Ask HN: Recommended way to receive customer payments when just starting up? What do YC startups recommend? PayPal? Google Checkout? Credit Card? (merchant account), Other? Which provides the minimum hassles, delays, transaction fees, etc.? Which do customers prefer? Any positive or negative recommendations based on experience would be much appreciated. |
I'd say that my customers 10:1 prefer to pay by credit card. If I didn't offer credit cards as an option, I figure I would have 20-40% fewer sales. That being said, get up and running first and foremost - that's what I think. You can always add credit cards. I think PayPal, for my customers, is an important option. Since it was the easiest of all to implement, I'd say start with it.
We went with Authorize.net as the gateway and another company for our merchant account. A lot of chargebacks can be handled by setting up your risk controls up-front correctly. Should the postal code be required to match? Should the card verification code be required? Those types of things have more to do with it than anything IMO.
What made Google Checkout a collosal waste of time? Do customers choose not to use it? Or is it a hassle to deal with on your end?
If you're going to take credit cards and/or do recurring billing:
I've built two recurring billing payment systems (braintree and paypal express checkout) and maintained a third (paypal payflow pro gateway) and am most impressed with braintree's api thus far. http://braintreepaymentsolutions.com/ My braintree-based system hasn't gone live yet, so I can't say anything about long-term service, but their api was far more sane than the other two. That said, when we added express checkout to the payflow pro gateway, purchase rates increased substantially.
There are monthly minimums with braintree and a good bit of paperwork, but being able to directly take credit cards might add some degree of "seriousness" in the consumer's eyes.
If you're rolling on rails, you might want to check out http://railskits.com/saas/ (although I have no personal experience with them) and http://www.activemerchant.org/ (a payment library extracted from shopify).
If you're just doing one-time sales, you have a lot more options and the accounting is a heck of a lot easier.
They also provide a virtual terminal so you can accept credit card payments via phone//fax.
I think they call it website payments pro and it costs ~$30/mo depending on volume.
As Aaroneous mentioned- Paypal Website Payments Pro allows you to process paypal payments and credit card charges invisibly in the background (there is no redirect to Paypal).
The processing fees/cost economics of establishing a merchant account/processor definitely make sense however once you're processing several $k/month.
I'm the lead dev, so I buckled down and figured out the merchant stuff. There can be 1-2 weeks worth of delays in getting your merchant account, but our admin guy said it was pretty straightforward. Took me about a day or 2 to figure out the response codes and to program the cc processing.
In short, take the jump and just process your own CCs (assuming that you have the legal structure in place so that you can get a merchant account. If not, use the Paypal API). Took about 2 days of learning and coding to figure out cc processing (and the Authorize.net interface ain't the greatest).
Fees are all about the same, so unless your margins are under a percent, don't worry about the fees. And if your margins are that low, rethink your business model ;)