Payment Provider Comparison
March 2, 2010
A comparison of some of the most popular methods for accepting payment for web sites.
In Brief
To accept payments via a web site, a merchant account is needed, to store the funds; and a payment gateway is required, in order to process
payments and move funds to the merchant account.
Alternatively Google Checkout and PayPal, to name two, provide third party processor solutions. Funds are typically held by Google or PayPal for a
number of days before being eventually transferred into the merchant's account.
Your bank1 may be willing and able to provide a merchant account and payment gateway with reasonable fees.
Other popular merchant account providers include Charge.com, MerchantExpress.com
Other popular payment gateways include Authorize.NET, LinkPoint, Plug n Pay, Verisign.
Opinion
Anecdotal info on the web indicates that it can be extremely hard to get support at Google if something goes wrong. This is a huge vote against
using Google Checkout.
My own experience has shown that both PlugNPay and Authorize.NET are reliable payment processors with good technical support. The down side
of both of these are the fees they and their resellers charge, and in finding a reseller that will be up-front about what the fees are.
A reasonable approach is to launch the web site using PayPal (Standard or Pro), and upgrade to either PayPal Pro or a merchant account once
registration heats up.
PayPal Payments Pro can be called from your web site just as a payment gateway; the use of PayPal can be invisible to your clients. PayPal
Payments Standard can be branded and configured to be easy to use for your clients, requiring no initial cash outlay.
Once your revenue stream is established it will be easier to negotiate a better transaction fee percentage with a payment services provider.
Web Payments Comparison Page 1 of 3 3/2/2010
Comparison
The table below compares fees and requirements of payment services, including both merchant account and payment gateway.2
The “apples-to-apples” row compares your total monthly fees for each of these services, assuming you hit a target revenue of $48,000 per month (2
seminars of 80 people at $300/head), with a sample of 3 chargebacks per month. In cases where the percentage per transaction is variable, I split
the difference (e.g. 3.22% for Intuit).
PayPal3 Intuit Merchant Capital Merchant/ BrainTree
Services Authorize.NET
Sign-up Fee free waived4 $99.00 $99.00
Apples-to-Apples $1,134.00 (+$30 for Pro) $1,606.55 $1,678.44 $1,581.20
Monthly Fee free ($30 for Pro) $12.95 $20.00 $52.40
Per Transaction Fee $0.00 - $3,000.00 2.9% 2.90% to 3.54% + $0.30 Visa, MC, Discover
+ $0.30 1.99% to 3.94% + $0.24
2.97% + $0.30
$3,000.01 -$10,000.00
(rate depends on card type and AmEx
2.5% + $0.30
other factors)
2.95% + $0.30
$10,000.01 -$100,000.00
2.2% + $0.30 (set by Amex, may vary)
> $100,000.00
1.9% + $0.30
Monthly Minimum Fee No No $10.00 $200.00
5
Chargeback Fee $10.00 - $25.00 $20.00
Termination Fee No - Typically requires a 2-3 year
contract; early cancellation can
cost several hundred dollars
depending on how many years
the merchant has held the
account.
Who processes the PayPal (for Pro, PayPal or Merchant site via gateway merchant site via gateway BrainTree via merchant site
payment6 merchant site)
Contract required No - Typically 1-2 years No
Web Payments Comparison Page 2 of 3 3/2/2010
1. For example, Wells Fargo Internet Merchant Account pricing: https://www.wellsfargo.com/biz/merchant/options/gateways/ima/pricing
2. All prices listed are in USD.
3. Google Checkout rates are nearly identical to PayPal.
4. Intuit has a reasonable offer for new Intuit Merchant Service customers only – they waive set up fees, first 90 days of monthly service fee
and monthly minimum fees. Their fine print is pretty heavy though: “You are responsible for the rates and fees for transactions processed
through the service. After the first 90 days, your account will be automatically billed at the then current monthly service and monthly
minimum fees and any applicable rates and fees for transactions processed. Terms, conditions, pricing, features, service and support are
subject to change without notice. “
5. Intuit isn't forthcoming about all fees charged or whether a contract is required.
6. This can be significant from the perspective of PCI compliance, once a merchant is processing more than 20,000 transactions per year
(higher than Level 4). PCI Levels: http://www.pcicomplianceguide.org/merchants-20071022-gaining-pci-compliance.php?step=define
More Information
Daniel at copress.org did a write-up last July of Google Checkout vs PayPal vs merchant account: http://inside.copress.org/2009/07/28/google-
checkout-vs-paypal-vs-merchant-account/
Authorize.net has a comparison of their service versus Paypal and Google Checkout : http://www.authorize.net/advantage/
A review of PayPal versus Google CheckOut, with PayPal coming out on top : http://blog.taragana.com/index.php/archive/google-checkout-vs-
paypal/
This article also pegs PayPal as the winner: http://www.bestshoppingcartreviews.com/content/google-vs-paypal.html
List of PayPal fees: https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-
content&content_ID=ua/UserAgreement_full&locale.x=en_US#8.%20Fees.
An extensive, exhausting list of payment service providers: http://discerning.com/topics/services/paymentprocessing.html
Good articles on e-commerce : http://www.merchant-account-services.org/articles/
Web Payments Comparison Page 3 of 3 3/2/2010
