Questions regarding payment gateways

[johncch]

Dear guys,

I need to ask a question that's not really related to hackerspace, but
like to get some pointers from you hacker folks.

Anyone had any experience dealing with payment gateways? If I'm
interested in doing a website that has a freemium business model, or a
recurring monthly subscription, what's the best option to go about
setting up the payment gateway?

Would appreciate any any any pointers on this. Thanks!

regards,
CH

[proteus guy]

We've integrated a lot of payment gateways (although not yet one specifically in SG). The better ones (amazon especially but they're still restricted to USA for now) have special apis to support recurring payments. This is very important because you don't want to be storing users credit cards on your systems at all which is what a good gateway will eliminate the need for. Paypal has this but their customer support is horrendous. Authorize.net is better but they don't have a proper test development environment which is VERY important, especially if it's your first time.

Thing to do is to make sure you can easily extend your system to support multiple payment options and don't get stuck with one single gateway. Payment systems get better and more flexible all the time. Otherwise, to give more specifics would need to know more about what you're looking to do.

  -- Ben Scherrey

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[zan]

For a recurring payment solution, there're 3 components

1. Merchant bank acct
2. Payment gateway
3. Recurring payment solution provider

I recommend Cybersource for your payment gateway. The email contacts
on their website is not working. You could either call their Singapore
office, or drop me an email. I can pass you their contact. Cybersource
offers an API, and their rates is comparable to those in the States/
UK. Its much cheaper than local payment gateways(enets, worldpay). For
your info, enets assume you're using Java and require you to install
some jar files on your server. That's unprofessional. Paypal payflow
gateway requires you to have $5mil in volume.

Recurring payment providers provides an API to manage recurring
payments. There're a couple of options. Zuora, Recurly, Chargify. Pick
one you like, and make sure they support Cybersource. If you're not
doing recurring payments, there's no need for a provider.

For merchant bank accounts, most banks would require a minimum deposit
of a 5 figure sum for fear of fraud. Just visit the local banks and
see who offers you the best rate.

There're a couple of threads on jfdi for payment gateways too.

On Apr 5, 12:23 am, proteus guy <proteus...@gmail.com> wrote:
> We've integrated a lot of payment gateways (although not yet one
> specifically in SG). The better ones (amazon especially but they're still
> restricted to USA for now) have special apis to support recurring payments.
> This is very important because you don't want to be storing users credit
> cards on your systems at all which is what a good gateway will eliminate the
> need for. Paypal has this but their customer support is horrendous.
> Authorize.net is better but they don't have a proper test development
> environment which is VERY important, especially if it's your first time.
>
> Thing to do is to make sure you can easily extend your system to support
> multiple payment options and don't get stuck with one single gateway.
> Payment systems get better and more flexible all the time. Otherwise, to
> give more specifics would need to know more about what you're looking to do.
>
>   -- Ben Scherrey
>

[johncch]

Thanks for the heads up, guys!

I'm working on a website that I would want to incorporate a paid for
option as the revenue generator. I'm just considering my options
before actually drawing out the concrete business plan. For now, I
have something like this in mind:

Perhaps a free-mium tiered plan
- free basic account
- a paid for account at $5 per month
- and an annual account at say $50

The thing is, from my understanding of payment gateways, the cost of
using them can eat in significantly into the revenues. For example
like paypal, the cost of a transaction is $0.50 + 2.4%-3.4% of the
transaction. If I'm selling things at $5, the payment gateway would
take up more than 10% of the transaction. It's not *too* bad if it's
$5, I once considered doing a high volume low profit business model,
with costs to the customer of say $0.30-0.50 per transaction, but
balked at that idea because of the cost imposed by the payment
gateway.

I'll definitely need a recurring API, I'll check out your
recommendations. Thanks! Please do describe your experiences and any
help in this matter is really really valuable and really appreciated.
Thanks!

regards,
CH

[Guyi]

Paypal is not just a payment gateway, they are a payment gateway +
shopping cart + merchant account.

You can get cheaper than paypal but you are gonna have to integrate
seperate merchant accounts + gateways + shopping carts.

$5 is getting into the realm of microtransactions, and yes fees start
to take up a huge % of the revenue, consider the fact that it is not 4
times harder to sell a $20 per month subscription than a $5 a month
subscription.

[Jeffrey 'jf' Lim]

On Fri, Apr 9, 2010 at 11:30 AM, Guyi <i...@guyishen.com> wrote:
> Paypal is not just a payment gateway, they are a payment gateway +
> shopping cart + merchant account.
>
> You can get cheaper than paypal but you are gonna have to integrate
> seperate merchant accounts + gateways + shopping carts.
>
> $5 is getting into the realm of microtransactions, and yes fees start
> to take up a huge % of the revenue, consider the fact that it is not 4
> times harder to sell a $20 per month subscription than a $5 a month
> subscription.
>

I'm guessing (this wasnt clear from the post) that your opinion would
be that it's *more* than 4 times harder to sell a $20/mth
subscription, as opposed to a $4/mth subscription?

-jf

--
"Every nonfree program has a lord, a master --
and if you use the program, he is your master."
--Richard Stallman

"It's so hard to write a graphics driver that open-sourcing it would not help."
-- Andrew Fear, Software Product Manager, NVIDIA Corporation
http://kerneltrap.org/node/7228

[Guyi]

In 99.999% of cases it is NOT 4 times harder to sell a $20
subscription vs a $5 one.

Meaning it is much easier to raise the percieved value of your product
and charge more, than it is to try to make up for low price in volume.

[Patrick Haller]

On Thu, Apr 08, 2010 at 09:25:52PM -0700, Guyi wrote:
> In 99.999% of cases it is NOT 4 times harder to sell a $20
> subscription vs a $5 one.
>
> Meaning it is much easier to raise the percieved value of your product
> and charge more, than it is to try to make up for low price in volume.

careful. This is kinda like the Laffer Curve, you don't really know what
the price elasticity of demand is until you try to map it out. i.e. if
you take your second paragraph at face value, then for every high price
you charge, there's a better higher price you should charge. ;)

A good route forward would be to survey what others are charging
(competing software and other software on the same platform) as those
will anchor the price in consumers' minds and set their expectations.

Patrick

[Jason Ong]

would there be a perception from your audienced that paypal easier and more trust worthy to transact than other cheaper solutions mentioned?

cheers,
Jason

--
sent from my android

On Apr 9, 2010 2:16 PM, "Patrick Haller" <patrick...@gmail.com> wrote:

On Thu, Apr 08, 2010 at 09:25:52PM -0700, Guyi wrote: > In 99.999% of cases it is NOT 4 times harder...

careful. This is kinda like the Laffer Curve, you don't really know what
the price elasticity of demand is until you try to map it out. i.e. if
you take your second paragraph at face value, then for every high price
you charge, there's a better higher price you should charge. ;)

A good route forward would be to survey what others are charging
(competing software and other software on the same platform) as those
will anchor the price in consumers' minds and set their expectations.


Patrick

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[johncch]

Good question.. Personally I don't hold PayPal at higher esteem and
won't choose PayPal over another CC option when I buy things online.

Thanks for the suggestions, folks. I'm still thinking about it. I
don't think I'll have any problems building and integrating my own
sign up flow together with the gateway so I won't be worried on that
front. The thing is yes, the processing fee takes up quite a bit %
wise.. are things better on the US front? I was wondering how people
manage to sign up for $5 a month services ala ArsTechinca premium
subscriptions.. perhaps they have volume they can command a better
price. I was hoping there would be significantly more options on the
microtranx front by now.

I'll have to think about the pricing. I thought $5 a month would be
optimum, something people would have less friction signing up,
compared to a $20 a month service. That's say, let's round down to $50
and $200 a year, the difference is quite significant. For a product
that's $50 a year, I'll sign up if it provides me with some value, for
a product $200 a year, I'll have to think long and hard whether it
provides me that substantially such that it can give me more
convenience or generate more business. The thing I'm building is
consumer facing, rather than business facing, so a low cost option is
something I consider quite important. Might be wrong on that, but it's
tough thinking about this without any factual data to back it up, and
it's not accurate (in my opinion) to conduct a survey based on
assumptions, i.e. if I provide you with this service, would you pay me
$x a month because it's hard to gauge something until one manages to
see the value of the service in action.. for example, if "I say if I
provide you a financial management tool for all your credit cards
would you pay me $5 a month"? Versus, say, mint. The response is
probably quite different.

Thanks for all your comments guys. Appreciate it greatly. Anyway I
have more coding problems to worry before worrying about pricing and
all that. Just a comment, I feel that we (SG) is not SV so probably
there should be some sort of revenue otherwise if one is to do a
startup, it's probably dead end. Just my 2c.

regards,
Chong Han
p.s. I was checking out HS membership. Is it still as stated on the
wiki? pledge 6 months and transfer via ATM? It's updated like last
year so I just wanted to clarify. Thanks

On Apr 10, 9:48 am, Jason Ong <velve...@gmail.com> wrote:
> would there be a perception from your audienced that paypal easier and more
> trust worthy to transact than other cheaper solutions mentioned?
>
> cheers,
> Jason
>
> --
> sent from my android
>

> On Apr 9, 2010 2:16 PM, "Patrick Haller" <patrick.hal...@gmail.com> wrote:
>
> On Thu, Apr 08, 2010 at 09:25:52PM -0700, Guyi wrote: > In 99.999% of cases
>
> it is NOT 4 times harder...
> careful. This is kinda like the Laffer Curve, you don't really know what
> the price elasticity of demand is until you try to map it out. i.e. if
> you take your second paragraph at face value, then for every high price
> you charge, there's a better higher price you should charge. ;)
>
> A good route forward would be to survey what others are charging
> (competing software and other software on the same platform) as those
> will anchor the price in consumers' minds and set their expectations.
>
> Patrick
>

> -- Chat:http://hackerspace.sg/chatTo unsubscribe, reply using "remove me"
> as the subject.