provider had cranked up rates gradually from the time we signed up, and always
found reasons to charge us the highest tier of pricing (higher risk
transactions got the higher rate, and it seemed like 90% of our orders
qualified as "high risk" according to their metrics, even though at the time
we were only dealing with about one chargeback per month). When we signed up a
few years ago it was dramatically cheaper than PayPal, but by the time we
switched it was almost a couple of points more expensive.

But PayPal is also not particularly great. The UI is _agonizingly_ slow (I can
only imagine how painful it would be to use if we were doing thousands or
millions of transactions per month instead of hundreds). Their response time
on payment processing is also slow...slow enough to confuse our shop
sometimes.

The good things about PayPal are its better fraud management tools (which you
have to pay extra for), its pervasive support in shopping carts (though
Payments Pro is a little more rare), and its really comprehensive online
interface. I used to have to send faxes for _everything_ with the old
processor, which was just ridiculous. I can do anything online with PayPal.

I also love that PayPal does everything. I hated never even knowing who to
call when we had problems with the old service. There were three web
interfaces for three different companies (Authorize.net, merchant services
bank, and some sort of reporting service that I never could figure out) that
did god knows what, and we were being billed by all of them. All of them had
different points of contact and different procedures for dealing with issues
(and issues pretty much never got dealt with), and I never, in years of
dealing with them, figured out who was responsible for what. PayPal is the
gateway, the merchant services provider, and everything else. When I'm
confused about something, or need to issue a refund or whatever, I login to
one place and all the data is there.

I also haven't been able to figure out how to use recurring payments at
PayPal. But, that's probably a failing on my part. I'm kinda dumb sometimes,
when accounting and money and such comes up.

But, I definitely don't think PayPal is the last word in payment processing.
If there were something better, faster, or cheaper, I'd happily switch (any
one of those three things would do it, assuming it's equal on the others).

It's a really hard market to tackle, since so much of it is regulatory
compliance (both private and government regulations) and interacting with
really old-fashioned industries (banks modernized about 30 years ago, and
seemingly decided that was a one-time expense that they never needed to do
again).

~~~
seanharper
The issue that you describe where your prior merchant account provider billed
you a downgrade rate for 90% of your transactions isn't really because they
were "high-risk" (they weren't, you have no downgrades). It's an example of
"marking up the downgrades" which is a strategy that unscrupulous merchant
account providers use to increase their profit.
<http://transfs.com/blog/marking-up-downgrades/>

What they really mean is that the interchange rate that your transaction
qualified for is worse than the rate that they set to be your default or
"qualified" rate. <http://transfs.com/blog/what-is-interchange-again/>

These billing tiers are a problem because there is no standard on what is
"qualified" and what is "unqualified", it varies between processors and
between customers within the same processor. [http://transfs.com/blog/tiered-
pricing-for-merchant-accounts...](http://transfs.com/blog/tiered-pricing-for-
merchant-accounts/)

There is a way to solve those billing tier ambiguities (which never are in the
favor of the businessowner) - its called interchange plus pricing. Insist upon
it, every processor can do it, for any size business.

Basically interchange is the wholesale rate that visa/mc charge the processor.
In an interchange-plus pricing scheme the processor pass those charges on to
you and explicitly disclose the markup you are paying above that wholesale
rate. It's the best way to ensure no funny business is going on with your
rates - [http://transfs.com/blog/why-you-should-want-interchange-
plus...](http://transfs.com/blog/why-you-should-want-interchange-plus-
pricing/)

Only accept interchange plus or a no-downgrade flat percentage (like Paypal
offers) - it will save you money and aggravation.

~~~
SwellJoe
This is another of the problems with the payments industry. A serious lack of
transparency pervades it. I never knew what was going on with our payments and
fees and such. They just kept getting higher every couple of months. They hide
behind wall-of-text terms of service (pages and pages of it), and ridiculous
application processes wherein you don't know what your rates will be until
_after_ you jump through all the crazy hoops and send a bunch of faxes back
and forth for several weeks.

Obviously, I've got a lot of hostility about the payments industry. Switching
to PayPal (which took less than 24 hours to setup, and took just a few minutes
of my time for filling out the application) was a breath of fresh air over
Authorize.net, where I had to deal with a mentally retarded reseller (I'm not
being facetious; retardation is the only explanation for some of the questions
she asked and her grasp of the English language, despite being a native
speaker) for three weeks to get things working.

------
tansey
Can we get some more information? What are they doing better? What kind of fee
structure are they selling?

Also, one big concern in my startup is chargebacks. Does this service help me
with chargeback protection at all?

More generally: how will they make my life better?

~~~
boucher
Have you actually gotten a lot of chargebacks? I've heard that the industry
significantly exaggerates the amount of chargebacks that actually occur.

~~~
SwellJoe
Chargebacks are such a pain in the ass that any number of chargebacks is a
lot, in my book. One of the reasons I chose PayPal when we were switching
providers a while back was to get better, and finer-grained, anti-fraud
capabilities. It's still an issue, but it's manageable now.

Interestingly, adding a really expensive product (about $1000) to our store
provided a nice mechanism for catching fraud. Nearly 100% of our fraudulent
orders purchase the really expensive product right off the bat, while most of
our legitimate purchasers of that product buy a less expensive one first, and
then upgrade to the more expensive version later. So, I automatically flag
orders for the most expensive product, and interact with the customer
personally before letting the order go through. This is _also_ a pain in the
ass, but it does reduce the number of chargebacks.

~~~
tansey
We were thinking of doing a similar approach, basically verifying people's ID
upon first purchase. However, we thought it might significantly decrease the
number of customers. I suppose there's no free lunch here... verification will
sacrifice volume.

~~~
matasar
You may run afoul of the credit card companies if you try to verify ID on
purchase.

~~~
tansey
How so?

~~~
matasar
In some states in the US, it's illegal to ask for id for a credit card
purchase. In all states, the credit card companies don't like it. Here's a
good set of google answers about the issue:

<http://answers.google.com/answers/threadview?id=71792>

This is all to say, credit card processing is incredibly complicated. Here's
another quote, directly from the federal government [1]:

"MasterCard wants to hear about merchants who break their rules. Send the name
and address and an account of what happened to MasterCard International, c/o
Radio City Station, P. O. Box 1288, New York, NY 10101. The merchant's bank
will get a stiff letter, ordering it to investigate and bring the offending
store into line - or pay a $2,000 fine.

Visa enforces the same rules as MasterCard. "When we hear about a violation,
we ask the bank that signed the merchant to get together with the merchant and
see that the practice is stopped," Visa representative states. To report a
merchant, send a letter to the bank that issued your Visa card.

American Express also prohibits merchants from asking for IDs. "All a merchant
is supposed to do is take an imprint, make sure the signature matches and
swipe the card through the terminal, to get authorization."

[1] <http://www.in.gov/dfi/2554.htm>

~~~
Natsu
Aren't Visa & MasterCard owned by the same company? I thought that's why they
always dump on Discover in the advertisements.

------
loumf
Just to put my two cents out there in case someone knows someone who does
this. I consider what Apple does to be exactly what I want on the web. I just
fork over 30% (no minimums) and literally never think about it. I get that I
need to integrate for the web, but I don't want much more than that.

I'm not trying to build a big business, just some side stuff where any time
spent on payment processing is a huge impediment. I don't want a merchant
account. Subscriptions would be nice.

~~~
pdx
I'm a little confused what you're asking for. Do you want them to run the web
store as well, so you really don't have to think (such as yahoo does?), or do
you just want somebody to process transactions for you, (such as PayPal,
Amazon Payments, and Google Checkout do?)

For somebody willing to drop 30% (or even 3%-5%) on a payment processing
solution, there are lots of them.

But, I bet we could convince Steve Jobs to create "Apple Payments", and charge
you 30%, and I bet there are a lot of people who would do it.

~~~
loumf
Basically no minimums and no merchant account. My account is with whoever is
providing the service and that's it. Apple does a great job of making is
seamless -- so I would want the equivalent of that for the web. I feel like
Google Checkout + app engine could get there, but they don't do subscriptions.

~~~
democracy
looks like they do:

[http://code.google.com/apis/checkout/developer/Google_Checko...](http://code.google.com/apis/checkout/developer/Google_Checkout_Beta_Subscriptions.html)

------
jarin
Couple of questions: Does it handle subscriptions? Do you need a merchant bank
account?

~~~
vyrotek
I have the same questions. The most frustrating part of shopping around for
these types of services is trying to figure out whats included and what isn't.
Perhaps its just the nature of this market, but the fact that I have to
purchase and manage additional services just to someone's special 'payment
subscription service' is a pain.

~~~
seanharper
This is a shameless plug, but at <http://transfs.com> (transparent financial
services) we have a free webservice that helps you compare various payments
options.

It's strictly private and requires no commitment of any kind. Basically it's
like Kayak for payments.

However, we don't do international yet, so probably can't help the original
poster. International payments are really hard, there are many fewer options
in most foreign countries.

Even in Canada and UK the number of merchant account providers is many fewer
than in the US, giving the customer less choice and enabling the providers to
maintain more of their archaic practices.

~~~
zavulon
Sign up, give my email address and information about my business before seeing
ANYTHING?

Sorry, in today's world this just won't cut it ...

------
jules
Do you need a merchant account?

Do you need an authorize.net or similar account?

Do they handle subscriptions?

What are their rates like?

When do they expect to be available outside the US?

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JarekS
I'm sorry but what does that mean "developer focused payment processing"? From
the SaaS provider perspective - less time I spend on integration with such
thing is better. "Developer focused payment processing" suggests rich API with
high learning curve. Not really compelling value prop...

BTW - don't get me wrong. I'm not suggesting they have a bad product. I'm
really curious how they can make payment processing developer focused!

~~~
jarin
Braintree is a good example of developer-oriented payment processing. They
provide very good APIs and client libraries, and they respond very quickly to
developer suggestions and feature requests.

------
mgrouchy
I don't know what this startup is, but one option for startups to get started
with payments is <http://chargify.com> , their api is pretty solid and they
are good with support and are focused recurring payment processing. Only issue
is you still need a payment gateway such as Braintree, Authorize.NET, etc.

~~~
bdickason
The payment gateway is still the bottleneck. Call it the only piece in the
value chain that hasn't been 'modernized.'

~~~
SwellJoe
Merchant services is even more old-fashioned than the gateways, as far as I
can tell.

------
chintan
WE integrated with Amazon FPS. But customers didn't have AMZN accounts etc, so
we started using the POMC method. "Plain Old Mail the Check". No more cuts. no
more hassles.

------
pedoh
From a startup SaaS perspective, is it really that detrimental to have your
customers sent to another site (Google Checkout or Amazon FPS, for example)
and then brought back after the conclusion of the sale? Do enough customers
walk away if the payment system is 3rd party _visible_ as opposed to 3rd party
_behind the scenes_? For any small startup trying to minimize costs, it seems
like eliminating those monthly minimums and setup costs might outweigh the
benefits of a more seamless customer experience. Can those with firsthand
experience chime in?

~~~
SwellJoe
It doesn't matter, anymore.

Our customers even occasionally asked for PayPal specifically because they
trust PayPal's refund process, but maybe not our money back guarantee.

------
seregine
We provide a REST-based API for processing payments for digital goods and more
(subscriptions, virtual currency management).

<http://getsocialgold.com>

------
Osiris
What I have a hard time finding is a service that offers low fees for small
purchases, or micropayments.

I sell a small software application that goes for $7. After trying a few
places I've settled on PayPal micropayments which charges 5c + 5%, which comes
out to about 7.5% for me.

I'd be interested in anyone that could give good micropayment rates.

------
barmstrong
Clearly there is a pain here, so it would be awesome to see someone solve it.

I'm really curious how they plan to do it though - since it seems like you'd
essentially have to start your own bank to streamline the process. Too much
regulation for that. What work around did they find??

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joubert
What's their name?

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keefe
In the next few months, I'm going to launch a site with micropayments for
particular bits of content. I'm currently researching different options and
defaulting to FPS for obvious reasons, I wonder how this new service compares?

------
Artifex
Awesome! Thank you! Will there be plug-in capabilities for people who use CMS-
type systems, such as wordpress? I see an increasing number of smaller
e-commerce sites running on that platform lately...

------
known
<http://www.ccavenue.com/content/comparative.jsp>

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moe
Out of curiosity, what would be the main differences to chargify and
cheddargetter?

~~~
seanharper
Chargify and Cheddargetter and Recurly are competitors and their products are
pretty similar. I cannot speak to their specific benefits and disadvantages.

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thinkcomp
Are we competitors?

<http://www.facecash.com>

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roschdal
Where can I invest in this company?

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mahmud
Does it handle invoicing?

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tjmaxal
Do they have a website?

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hassenben
The views counter is not unique. Fun!

