Payment Processors

Many of my clients have something they would like to sell online.  That brings up the question how to accept payments online.  The way that most larger companies do this is to sign up with a bank for a merchant account.  This allows them to accept Visa and Mastercard payments.  Depending on the bank, it is often possible to also accept American Express and Discover card payments for an additional setup and/or monthly fee.  The monthly fee charged by a bank to accept Visa/MC is generally around $30-$40 per month in addition to per-transaction fees and a percentage of each sale.

The costs involved in this type of setup can be worth it if you are processing at least several thousand dollars in sales per month but if you are just getting started do you really need to pay all of these setup fees and monthly charges?

The good news is that you don’t!  There are multiple payment solutions available that don’t require you to set up a merchant account with a bank in order to accept online payments.  I’ve worked extensively with two of these:

Paypal is a widely used payment solution in the online e-commerce world. Everyone who uses Paypal becomes a member and payments are transferred from one Paypal account to another. Paypal fees are .30 cents per transaction + 2.9% of the total.  Paypal also offers a free debit/credit card that you can use to access the funds in your account. If your business involves in-person transactions as well as online sales, you can also get a free card reader to use with your Paypal account.

Stripe is currently my favorite payment processor. The fees are exactly the same as Paypal (.30 cents per transaction + 2.9% of the total). There are no setup fees or monthly charges and your money is deposited directly into your bank account 2 business days after each sale. You can choose to have deposits made each time you make a sale or schedule your deposits every week if you prefer. Since many people trust Paypal and have money sitting in their Paypal accounts, I recommend giving your customers the choice to pay with either Paypal or Stripe.

Square is another good option for accepting payments on your website. The fees are the same as Paypal and Stripe (.30 cents per transaction + 2.9% of the total). Like Paypal, Square also allows you to accept payments at Point of Sale. If your business involves making in-person transactions as well as online payments, Square offers multiple POS hardware options starting from as low as $10 for a card reader that plugs into your phone or tablet.