Web Podcast - Episode 25: What payment provider should you use?

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Hey guys, episode 25 today and we’re talking about payment systems. If you're doing an online shopping website, or a subscription as a service website, that's where you're going to need a good payment system. If you don't then you're not going to get paid, and that's the total purpose of most business, to make a living and provide a useful service.

The first thing you need to ask yourself is, what are you taking payment for. Are you taking payment for one off purchases of items, like musical instruments, are you selling clothing, car-parts. That's all one off stuff. Then we have recurring, so where people will subscribe and pay you every month. This is a passive income, which I think is a good way to go if you're setting up a business. Something where people can pay monthly. You capture the credit card details, then bill them every month. Obviously, we want to pick a good system that allows the customer to cancel themselves, but also allows them to easily subscribe, and they won't be distracted or put off because it looks dodgy.

That's the other side of it.

The next question is, what type of payment are you taking? There's a one-off transaction, a recurring transaction, or are we doing authorisations.

Authorisations are where someone enters their credit card details, we check it's a valid card. We hold a small amount, say $1, just to check their credit card is valid. Or, maybe it's $500, and we give them access to a program for 30 days, if they don't cancel before the 30 days is up, then they're charged the full $500.

Another quick thing, if you are doing them, make sure the authorisation doesn't expire before the day you want to charge them. This could mean the funds will be released and you won't have a hold of them anymore. Be careful of that.

What is your audience used to? You will need to go and study your competitor's websites and find out what payment systems they use. If you're selling internationally, they may use a system like PayPal, which is global. Whereas if you're selling in your own country, people may not be familiar with PayPal, or they may not like it. You may want to use a local provider that all of the other people in the area are using. Here in New Zealand, there's local providers that we use. They provide FPOS machines, they do all that stuff. People are familiar with their logo. Whereas some people will not know some payment providers, you need to be careful. It's a good idea to have a couple of options. So pay with PayPal, or give the option to pay with a credit card. So you can use a smaller merchant credit card provider.


Ask yourself in what way can you automate it. When you're choosing a shopping software on your website, make sure that you can automate it. If someone pays with their credit card, the payment marks the order as complete, and it adds the payment to the order. When you receive the email confirming an order, you'll know it's been paid. Although, when you just launch a website, when it's fresh, it's good to go and check the first few weeks to ensure the payments are coming in. you can make sure there's no problems with the website, or the integration of the payment system. You need to make sure it's working seamlessly. Over time though, you'll be confident that you'll open the email, see the customer has paid, then send off the items.

Automate as much of that as you can.

Just bolting on, if you use a shipping company, see if you can connect to their system in some way, so that when the tracking number comes in, it attaches it to the order within an email to the customer. Not only are you offering better customer service, you're also adding value by giving them a tracking number. I'm sure they'll be eagerly awaiting it.


Have a backup in place. It's good to have different payment methods in place. If banking is still a big thing where you are, like here in New Zealand. It's good to maintain a bank deposit feature, allowing people to manually log into their banking and deposit the funds if they don't have a debit card on them.

You can also use an old-fashioned cheque. Depending on your target audience. If you have an older target audience, who are still used to using cheque books, then you might want to have that option on there.

Also, cash on pick up. You may have a store. Give people the option to come in and pick it up, like click and collect. This gives them the option to come and pay in store. Then you're making sure you're giving people all the options available to them rather than giving them one payment option. You don't want to do that, give people every option so that they feel comfortable paying through your sire.


Three mainstream payment options that are available are:

PayPal: I believe PayPal has come a long way it used to be a task to use. They were quite picky with who could use it, and who could check out. The credit card features are fraud protected. This is good but can be bad because it can stop a lot of people from checking out. If you launch a website and have a lot of transactions in the first few days, the account could be locked by PayPal as they think the big increase in sales doesn't seem right.

Going back to the backup plan, ensure you have one to cover that scenario.

PayPal is getting better. a lot of people used to dislike it, but more and more people are using it. It's very mainstream.


Braintree: Braintree Payments is owned by PayPal, but it's a more integrated payment solution. This makes integrating the credit card from into your website using a JavaScript plug in easier as people are able to enter their details into the page before clicking confirm. Instead of having the user go to PayPal, enter their details, then authorise, it's all just on one page. They can check out there and then.

The downside to it though is, people are aware of possible credit card fraud, so may be hesitant to enter all those details into one page. Braintree isn't well known yet.

I’ll add, Braintree does have the option where people can log into PayPal through Braintree to make the process quicker.


Stripe: This is a lot more well known that Braintree. It's the same concept. Integrates into your website, which allows people to enter their card details directly into a little pop up box. They enter the details in and pay for items immediately.

Stripes is easier to set up than Braintree. It doesn't need all the business information that Braintree requires.


Fees wise, they're all based on transactions. You'll find that your local providers of these facilities will charge a monthly fee, whether you sell anything or not. When you first launch a website, it's good to be aware of what you're paying in terminal fees. Is that worth it? Or should you start with PayPal, then later on when you're making $1,000s a month, that may justify using a local payment provider. They do have lower fees, but there's the monthly fees. Do the calculations and weigh up what happens if you sell nothing in your first month, you could be down $30. Whereas if you sell $10,000 of stuff, and PayPal charges 3%, then that's $300 of fees. If you used an integrated credit card solution, that has fees of $30, plus a lower transaction fee, you'll only be paying them $130.

You can figure out which is the best way to go. Most people start slow. It builds up, then ramps up as time goes on. I recommend starting simple and using the more affordable option.

At least if you're already established and you've got clients, you'll know they'll be paying straight away, then you can justify it. Whereas if you're a fresh company, nobody knows you, you're not sure what your sale volume will be, then it's good to do PayPal.


Hope that helps guys. It's the different payment solutions you can think about. Have a think about it, do some research on your competitors.


That's Matt from the Razor Web Design Wire Podcast, please review, like and subscribe. I’ll talk to you next time.