Payment Gateways - Is Stripe a good choice?

Hi all,
I am currently using PayPal (free) for accepting Credit Card or PayPal payments on our website via Gravity. This is working fine and there is no problem, but we’re looking for a way to have payments from the forms be transferred to our bank immediately (or automatically) and have eBay and other PayPal things stay there. I don’t think this is possible with their Auto-Sweep features.

So, I see that Stripe is the same transaction rates with no monthly fees. Should I just sign up for this and give users the option to pay with PayPal OR Stripe? Is there a way I can set up the PayPal gateway to require a PayPal account? Or will users then always have two options for a Credit Card?

Is there anything else I need to know about Stripe or is it pretty straightforward? I do have the Add-On with my plan.

Hey @muzicman82.

Great question!

I’ve been in the payment industry for 25 years and might be able to offer you some insight if you’re in the US.

First, I would encourage you to accept all forms of payment available, including Paypal, Amazon, etc. The goal, of course, is to make it as easy for people to pay you as possible.

Stripe is a great solution–particularly if you’re outside of the US. If you’re inside the US, there are a lot of more cost-effective solutions than Stripe or Square. It’s usually easiest to integrate with Authorize.net and connecting to a “real” merchant account with a provide your know, like, and trust. Generally speaking, you’ll save money if you’re processing more than $2200/mo–and naturally, the more you process, the more you save with a provider like Brightr Payments because the processing fees are considerably lower.

Hope this helps.

Let me know if I can answer any questions for you.

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@SmallBizWhiz

Thanks. I went ahead and signed up for Stripe and deployed it alongside PayPal. We’re not a storefront, but we’re a service provider, and our clients are primarily businesses except for a few residential customers. That said, I don’t think offering everything under the sun is all that necessary.

The way I have things now, there’s a choice for Credit Card and a PayPal. People that have PayPal will use it, and others won’t. It’s that simple.
I don’t know who we are using for in-person processing but I’m told we’re paying a lot of fees.

As far as online payments go, we might see over $2200/month, we might not. Is that about the breakpoint where fees are lower even though you’re paying a merchant per month?

We generally set up our pricing such that we offer a discount if clients pay by cash or check (where we’re not paying credit card fees).

Stripe’s fees appear to be the same for PayPal for online payments. We’re fine with that… and we’re also not paying a merchant account this way too.

Aside from that, Stripe appears to be top notch in terms of Developer APIs and resources.

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@muzicman82 – I totally agree. Everything can be too much. After 25 years in this industry, I’ve experienced people who are very choosy about the cards they want to accept. And my guidance is more along the lines of – whichever ones put money in your pocket! :slight_smile:

$2200/mo is generally the breakpoint where a higher-processing fee solution like Stripe becomes more expensive than a traditional merchant account, which will run about .50% less per transaction but has a monthly fee.

Knowing what I know–if I weren’t in the payments industry, I would use Stripe and Paypal until I consistently reached $2500/mo. Then I would move to a traditional merchant account and Paypal.

From an API perspective, Stripe has done a great job. There are many other gateways out there that have excellent solutions as well, Authorize.net being one of the largest. There are smaller gateways that are really focused on hooks and automation.

Hope this helps.

@SmallBizWhiz

I assume that by around $2500/mo, that’s just credit card payments and likely between both web and in-person transactions assuming we’d use the same service or merchant account for both. We certainly aren’t doing that that volume online just yet.

Right now, our in-person credit cards are processed by some merchant account, but I have no idea who it is or what our fees our. I’m trying to get this info.

What I don’t like about merchant accounts is that with monthly fees, transaction fees, and other tack on charges, it becomes very hard to predict what it costs per month. At least with 2.9% + $0.30, it’s a dead on calculation for every transaction.

@muzicman82

In the case of the $2500/mo–I’m just using that as an easy number because as you point out, a true merchant account generally comes with a monthly service fee.

Without getting overly technical and deep into how it all works (which I’m happy to do offline if you care to know - doug@brightrpayments.com), the short of it is, that companies like Stripe, Square, and Paypal are “Payment Facilitators”. This means they operate under one merchant account and every merchant thereafter is a sub-merchant. As such, they spread their costs across the majority and build a profit in for themselves. So as a small merchant (less than $2500/mo) this is of benefit—strictly due to the monthly fee associated with a true merchant account.

Conversely, when you are processing a larger amount of transactions, you are DRASTICALLY overpaying. The actual cost of transactions, which is the same for EVERY credit card processor ranges from .05% to 3.05%. The average COST for retail (swiped) locations is about 1.60% and 2.20% for strictly e-commerce. Grant it, there are a lot of variables that come into the mix—AND paying on a cost+ fee structure, while more complicated, is ALWAYS less expensive. This is why ALL the major retailers out there pay actual cost plus a clearly defined markup–and do NOT pay a simple, flat rate price.

To put this in an analogy—Stripe is forcing you to buy a 3-piece suite with every transaction, when all you really need is a pair of Kahkis and a button up shirt. It may be easier to buy the suit off the rack… but why?

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