A Quick Primer on Online Payment Systems
Before getting started, here are just a few things to know about online payment systems.
- ACH payments are electronic credit and debit
transfers, allowing customers to make payments from their bank accounts
for utilities, mortgage loans, and other types of bills. ACH stands for
Automated Clearing House and most payment processors offer ACH payment
options to their customers, especially for monthly- and
subscription-based transactions. Most payment solutions use ACH to send
money (minus fees) to their customers.
- A merchant account is a bank account that allows a
customer to receive payments through credit or debit cards. Merchant
providers are required to obey regulations established by card
associations. Many processors (such as the ones listed below) act as
both the merchant account as well as the payment gateway.
- A payment gateway allows merchants to securely pass
credit card information between the customer and the merchant and also
between merchant and the payment processor. The payment gateway is the
middleman between the merchant and their sponsoring bank.
- A payment processor is the company that a merchant
uses to handle credit card transactions. Payment processors implement
anti-fraud measures to ensure that both the front-facing customer and
the merchant are protected.
- PCI compliance is when a merchant or payment
gateway sets their payment environment up in a way that meets the
Payment Card Industry Data Security Standard (PCI DSS). The PCI DSS
standard was created by the Payment Card Industry Security Standards
Council to increase security of cardholder data and to reduce fraud.
What follows are 10 excellent online payment systems.
Authorize.Net is the Internet’s most widely used payment gateway.
With a user base of over 300,000 merchants, Authorize.Net has been the
go-to method for e-commerce sites
that need a gateway to accepting payments. Widely used e-commerce
platforms such as Magento, Volusion and X-Cart are designed to accept
payments using Authorize.Net easier.
Pricing: Authorize.Net has a $99 setup fee, costs $10 per month and takes a $0.25 per-transaction fee. Source: Authorize.Net pricing
PayPal is the world’s most widely used payment acquirer, processing
over $4 billion in payments in 2011. PayPal payments are made using a
user’s existing account or with a credit card. Money can be sent
directly to an email address, thus prompting the users to sign up for a
new PayPal account. In addition to taking payments, PayPal also allows
its users to send money through the service, which is a feature that
only a few payment solutions provide.
Pricing: PayPal takes 2.9% + $0.30 per transaction and has no setup or monthly fees. Source: PayPal merchant fees
Google Checkout is Google’s answer to PayPal. Google Checkout allows
users to pay for goods and services through an account connected to
their Google profile. The major benefit that Google Checkout has over
the competition is that millions of Internet users use Google for other
services, making a purchase through Checkout a simpler process.
Pricing: Google Checkout fees start at 2.9% + $0.30
per transaction for sales less than $3,000. The percentage they take
goes down depending on monthly sales volume. Source: Google Checkout fees
Amazon Payments allows its users to receive money using its API (and to send money out via ACH). Popular crowdfunding site Kickstarter uses Amazon Payments.
Pricing: Amazon Payments fees start at 2.9% + $0.30
per transaction for payments over $10 (the percentage they take is less
for larger transactions). For payments under $10, the fee is 5.0% +
$0.05 per transaction. Source: Amazon Payments fees
Dwolla is a direct competitor to PayPal. One of the newcomers in the
third-party payments space, the company is processing over $1 million
per day. Setting up Dwolla payments is similar to PayPal, although
Dwolla doesn’t have the same name recognition as their competition.
Pricing: There are no fees for transactions less than $10. For transactions over $10, Dwolla charges $0.25 per transaction. Source: Dwolla fees
Stripe provides an excellent payment solution for web developers who
would like to integrate a payment system into their projects using
Stripe’s robust API. By bypassing the traditional sign up process,
Stripe acts as a merchant account for its providers, handling all PCI
compliance and merchant approvals.
Pricing: Stripe charges 2.9% + $0.30 per transaction with no setup or monthly fees. Source: Stripe: pricing
Braintree is an online payment gateway and merchant account solution known for working with popular tech startups such as Airbnb and LivingSocial.
Pricing: Braintree has a $35 monthly fee (with a $75
monthly minimum). Transaction fees start at 2.29% + $0.30 per
transaction for qualified cards. Source: Pricing – Braintree
Samurai is a payment gateway and merchant account solution. The company’s main product, FeeFighters,
is a tool to help merchants compare rates for merchant accounts.
Samurai was developed as a direct competitor to Braintree and other
gateway/merchant solutions and offers customers a payment gateway or a
gateway/merchant account package.
Pricing: For their gateway/merchant solution,
Samurai takes 2.3% of all sales volume, costs $25 per month and charges a
$0.30 fee per transaction. Source: Samurai by FeeFighters pricing
WePay is a payment processor that allows Internet merchants to accept
credit cards and bank account payments online. WePay seems to be
focused on the individual user, and has recently added e-store pages to
their service to help their customers conveniently take in payments
(e.g. event tickets, products, donations and so forth) through their
service.
Pricing: WePay charges a 3.5% transaction fee (with a
$0.50 minimum) for credit card transactions and $0.50 for bank
payments, with no setup or monthly costs. Source: WePay fees
2Checkout is another payment processor that combines a merchant
account and payment gateway into one, allowing customers to receive
credit card payments as well as PayPal payments. The company offers
international payments, shopping cart stores as well as a recurring
billing feature.
Other Noteworthy Payment Systems
Here are other online payment systems I think you should also check out:
