Online payment systems: which way to go

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With the prevalence and increasing growth of the internet, there are more and more sales conducted through this global network. Selling online has a lot of benefits. It works with buyers, who make impulsive decisions and get the desire to buy something immediately. It provides purchases on the international level. After all, it just makes the sales process much easier and quicker, allowing a website owner to increase profits.

Nowadays, adding payments to a website is not an issue. There are a lot of options to collect money from goods and services all over the world. Nevertheless, one has to consider everything thoroughly before making the final decision.

Choosing the right method

Since you have built a website for your online business, and you want your customers to have a chance to pay by card there, you need to decide on the right way to do it.

So, there are two common methods you can choose:

  • Creating your own merchant account
  • Using third-party merchant (payment gateway account).

Setting up your own merchant account

Creating your own merchant account means creating a bank account, that enables you to process credit cards. It is called Internet merchant account (IMA), and you need to apply for it. In this situation, the easiest option would be creating such account in your own bank. However, even having long-term established relationships with your bank doesn’t mean it wouldn’t refuse. So, you may need to start looking for another local bank.

merchant account

In this context your bank will provide transactions by exchanging funds with the card holder’s bank. The funds minus fees will be transferred to your merchant account. It’s important to mention that in order to deal with a bank you will have to comply with a set of rules, including legislation and security issues.

Advantages of establishing a merchant account

  • More control over the process because transaction is held between the customer and your merchant account without a third party handling the money for some time
  • Payments are received faster as long as they are transferred directly to your merchant account
  • Clients are not going to leave your website to transfer the money, and the name of your company will be printed on the bill.

Disadvantages of having your own merchant account

  • The process of establishing your own merchant account, in general, is longer and more complicated
  • You take all responsibility for disputes, field service issues, chargebacks, etc
  • You have to deal with security issues directly, since fraud is very common in the internet
  • It involves more upfront costs.

Using third-party payment processor

Since the above mentioned way can be quite challenging, there is an alternative. You can use services of a third-party merchant – payment processing company. There are a lot of companies, which offer to accept credit card payments on your behalf, charging fees and some payment percentages for such services. They are also known as payment gateways.

Advantages of a holding a payment gateway

  • Easier and quicker setup, since you don’t need to get approved for merchant services by a bank
  • Lower initial costs. Many third party payment processors don’t charge high deposit fee for setup or even monthly fees – money is charged only for transactions
  • If there are any disputes concerning payment process, they are an issue of the payment processing company
  • There are some well-recognized and trustworthy brands among payment gateway companies.

Disadvantages of using third-party merchant

  • While the initial costs are lower, transaction fees are usually higher
  • Clients are often redirected from your website to another link while making a payment
  • Not all third-party merchants have flawless reputation and deal properly with fraud issues.

There are plenty of online payment gateways out there, so choosing the right one for your business is not an easy decision. You should consider a list of factors, such as set up and transaction fees, which countries and currencies are supported by the payment processor, reputation, dealing with fraud, security issues, customer support, and many others.

So, let’s take a look at four payment processors on the market, which are definitely on top of the lists – PayPal, Stripe, Braintree, and Authorize.Net.


Looking for a third-party merchant account, PayPal probably will be the first and the most common option you will come across. And it’s not surprising, because it’s a global leader in online payment gateway industry. Having been launched in the late 1990s, PayPal started as an online payment solution for eBay, enabling its customers to buy different goods via internet. Now, it is not tied to eBay anymore, but is widely used by millions of customers.


Pricing. The transaction fee for PayPal is 2.9% plus $0.30 per sale. It offers discounts with the increase in sales going as low as 1.9% + $0.30 per sale. However, its pricing system is not that simple because PayPal also charges some extra service fees. What is more, PayPal offers various payment solutions, such as Payments Pro or Payments Advances, which imply charging monthly fees and use different pricing systems as a price for additional features. When it comes to international transactions, cross-border fees (for US it’s 1%) as well as 2.5% currency conversion fees are charged. In addition, there are micropayments (less than 5$), for which PayPal lowers the rate.

Advantages of using PayPal

  • Offers a variety of payment solutions. PayPal offers a wide range of options. For instance, you can choose Payments Standard with buyer’s checkout on the PayPal site or Payments Pro, which requires paying a certain fee, but gives you some extra features, such as checkout directly on your site.
  • Globally-recognized brand. PayPal is a truly recognizable name, which makes this online payment solution trustworthy among the consumers. Moreover, when it comes to some small online retailers, customers often take accepting payments via PayPal as a proof of confidence.
  • Easy to set up. PayPal presents different developer tools and its setup varies from simple to more advanced, but, in the end, the easiest integration it offers allows nothing more than just inserting the existing codes.
  • No regular payments and no setup fees. Paying via PayPal takes place only when you sell, which protects users from risk of to paying service fees when there are no sales. Nonetheless, it concerns the standard version of PayPal payments, because Payments Pro and Payments Advanced charge setup fees for their additional features.
  • Supports all the platforms. As long as PayPal implies redirecting to its own site, no platform integration is necessary.
  • Available in a most of countries. PayPal works in 202 countries around the world.

Disadvantages of working with PayPal

  • Lack of customer service. If you face a problem with the payment and need some help, it’s not so easy to get through. It’s difficult to find phone numbers on the website. If you send an email, you will probably receive an automated reply.
  • Off-site checkout. In order to pay, users are redirected to the third party website
  • Freezing the accounts. PayPal wants to provide its users with a high level of security. However, it often causes situations, when even the smallest suspicion can lead to locking the account. Consequently, it takes time to check whether this is fraud or no, so money can be locked for a long period.
  • No data portability. If you want to change payment processor, PayPal is not going to let you transfer all the credit data about your customers. Signing up again can be a test of users’ loyalty and not everybody will pass it, for sure. As a result, you will lose some part of your clients.


Stripe is often thought to be the most popular PayPal alternative. Founded in 2010, it is much more modern option than PayPal, but is getting more and more widespread. Stripe has got its own approach – building it for developers not for merchants. It also states that it is going to make it easy for companies to run their businesses online.


Pricing. Stripe offers simple pricing system. It charges 2.9% plus 30 cents as a transaction fee. The rate can vary from country to country, but it stays flat. What is more, Stripe takes 2% for converting the currency and doesn’t offer any discounts for microtransactions.

Advantages of using Stripe

  • Simple to implement. Stripe is easy to use both for businesses and for customers. It offers simple setup using plugins and simplifies checkout for its customers
  • No redirecting. Stripe implies handling transactions directly on your website and, this way, allows you to have complete control over the entire payment process. Everything is done on your website, so users don’t have to leave it in order to fill in their credit cards information
  • Good for making business abroad. Supporting more than 130 currencies and many payment methods including cards, such as Visa, MasterCard, American Express, and JCB makes Stripe a good platform for going on the international level. However, Stripe is present only in 25 countries so far, which narrows its opportunities a bit
  • No setup costs or monthly fees. Like PayPal, Stripe doesn’t charge regular payments or fee for setup, so fees are paid when there are sales
  • Great API. Stripe offers simple and clean API, which is easy to implement. It holds valid documentation with appropriate examples for standard functions and understandable explanations all wrapped up in an attractive interface.
  • Data portability. Stipe is data portable, which means whenever you want to leave Stripe, it will give you all the credit card data in a secure and PCI-Compliant way.

Disadvantages of working with Stripe

  • Present not everywhere. Stripe can be used only in 25 countries. Such countries as Canada, UK, United States, Ireland, Australia, Austria, Belgium, Finland, France, Germany, Luxembourg, Netherlands, Spain, Denmark, Norway, Sweden, Austria, Italy, Switzerland, Hong Kong, Japan, New Zealand, Mexico, Brazil, and Singapore are able to receive payments via Stripe
  • Concentrates on particular niches. Stripe is a developer’s payment processor in the first place. It has a lot of powerful features designed for developers, but at the same time not so many of them are suitable for small and medium-sized businesses.
  • Requires an SSL/TLS certificate. Such certificate can cost from $25 to $100 a month, depending on your setup.


Braintree was founded in 2007 and is known as one of the top payment platforms, which enables accepting payments through an app or website. The company has easy integrations with multiple payment method options, simple pricing, decent level of protection, and customer support. Acquired by PayPal in 2013, Braintree became part of PayPal family, which also includes such well-known payment processor company as Venmo.


Pricing. Braintree charges the good old 2.9% plus 30 cents for each transaction (after first $50 000). For transactions held in foreign currency Braintree takes additional 1%. There is also $15.00 per chargeback. Moreover, Braintree offers discounts for eligible nonprofits at a rate of 2.2% plus 30 cents.

Advantages of using Braintree

  • Supports multiple payment types. Braintree offers connections with all the major payment types, including PayPal, Bitcoin, Apple Pay, and Android Pay
  • Internationally available. It supports more than 130 currencies and almost all major credit and debit cards like Visa, MasterCard, American Express, etc
  • No setup and regular fees. Braintree uses the same approach as PayPal and Stripe here, not charging any monthly and setup payments
  • Data portability. It is one more positive feature, which allows you to get customers’ stored payment information when you decide to change providers
  • Valid customer support. Braintree offers support via email and phone as well an extensive knowledge base.

Disadvantages of working with Braintree

  • Narrow range of settlement currencies. Despite working with 130+ currencies all over the world, there are only 13 currencies in which funds can be deposited into your bank account
  • Not totally clear documentation. The documentation Braintree offers is well-structured but can be ambiguous or open to interpretation
  • Limited upgrades and proration. Braintree isn’t able to process more complex upgrades from plans, which imply different billing cycles.


Authorize.Net is not something new in the payment processing field. Launched in 1996, this payment gateway is now one of the oldest and most well-recognized brands with more than 300,000 websites supporting it.

Pricing. As well as PayPal and Stripe, Authorize.Net charges 2.9% plus $0.30 cents for every transaction held. However, it has also $49 setup fee, plus $25 recurring monthly charge. What is more, it assures on its website that it charges no extra fees – no hidden fees, no annual renewal fees, and no cancellation fees.

  • On-site checkout process. On-site payment processing is an attractive feature because it helps to keep customers on your website throughout the payment process
  • Live chat support. Unlike many payment gateways, Authorize.Net provides 24/7 customer support as well as different user guides, which definitely makes customers feel more cared about and improves customer satisfaction
  • Accepts wide range of payments. Customers can pay using any major credit and debit cards, e-checks, PayPal, and Apple Pay payments.

Disadvantages of working with Authorize.Net

  • Charges setup and monthly fees. Unlike PayPal and Stripe, it charges setup fee and monthly fee in addition to transaction fees, which was already mentioned above
  • No credit card portability. Like PayPal, Authorize.Net won’t provide you with credit card information about your clients if you decide to change payment processor
  • Not available everywhere. Authorize.Net is an option for you if your business situates in the US, Canada, Australia, the UK, or Europe.


Establishing a way of accepting payments online on your website is not really hard or super complicated task these days. Nevertheless, what you should be aware of are the options today’s market offers and features that will perfectly suit your business. You can make your choice relying on a pricing structure, setup process, ease of transaction, user interface, security issues, and other. Choosing the way you process payments via website may be not the main thing in your sales, but it is crucial to make the correct choice, which will satisfy you and your customers. Hopefully, this article has helped you on the way of making the right decision.

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