A short history of accepting payments with credit online before telling you about Stripe (and this is good info to know if you’re in business for yourself):

In the early-early days of internet commerce, known as "e-commerce" back then when anything internet had an "e-" in front of it, it was required to have a true merchant account to accept credit card payments. And oh yes, it was a serious pain to deal with. I know because I did it. There was a huge application fee usually around $250, a business checking account was required, and accepting The Big Four cards MasterCard/Visa/Discover/American Express was and probably still is split three ways concerning how transactions were charged.

MC/Visa was and still is the cheapest, best and easiest. Discover back in the day charged an additional 8 cents to the merchant per transaction (now you know where "cash back rewards" come from); they probably still do. AMEX had a separate application just for them, charged the most to the merchant per transaction and still does to this day. If you ever wondered why smaller merchants hate accepting AMEX, that’s why. The difference is usually 1.3% more taken out from a merchant when using AMEX compared to MC/Visa. That may not sound like a lot, but for example a $20 item on MC/Visa will usually cost the merchant a bare minimum of 47 cents. The same purchase on AMEX costs the merchant 70 cents. Yes, we’re talking cents here, but multiply that by, say, fifty 20-dollar items, and the MC/Visa takes out $23.50 while AMEX is $35. It adds up quickly.

And yes, this is why some gas stations charg extra cents-per-gallon if you purchase with a credit card. Contrary to popular belief, they’re not gouging, they’re covering the transaction fee for the privilege of paying with credit or debit.

Enter PayPal

PayPal is, said very honestly, a great way to accept payments by credit card online – but it does have its flaws.

Stupidly high transaction fee

The last I knew, PayPal whacked you with 3.9% per merchant transaction. I could be wrong there but It’s probably not far off the mark. I do know it’s stupidly high.

Phone call required any time you break out of your "typical transaction history"

Let’s say you have a good month of sales – a really good month. You double the normal amount of sales that you ordinarily would. Then the worst happens – your PayPal account is frozen. Now people can’t pay you.

What’s required to do is that if you see your incoming transactions exploding with sales, you’d best pick up that phone real quick, call PayPal and tell them everything is normal and you’re just having a really good sales month. They will record the call and mark your account so the freeze doesn’t happen.

Yes, this is an annoying process, but par for the course when dealing with credit transactions as a merchant.

Difficult interface

PayPal basically gives you only one way to embed their stuff into your web site – their way. Customization is so-so at best. Yeah, it works, but sometimes when you have a custom ordering system, it’s a bit trying on the nerves getting all the stuff to work right.

Enter Stripe

Stripe has been making news lately because not only do they accept The Big Four cards, but they also have a much lower transaction rate (2.9% + 30 cents), stupidly easy embedding options, an API that you’ll actually like when customizing it to your payment system, and the best part: It’s not PayPal.

I haven’t personally used Stripe, but I’ve seen PayPal alternatives for accepting credit cards before and, well, they all sucked. Either the cost was too high or the API was completely stupid and unusable or the gateway requirements were dumb, etc. Something was always amiss – but not so with Stripe.

If you currently use PayPal to accept credit card payments, no I’m not telling you to stop using them, but you may want to consider using Stripe as your primary payment option – if for nothing else than the easy pricing schema so you know exactly what you’ll be spending when transacting with that system.

Site: www.stripe.com

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