What’s the Best Payment Gateway for Me?

Let’s break it down:

To make sure you get the very best solution for you here’s the low down on two well-known gateways…Paypal (an eBay Company) and Paymate, and one “not so well known” provider, eWAY.

For this exercise, we took four fairly low turnover scenarios.
Our scenario categories for this exercise are:

• eBay Seller $3,000 in sales per annum
• Hobbyist $14,000 in sales per annum
• Startup $30,000 in sales per annum
• Small Biz $60,000 in sales per annum

Before we begin on the numbers, let us first examine each provider and their pro’s and con’s.

PayPal

Probably the largest of them all as far as recognised payment gateways online, PayPal, owned by eBay, has a heavy market share in payment processing. Starting with eBay, they expanded to integrate with web stores, offering a secure, rapid means of transacting with your customers.

PayPal takes approximately 5-7 working days before your money appears in your account, so if you’re patient, this is OK. However for most small operators, cash flow is king. 5-7 days is a long time to wait. You must also initiate this withdrawal from your PayPal account yourself. It won’t happen automatically.

On the up side, PayPal has a buyer protection program, protecting your customers should the order (if you are trading goods) does not turn up, is damaged, lost, stolen etc…however this protection is only offered for sales on eBay.

PayPal is good when it comes to verification of your identity. If there is ever a problem with your account, the only thing they will ask of you, via email, is to go to their website, log into your account and address the issue. That way, you know the information you are passing is secure.

Pro’s

• Secure
• Reputable
• Buyer protection for eBay sellers and buyers
• All verification of identity happens within their website

Con’s

• Manual withdrawal to your bank account
• 5-7 days before you have your money
• Prone to scammers due to it’s size and it’s connection to your email address
• Must leave your website to make a payment
• Help desk is located in the USA. Sometimes they don’t understand how business operates in Australia

Paymate

Emerging contender to PayPal (and the “other” option for those who don’t like PayPal), Paymate offers integration with eBay and online stores.

Set up is reasonably easy, however one thing I’ve personally experienced of late, is their seemingly odd querying of legitimate payments to legitimate businesses. It’s almost as if they don’t really know where fraudulent transactions are occurring, so they just indiscriminately target accounts, stop and reverse payments and demand sensitive information via email. This is embarrassing for you as a business.

As with PayPal, Paymate also offer shopping cart integration to your website, however this integration only appears to be one way. I’ve set up a few web stores in my time with Paymate and the information only ever passes one way to their payment page. You do eventually return to your web store, but the purchase information does not update a successful payment. Why is this important? With bi-directional information flows, you only ever need to manage transactions in one place…your website. Uni-directional means you have to verify the transaction in more than one place, taking extra time and resource to manage a sale.

One positive feature Paymate does have over PayPal is that funds are automatically sent to your bank account after they are approved. Payment will appear in your account between 1 and 3 business days. Not too bad (provided you’re not randomly targeted as a fraudulent account).

Also be aware that Paymate charge a “buyer fee” as well. This is 3% + $0.50 of the total amount and can either be absorbed by you (making your costs higher, but your customers happier) or charged to the customer, which may lead to customer dissatisfaction. Think carefully about how much you value you customers before choosing this payment gateway. 

Pro’s

• Cheap for the small trader
• 1-3 days automatic transfer to your bank account

Con’s

• You must seek permission to trade beyond $10,000 per month. That’s a barrier to your growth!
• Randomly target accounts suspected as fraudulent traders, stopping and reversing payments without your consent
• Uni-directional information flow with your shopping cart
• Make requests for verification of sensitive info (e.g. scanned bank cheques and drivers licenses) via email. This is not a secure way to manage your information. If this is ever asked of you, close your account and find another provider.
• Must leave your website to make a payment
• Help desk is located in the USA. Sometimes they don’t understand how business operates in Australia
• Buyer fees in addition to seller fees

eWAY

A global provider of payment processing, eWAY steps it up when integrating with your online store. eWAY is not for use with eBay, so if you’re only trading on eBay, then you’re forced to choose between PayPal or Paymate. Sorry.

eWAY think and act differently when it comes to dealing with business. I know…I’ve experienced all three of these companies personally. From a customer service perspective, I rate them #1. Why? Because their creator and CEO, Matt Bullock, actually lives on Twitter (@mattbullock) and will actively take part in resolving any issues you might have. This level of customer care is outstanding. The rest of their team are just as great.

eWAY works with 158 known shopping carts, including eCorner, magneto, Virtuemart, cubecart, XCART…and the list goes on. I’ll be honest here and say that sometimes, integration can be a little bit “buggy”…however this is more often due to a lack of field-testing on the particular cart software you use. Communicate with them and they work hard to fix the problem.

My personal experience is with Virtuemart. The set up is nice and clean, but here’s what I like best. For your business in particular, nothing looks more professional than being able to process the payment without having to leave your website. PayPal and Paymate require your customers to leave your website, visit theirs for the payment, and then return back to your site.

Not eWAY. The customer stays totally within your website. Nice! The payment gateway also passes the payment information back to your shopping cart’s back end, then updates the order to “Confirmed” when it is successful. This means you rarely have to visit the management portal of your eWAY account as all of the information you need is contained in your site.

eWAY is for the business who is serious about growing their business and want to look, act and play the part of a professional store. In comparison, this makes leaving your website to make a payment look amateur. Yes, financially they are not always the cheapest, but cheap shouldn’t always be your target when trying to build a reputable online web store. Efficiency, reliability and security are just as important. Think…if it’s cheap, you may get exactly what you paid for.

Pro’s

• Payments processed on your website (sent to eWAY in the background)
• Bi-directional information processing, meaning you don’t have to verify payment in two places
• Help desk support based in Australia (Canberra)
• Transfer of funds direct to your merchant* bank account (have seen payments in a few hours…sometimes less)
• Fantastic customer service

Con’s

• It is recommended that you use an SSL Certificate on your web server. These sometimes are tricky to set up and may cost you around $150-$300 to install (depending on your webhost)and then approximately $230 every two years after that (again, depending on your host and the SSL product you purchase).
  (Nb. SSL Certificates are only listed as a con because they incur some additional cost. They provide your customers with added security and comfort when offering credit card information on your website. And when you are growing a business…a few hundred dollars is a worthy investment. So it’s actually a pro!)

Now for the numbers!

Summary

For the eBay Seller…bite the bullet and go with Paymate. They are by far the cheapest, and for $3,000 per year in annual revenue, you don’t really have that much to spare. You shouldn’t have much trouble, but keep in mind. If your account is ever questioned, it’s not worth the risk to the security of your information. Switch to PayPal if this happens.

For the Hobbyist…PayPal offers a cost effective solution. You do have to head away from your website to make the payment, so if you’re planning on growing your business seriously, consider how the “offsite” payment presents to your customers professionally. eWAY is not much more and offers a better buying experience, plus you get your money a lot sooner!

For the Startup…Paymate offers the cheapest solution, but as a startup who is looking to expand, I certainly wouldn’t trust my business to this company. The jump up by a scratch over $90 per year is worth it for PayPal (but there is that delayed money transfer thing).

For the Small Biz…eWAY is not only the cheapest, but also the best solution in terms of features, reliability, help desk location and support, and customer service. In fact, if you’re at any level below Small Biz and looking to grow and expand to, and, beyond the small biz revenue stream, then you should consider eWAY from the start . Plus you can tweet their CEO. If he’s not too busy, he’ll say hi back!

*At the time of writing, it was not explicitly clear that a Merchant Bank Account was a requirement for eWAY. Upon taking my own advice and signing up, I found this out. Whilst a merchant bank account will cost you money to own and operate, the benefits of trading “on site” as well as the added benefits that accompany a merchant account (like phone orders) still place you in a better position of growth than if you were trading using Paymate or PayPal. Our blog following this will be talking in greater detail about Merchant Fees and we will update this blog when the information is at hand.