
Payment gateways for startups: a guide for founders - anuriev
http://aynuriev.com/best-payment-gateway-startups/
======
abalone
Request for startup: If you want to disrupt payments, do a gateway that
captures U.S. major debit transactions and handles them at 0.1% + $.30 (still
a healthy margin) and redirects the rest to a higher-fee processor.

Little known fact: Major debit card interchange is regulated by law at 0.05% +
$0.22.[1] That's right, a twentieth of one percent. The gross margin for a
processor like Stripe that charges 2.9% + $0.30 on these transactions is just
astronomical. A U.S. payment gateway that specializes in low cost debit card
processing arbitrage would instantly start saving startups money. It also give
them the option of steering their customers to low cost debit, for example by
requiring it for discounted annual subscription rates.

This would work where other efforts have failed. Crypto never took off for
consumer payments for a variety of reasons, among them no wallet penetration
and no consumer protections. ACH is inconvenient to set up and also has poor
consumer protections. Debit cards on the other hard are widely available, safe
and easy to use.

[1] [https://www.burlingtonbankcard.com/home/interchange-plus-
cre...](https://www.burlingtonbankcard.com/home/interchange-plus-credit-card-
processing-faqs/what-are-the-interchange-fees-on-a-10-visa-debit-card-sale/)

~~~
darkestloud
Consumers prefer to use credit cards, for many reasons one of which is points.

~~~
abalone
False. More Americans use debit than credit for everyday purchases.[1]

[1] [https://www.nerdwallet.com/blog/credit-cards/credit-debit-
su...](https://www.nerdwallet.com/blog/credit-cards/credit-debit-survey-2017/)

~~~
icedchai
Most Americans are also financially illiterate. For every day purchases (not
cash advances), it is always better to use a credit card that offers rewards
points... _as long as you plan on paying off your full balance every month._
It's free money, period.

~~~
awad
That's something only the minority of the population does, though.

"...average individual credit card debt stands at $5,331 in 2019.
Additionally, on a monthly basis, most Americans don't pay their credit card
balance in full every month - 55% don't regularly pay in full."

[https://www.thestreet.com/personal-finance/credit-
cards/aver...](https://www.thestreet.com/personal-finance/credit-
cards/average-credit-card-debt-14863601)

~~~
masonic
Forgive me if I don't take a blog quoting "CreditDonkey.com" as its only
source very seriously on this.

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inapis
There’s also Paddle and Fastspring. With stripe et al you are the merchant of
record but with the above two they are the merchant of record. For people who
are new to receiving payments, like me, this was a big revelation.

Receiving payments is just the tip of the iceberg. There’s tax, vat, handling
fraud, chargebacks and other compliances, not to mention more headaches if
your place of incorporation is different than your place of business/where
most transactions occur.

Depends on how much you want to handle. If you want to handle
chargebacks/fraud on your own, Stripe is great. If you want to offload that
responsibility, then you need someone like paddle and fastspring.

I’m currently still evaluating what I want and do not want to deal with but
this little piece Iof information might help someone in need.

~~~
FSpring_Rkong
Hi Inapis,

You’re right about payment processing being only the tip of the iceberg! Often
times, companies are shocked to find out that there’s a lot more to ecommerce
than just selling their products online. To avoid costly fines and maximize
their revenue potential, companies selling their digital products online must
also focus on fraud prevention and proper VAT/TAX management.

You can learn more about digital taxes and VAT in this blog post:
[https://fastspring.com/blog/everything-need-know-digital-
tax...](https://fastspring.com/blog/everything-need-know-digital-taxes-vat/)

If you have any additional questions or would like to learn more about our
features, please visit: [https://fastspring.com/](https://fastspring.com/)

Full disclaimer: I currently work at FastSpring.

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nicodjimenez
Payment gateways are the easy part. Stripe or Braintree are both good enough
for the vast majority of startups. The hard part is a full billing solution
for subscription type businesses. Turns out that’s harder than I thought. I’ve
been checking out Chargebee for my business. Any suggestions?

~~~
theyoungwolf
what makes it hard for subscription type businesses?

~~~
davidgh
Things that can get tricky:

Product upgrades and downgrades - if a user changes products midstream you
need to calculate the prorated value and bill or refund the customer
accordingly. Reporting then gets tricky - if the customer upgraded from A to B
during the middle of the billing period, you want to make sure that your sales
for A and B receive proper allocation for what was used to get an accurate
sense of where you’re earning your money.

Then there’s the mess with configuring which changes customers are allowed to
perform. Perhaps going from A to B is allowed, but B to A is not.

Similar challenges when customers want to change quantities during the
subscription term. And what about customers who want to make changes, but have
the change apply at the end of the current billing period vs immediately?
You’ll need to set up a process to schedule those changes.

Also you’ll need to consider how to handle customers that move from monthly to
yearly billing or vice-versa. Not to mention subscription add-ons (and
removals of such).

You should also keep a ledger of all changes that have been performed (and by
whom) so that if there’s any doubt, it’s clear why a change was applied, and
details of the implications of the change so the financial impact can be
clearly explained.

And what about situations where a customer’s card is declined? You’ve got to
run a process to let them know, inform them how to update their payment
method, and provide them a means to do so. If the customer doesn’t take
action, configure if / when you should automatically retry, and how many times
you retry before you kill the subscription.

What if you sell outside your country? Should you bill in their currency or
your own? If their currency, does the renewal price fluctuate based on
exchange rates so you get the same in your currency every billing, or does the
amount the customer pays stay the same with every billing so the amount you
receive fluctuates? You may want to configure this by currency, so stable
currencies stay the same and less stable currencies change when re-billed.
You’ll need to convey this to the customer up front based on the configuration
so they’ll know what to expect.

If you’re not a “famous” company, some people may not recognize you on their
credit card statement. So to keep chargebacks in line, you may want to
configure a “pre-bill” email to be sent to customers a few days before the
charge happens, along with instructions on how to cancel in case they no
longer want the service.

What about discounts? Should they apply to the first billing only, the first n
billings, or all billings? That probably depends on the nature of the discount
so you’ll need to configure how to handle the different situations. No doubt
customer service will want to offer discounts to customers mid-stream to make
up for service disruptions or entice someone to not cancel, so discounts will
need to be able to be applied mid steam as well.

Sorry, I’m rambling. Subscriptions do seem easy until you start to actually
peel the onion.

Source: I’ve been operating an online e-commerce platform for nearly 20 years,
and many of our clients do subscriptions.

------
javitury
Here in Spain most brick and mortar banks will give you a merchant account
with a Redsys payment gateway(national standard).

A standard merchant account will process cards for a ~0.90% fee. The account
fixed costs are around 25€ per month. It has basic operations such as
authorization, capture, refund and safe vault storage(for recurring payments)

With enough volume(>5000€) you can talk to the bank manager for a tighter fee
structure and no monthly fee. For instance 0.6% fee + 0.10€ per transaction
and no monthly fixed costs.

------
westoque
I just had a conversation with a non developer person using Stripe and he told
me that Stripe was the worst. I was shocked as a developer because I mentioned
how Stripe was hiring the best people I know and was acquiring really good
startups so I would assume Stripe would be the best. It turns out Stripe was
really good only in the development (API) end but not on the usability on
their front end app.

Shows you that they are a development/technology company first and foremost,
and payments second.

~~~
edwinwee
Edwin from Stripe here. We think we do optimize for usability—after all, it's
in everyone's interests that Stripe is easy to use. But I'd like to hear more
about what pain your non-developer friend mentioned. If they're able to email
me at edwin@stripe.com, I'd love to chat and see where we might be able to
improve.

------
awad
Small Feedback: It would be easier to skim if there was a list of all the
providers up top and/or each of their names were significantly larger to
denote separation of sections.

~~~
anuriev
thanks, I ll do it it!

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mjevans
The one solution that I really want isn't even on the list (because, AFAIK, it
STILL isn't in actual production for public use)...

[https://taler.net/en/index.html](https://taler.net/en/index.html)

------
x13
Disabling right-click is lame.

~~~
brobinson
In Firefox, simply hold shift when you right click OR set
dom.event.contextmenu.enabled to false to prevent Javascript from receiving
that DOM event entirely.

------
sonnyblarney
I think the issue is not a fraction of a percent here or there - this is an
optimization.

The issue is what is going to be easy, robust, painless and get you your money
without fuss in the markets you need it to?

There's some friction with moving to another processor, but it's not as bad as
AWS vs. Azure.

If a team is very familiar with an API/service, that's probably the one to use
(!) so long as it checks out on the major items otherwise.

Once the model makes sense, you can think about Russia, 1% conversions, fees
at scale yada yada.

------
tomschwiha
Using mainly Stripe for Credit/debitcard because compared to its competitors
at least here in Europe its cheap (1.4% + 0.25€).

And the DX was very smooth.

------
sreeramb93
In India, UPI is making major inroads and has cut the rates drastically.

~~~
inapis
I’d love to see UPI expand its capabilities. It’s one of the most innovative
fintech products I’ve seen in a while especially when it gives you way more
privacy and safety than plastic.

