

Accepting credit cards online for recurring payments in Europe - simon02
http://www.piesync.com/blog/2013/accepting-credit-cards-recurring-payments-europe/

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allerratio
I find it strange that everytime I read something about payments in Europe
it's about credit cards. I don't know anybody here in Germany that uses credit
cards as their main way for payment, most people I know don't even own a
credit card. If you don't offer direct debit or wire transfer I won't buy
anything from you.

~~~
challengee
If you want to sell internationally, credit cards are practically the only way
possible. If you ask me, there is no standardized way to allow users to pay
via wire transfer (internationally and instantly). Heck, even amazon.com does
not support international wire transfer.

I think even consumers are getting used to the fact that ordering online
internationally is done mostly via credit cards.

Another question is, how would you handle automatic recurring payments?

~~~
Ives
The standard way of handling recurring payments is to send recurring invoices
and have users pay those. I don't see the issue.

(I agree with you that CC's are the only practical way nonetheless.)

~~~
challengee
Yes that's true, and many businesses work that way. It heavily depends on the
use case.

That's why I carefully added "internationally and instantly" between brackets
here.

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omegant
Well my experience with braintree is that if your business model is innovative
enough they won´t take the risk to process your payments (told personally by a
braintree representative in a phone conversation, after a brief explanation of
our business model). At least they are very kind, and they´ll tell you before
hand, so you don´t have to waste time with all the legal paraphernalia. A pity
because the API seems really fast to implement and well thought.

Respecting Paymill... well we are not going to put data on the hands of the
Samwer brothers right away(just in case...).

edit: typo.

~~~
simon02
The API does work like a charm. If history can be a reference, Paymill is
going to get bought by one of the big players who want a quick start in the
European market (Stripe comes to mind). But I do get your reluctance.

What alternatives are you now considering?

~~~
omegant
By now we are working with Paypal to show the concept (Not an API you would
recommend dough...). But we are planing to create a Ltd. in the states to work
with Stripe. It will also make it easier to close a round with american VCs.
We are based in Spain and the Spanish VCs are not what you could call that
"venturous". They are more likely to invest in "me too" startups, or proven
models.

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simon02
Author here. Are there any other important payment solutions we should be
looking out for (available in Europe, Belgium) that I forgot to mention in the
blog?

~~~
primigenus
As I just posted in the comments on your blog, Google Wallet is a serious
consideration if your app is available in the Chrome Web Store (or on the Play
Store). They charge relatively little and support European accounts and
subscriptions.

There's also the Google Apps Marketplace to consider if your app targets the
enterprise, which also hooks into the same payments APIs.

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dewey
Another interesting discussion on this topic:
<https://news.ycombinator.com/item?id=5091069> (not limited to recurring
payments)

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AhtiK
Is Braintree really holding the first $3000 in reserve until you stop using
them? That sounds rather weird and unexpected.

~~~
dangrossman
It's neither weird nor unexpected. Reserve accounts are a decades-old tool of
the credit card processing industry for approving new or unusual businesses.

The bank is taking a considerable risk: whatever the merchant's expected
transaction volume is, the bank could be on the hook for up to 6 months worth
if that business were to go bankrupt or otherwise disappear without fulfilling
its obligations to customers. They would all charge back their payments, and
with the merchant gone, the bank underwriting the merchant account is on the
hook for all that money. If they start out at $10k a month in revenue, that's
$60k in risk for the bank.

If a company has no track record, poor or no credit, or a business model that
doesn't fit well into a known risk model, the bank can mitigate the risk that
it'll lose money by establishing a reserve account. It might be a fixed
reserve (i.e. $3000 for a new company with low expected initial volume), or a
rolling reserve (i.e. holding back 15% of your gross sales up to some limit
for an existing account that has seen a jump in its chargeback rate).

The alternative is to deny the application altogether. Now, a bit of
speculation... Stripe, PayPal Pro and other 3rd-party processors that act like
first-party processors are able to take more risks (like letting you start
taking payments right away without a formal application and underwriting)
because they've negotiated permission with their underwriting bank to process
payments on behalf of their customers with only one or a few real merchant
accounts. By pooling many customers on one account, and charging a premium on
the fees, they can absorb more losses and even handle merchants with >1%
chargeback rates without the underlying merchant account reaching those risk
barriers, which is all Visa/MasterCard/Amex care about... as long as on
average, their customers are running legitimate, healthy businesses.

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helloamar
That's a nice post, glad you have got the solution for recurring payments. In
India we don't have that open yet.

