I love virtually all startups and wish for their success. That said: I'm thinking that when every bank in Creation was saying "We won't take CC payments for that. No, no, you simply can't convince us that is a good idea." they were actually being appropriately conservative about legitimate operation risks uniquely incurred by this business model.
If you don't have a Fraud Guy, I respectfully suggest either hiring or training a Fraud Guy very, very soon, preferably before enabling any form of credit card payment. Your Fraud Guy is going to have some recommendations, including recommendations which meaningfully interfere with the product team's ability to meet user demands. If you do not listen to your Fraud Guy's recommendations (or, regrettably, even if you do), you may eventually get an expensive lesson in why both BigCo and startups in related fields eventually have to hire a/several/an entire department of Fraud Guys.
One of your Fraud Guy's first questions is going to be "Is there any pathway by which I can take a credit card and turn it into cash using this service? If so, what is the timeline on that?" I am not a Fraud Guy, but I count two ways to cash out credit cards, just reading the website FAQs. If you are discovered by the adversaries to be the weakest link in the UK financial system with regards to cash outs, you can expect heavy, dedicated adversarial interest.
It seems relatively easy for someone to turn credit card payments directly into cash, by making a trade and then extracting cash through the bank account. And the gap between your withdrawal policies and the chargeback policies of credit cards are pretty wide. I would be very careful about this. Forcing users to enter bank accounts make it a bit harder for average people to defraud, but not a motivated fraudster. Also, allowing people to take delivery of wine through the purchase of a credit card, and then being subject to a chargeback will be extremely painful, although I'm not sure how easily chargebacks are fought in Europe. If you do suffer a lot of chargebacks though, even if you successfully fight them all, be prepared to be dropped by your credit card processor.
I think your business is actually very interesting, but I'm surprised that credit card companies would allow you to accept credit cards at all, since I would think they would lazily lump you in as a form of brokerage site. Not that I believe this, but it seems like an easy translation to stock brokerages, which don't accept credit card payments, but force you to transfer real cash into your accounts before you trade. Then once you have money in a brokerage, they can extend margin, but they maintain their own risk by monitoring the margin levels, etc.
Good luck though, I read through your site and I think it's a very neat idea!
1. A number of wine investment companies took card payments but never bought the wine. So the bank was liable for the money lost in those situations - and as a result that put a blanket ban on all fine wine companies. We were able to talk Barclays around on this.
2. Storage of wine would be handled by a third party warehouse. If they screwed anything up (e.g. broke the case, had a fire, and insurance refused to pay out), there was a chance that buyers could get the money back through their bank if they paid by credit card.
and for us when we did accept this:
3. Getting the fees to work with our model - we wanted to offer a fixed fee for trading cases, but all banks / payment services wanted to take a percentage, including for debit card payments (hence my point about doing more work to get the model to work payment charges).
Obviously fraud is a major concern, and is something that we do a lot of work on as we scale up (e.g. at the moment we're manually processing all orders, taking ID for anyone buying more than £10k total etc). It's not something that we're naive too and we're definitely not going to launch a completed automated system without adequate processes in place.
And am I right in that you are basically saying that the buyers take on all risk of storage at the warehouse facility? If so, you should probably outline that as well, including what the insurance policy of the warehouse, covers, etc.
Step 1: Start posting username/pwd to your server over HTTPS and start delivering signup & login forms over HTTPS.
At the moment, both of these happen in plain text so I don't see how you can say you take security seriously if you can't even get the low hanging fruit.
Outsource anything you can, especially the things that others can do much better than you because it is their core business. Payment processing is definitely one of those things.
I started my software company in Germany and have always used a third-party payment processor.
PayPal, PayMill, Braintree etc are all 3rd party payment
processors. So I don't quite understand your distinction.
I believe FastSpring may mean you avoid having to get a
merchant account directly so perhaps that's the
difference you see?
The biggest objection I've heard is the 9% flat rate they
take vs 3% and 30 cents per transaction that you'd roughly
see from a payment processor.
These type of solution also rarely let you set up recurring payments.
Unfortunately PayPal is pretty much an unregulated bank and
there are a number of horror stories about them closing accounts,
freezing funds and making life very difficult for entrepreneurs.
A lot of the big firms (in the UK at least) will use Corporate AMEX charge cards (rather than credit cards) for this purpose. If they can't pay on their Corporate AMEX they'll often have to go through a more drawn out process to get the payment made by some other method unless they want to make it on a personal card and then claim it back.
* Verified by VISA with my VISA card redirects to a third party domain (not the retailer or my bank) which then asks for DOB and very basic details to set a password (and little more is needed to reset the password). Even if fundamentally secure the user education message of this process is awful. I believe that some card providers make better use and of Verified by VISA mechanisms but not all.
Of course as a merchant it's higher fees, has weird conditions attached to it and virtually all AMEX users have another credit card (indeed Amex provide me with a visa card for when I can't use my amex) so there is little benefit to supporting amex.
Personally, I have an Amex too and I'm not rich or special but maybe it's different in the UK. I use it because I get a ton of airmiles and Amex never seems to get rejected or stopped for fraud checking purposes.
The evaluation of new applications in order to accept credit card payments is subject
to strict compliance rules and risk regulations in Germany. Our current acquiring
bank has declined your contract for some reasons with regard to their risk and compliance
management guidelines. We do not receive any detailed reasons from the bank.
This is why we cannot give you a better explanation. Unfortunately,
Paymill does not have an influence on that decision.I like their service and they're nice guys.
For us, GoCardless win in every respect except for scope: the bank accounts they can charge have been limited to UK only and are just starting to expand out to other countries in Europe, but global sales aren't possible for now so you need at least one other option if your customers are worldwide. No complaints so far in terms of integration, support, fees, or legal terms though.
Braintree is our other current plan: there's a multi-week time lag and the hassle of providing significantly more information up-front when you apply, but like GoCardless they seem to have good support and the information they ask for doesn't seem to be unreasonable, just time-consuming. Also, unlike a lot of payment services, their legal terms were quite short and so far red-flag-free. The fees aren't bad, but they need to sort out their presentation so they don't refer to obscure bank interchange rates rather than giving a straight answer on percentages, and the minimum monthly fee just to sign up is expensive if you're only expecting a modest number of customers in the early days. They do have some serious limitations in their fraud protection that make us wary of chargebacks, such as not supporting 3D Secure and the liability shifting that should go with it.
We've considered numerous other options, including most of the ones mentioned in the article, but ruled everyone else out so far.
PayPal is a non-starter due the fact that on their new web site it seems you can't even look up basic details without signing up for an account and all that goes with doing so. Combine that with a well-documented history of poor customer service and some dubious terms last time we checked, and for us they're not a serious contender. The one thing you can see before signing up is the fees, which are high even before all the nasty extra percentages they can add on if you look carefully enough.
Paymill should be a much better option, but I simply couldn't understand their legal terms, so they've rule themselves out immediately. If they want companies like us to look at them, they need to hire a lawyer who speaks English, and then they need to write terms that are clear enough that we could confidently accept them without paying a small fortune for a lawyer to review them in detail. The Rocket relationship doesn't inspire confidence about them as a long-term partner for such a critical business function either, though that could be overcome.
We did consider a couple of traditional payment gateway + merchant account set-ups, and actually there seem to be some quite decent payment gateways these days in terms of service, fees and integration options. However, the heavyweight merchant account guys seem to be so risk averse and offer such absurd charges and waiting periods that we're not going to waste our time applying and sitting around for a month or more for an answer in case they deign to work with us.
As an extra data point, we also considered outsourcing the entire payment collection process to FastSpring. They were expensive and their system didn't seem to have a lot of flexibility, though in return they did seem to offer to do a lot of the set-up work we would otherwise need to do ourselves. The deal-breaker here was that we got the feeling they didn't really understand the tax and data protection rules in Europe and that gave us little confidence that their system would cope with our statutory obligations. This was quite a while ago, though, so perhaps they've improved more recently, and in any case they might be a better fit for people with a different business model.
Bottom line: For us, GoCardless is a clear first choice, and then once we're up and running we'll look at applying for Braintree to broaden our reach, as they want to see a bunch of stuff when you apply that we'll have done anyway by then.
In terms of cost, there's a major distinction in that FastSpring's pricing of 5.9%+$.95/txn or a flat 8.9% is inclusive of the cost to process credit card and other transaction types globally (typically costs 3-4%+ of every transaction including chargeback fees when you get your own merchant account, assuming getting one is an option for you) because FastSpring is the reseller, the merchant of record. The other reason is the vast functionality FastSpring provides as part of its full-service, all-in-one solution, enabling developers to skip the months or even years of dev work and instead focus on product dev and marketing. You can view the difference here: http://bit.ly/uuklQu
As far as VAT goes, at the time you appeared to collect it and then remit it directly to national tax authorities, not to your clients. If that is still the case, could you explain why you are required to collect VAT at all if you're acting as a reseller and based outside the EU? If you're acting as the merchant for tax/legal purposes, how do clients offset VAT they have paid themselves against VAT on the purchase if you handle all of the collection and remittance directly? If you're acting on behalf of the merchant, how do clients integrate with your systems so that any invoices generated on your side meet the requirements for sequential numbering if they also sell via other channels?
In terms of data protection, are you now covered by Safe Harbor or equivalent provisions, so there is no risk of clients running into trouble because you might be considered to be collecting personal data on their behalf and then exporting it outside the EEA?
Regarding the pricing, I'm afraid you just have to eat that one. Obviously you're offering a tailored service in exchange for the higher rates, so it's an apples to oranges comparison, but just about everyone from newcomers like Stripe and GoCardless to old school payment gateways now offers hosted options or transparent integrations that can be set up in hours, not "months or even years of dev work". Meanwhile, none of the options we've been considering recently are anywhere close to the rates you charge even with extreme adverse factors. In more normal cases, you're about 3x as expensive as various card payment services, and GoCardless charge a flat 1% and that's it.
I see you didn't directly mention Sage, I've seen a number of sites using Sage Pay for their online billing, and they don't seem to require a merchant account. (though fees are probably higher than others)
You should consider that direct debit as a payment method needs an activation process of about 7-14 days. Therefor you won’t be able to use direct debit without completed activation process. Please note too that this service is only available in Germany right now!
EDIT: checking the terms of service fine printed at the bottom of the page I finally found this
3.1 The merchant receives the right of use to the Paymill platform limited to the duration of the contract, territorially restricted to the following countries, which is non-exclusive, non-sublicensable, non-transferrable and non-assignable. Countries in scope: Andorra, Belgium, Denmark, Germany, Estonia, Faroe Islands, Finland, France, Greece, Ireland, Iceland, Italy, Israel, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Austria, Poland, Portugal, Sweden, Switzerland, Slovakia, Slovenia, Spain, Czech Rep., Turkey, UK, Hungary, Cyprus (Greek part), Vatikan City (State). The right of use is valid for access to the platform via the Internet and for use of the functionalities associated with the Paymill platform in accordance with the regulations of this contract and the documentation. The merchant shall be entitled to use the documentation solely for the connection of the utilized data processing system to the Paymill platform and to store the data transmitted to the merchant via the Paymill platform on its data processing system or a data processing system of a third party authorized by the merchant.
In Europe this can quickly become a pain, not only due to the extra information you need to collect (names, addresses and so on) but especially if you also need to collect Value Added Tax (VAT). This means asking for VAT IDs for companies - if they have them - and then calculating the tax based on whether the customer is in the same country as you or not. The complexity can rapidly descend into madness.
I have the added fun of having to issue bilingual invoices written in both Polish and English. Well, they could be only in Polish, but then the majority of people wouldn't understand them.
In the end, I bought a ready-made solution (http://nbill.co.uk/) which, whilst not being one of the most intuitive pieces of software I've ever used, gets the job done.
Do I charge VAT. Here is his reply:
" Vat rules You need to identify B2B and B2C UK, EC and outside EC customers. A vat registration number is usually accepted as evidence of B2B.
1 All sales outside the EC have no vat implications and are ‘outside the scope of vat’.
2 All sales to UK customers (B2B and B2C) have UK vat to apply to them and are standard rated.
3 All B2B sales to EC customers have no vat and are ‘outside the scope of UK vat’.
4 All B2C sales to EC customers have UK vat to apply to them and are standard rated.
There is a further twist. If you can identify where your service is effectively used/enjoyed, then If the place of supply would be the UK (2&4) but the service is enjoyed outside the EC, then no vat (outside the scope) or If the place of supply would be outside EC (1) but the service is enjoyed in the UK, then UK vat applies."
According to the law you're supposed to tax EU customers if your business is in the EU. Obviously the tax is different for each country and changes from year to year: https://en.wikipedia.org/wiki/Tax_rates_of_Europe . Businesses with a VAT ID can be exempted from the tax but only if they provide a valid VAT ID. At the end of the year your business then provides the list of transactions and VAT IDs to your state with the tax form and the state takes care of forwarding the taxes to the other countries.
According to the law you're supposed to check the validity of that VAT ID and because the data changes over time they provide an "API": http://ec.europa.eu/taxation_customs/vies/faqvies.do That API forwards the query to country-specific databases and these databases go down. From their FAQ: "Some parts of the system may be unavailable at certain times due to the necessity to back-up the Member States' databases." Year right.. From my 1 month experience I've already seen two outages, one of them lasting a full day. And I'm not actively monitoring the service.
I've also had customers from Spain and Germany ask for their VAT ID to appear on their billing recipes, because of regulations again. It shouldn't be a biggie but Chargify doesn't support that field so I have to ask customers to use their Billing Address 2 field instead as a hack.
These are still things that I haven't figured out yet:
What happens if you provide invalid VAT IDs in your tax form ? I don't want to loose conversion because a state-owned service on which I have no control doesn't work properly.
I've read in multiple places that if the customer is in your business' country the rules are again different but I have no idea how.
However, if they turn out to be false and the tax man comes back to you, you could be liable for the VAT. Depending on your sales profile, you might consider this an acceptable risk - I certainly do (I get perhaps 10 transactions like that each year).
We don't automatically check validity of VAT number, so maybe I'll be able to answer that question in a couple of months.
I really like GoCardless but feel that customers might be hesitant to enter that information, especially when they're not used to doing it.
We have found that conversion can be just as good, if not better than cards in the right cases. The biggest factor that affects this is transaction type.
We see really great conversion for repeat billing where Direct Debit is already a well known method of payment. Conversion is not as good for one-off payments where DD is less expected though.
I was considering GoCardless but a survey of my customers stopped me.
Some people have funny ideas about how DD works, not realizing it's extremely consumer friendly and much smaller fees than credit cards.
I was thinking of offering both as my brief play with GoCardless was very easy to implement.
I spent at least 4 hours trying to legitimately acquire bitcoins to purchase some pretty physical coins from https://www.casascius.com before giving up.
http://www.npr.org/2012/06/01/154140277/berlin-restaurant-ex...
I'll soon be in the process of adding payment options to a new UK-based startup and really really really want to believe that Stripe will be an option for me in time.
Braintree which have an amazing reputation in the US, when they launched in Europe did so with their support still in the US, prices on demand and with paperwork requirement not even a bank would ask for to be emailed to them. Other then the support and pricing the other bits were sorted out quite quickly but for the initial customers the setup and initial period was a little choppy.
That said now I would wholeheartedly recommend Braintree in the UK based on a couple of clients more recent feedback. I suspect when Stripe launches a similar scenario will occur, so for them other then regulatory issues, I suspect the biggest issue is getting the support infrastructure in place, trained and modifying their processes to deal with different regs, as much as getting approvals and bank backing.
The only thing that does seem slightly annoying is all their support and accounts people are in Chicago, meaning the inevitable back-and-forth can drag on for way longer than it should for merchants based in Europe. Hopefully this is something they will get ironed out once they have some significant traction in the EU.
To be honest, PayPal could not have been less helpful at any step of the process, both before we were wanting to switch and during the process. They're a total nightmare of a company to deal with.
Their solution is a bit oldfashioned ... needing to skin one of their pages and send over the customer for processing but they offer plenty of payment options like debet & webbanking payment options
The main problem we have here is that debit cards are a preferred payment method and each country has it's own system. From my experience and other reports I've seen up to 30% of the customers will use a debit card if that option is given. I don't know how many of them would cancel the sale if debit payment isn't possible.
Unless I'm mistaken only WorldPay offers some of the local debit cards, such as Carte Bleue in France, Bancontact in Belgium and iDeal in The Netherlands. Paymill seems to be the only one to offer ELV in Germany.
I have a MasterCard debit card with which I never, ever had problems making payments and I have made such payments, either direct or through PayPal, Google Wallet or iTunes. Before this I had a Visa debit card issued by the same bank (Groupe Société Générale). Before this I had another debit card issued by another bank.
All of them worked, all of them debit cards, as indeed credit cards are not really popular here. Should mention that I'm from Romania and this debit card is linked to my bank account (are you talking about anonymous debit cards or something?).
The two main complaints levelled at PayPal in TFA are poor customer service and poor technology - two aspects that Amazon have been very good at in my experience.
Does anyone have much experience with these platforms and their use by "normal" UK consumers?
FWIW, we looked into Google Checkout/Wallet but the unclear branding and some tight rules about how you had to present the option on your web site put us off before we got very far.
Have you ever set up payment processing in the US? Did you get it going in a matter of minutes and not days? Because I have, and I can clearly say that any of the solutions presented in the post as well as the one you point out (and with a tone, as if everyone just had to know about this MerchantWarehouse you speak of) require a lot more work. I'm okay with work, just not okay with jumping through hoops that are unnecessary elsewhere.
The Adyen guys are smart, their technical platform is simple and robust, and unlike the Stripe/Square/Braintree guys, Adyen actually does the processing so they can offer better rates and are suitable for huge volume.
About the only downside is that "At-jien"'s b2b marketing is pretty terrible. They have some faux Apple videos on their site which I think undermines their technical sophistication.
Reputable company based in Sweden so no dealing with American companies - more suitable for European markets.
It's in my opinion more costumized for the European market - they can handle credit cards - but they also have setups where they buy the invoice from the merchent and handle the payments and stuff like that.
It's extremely widely used in the Swedish online merchent business world. And they're available in most European countries it looks like.
Personally I've been using FastSpring and 0 problems so far. However they only work with apps, not webapps and such.
So it's good to know we are not left out in Europe.
Personally I've been using FastSpring and 0 problems so far.
However they only work with apps, not webapps and such.
Actually, speaking from personal experience, it is particularly stringent. I had to give up in the end because the bureaucracy was taking too long.
From memory, you need a tax identification number, your VAT identification number a scan of your passport, to display your name and home address on your website and you need to post it all to Munich. I suppose this doesn't sound like too much but in the UK you have no reason to have a tax identification number unless you're self-employed and already trading. In the UK you don't have a VAT id unless you're making £77k. Outside Germany showing your home address on the web is considered a bit crazy. Consider now that if you're trying to get Paymill to authorise you are probably are not trading yet. It's not that appealing and I would recommend against it unless you have time to spend exchanging emails with customer service representatives who have a poor command of English.
Paypal's (admittedly lame and APIless) method of payment acceptance is to copy and paste a button.
Online bank e-payment is the preferred method by customers in quite a few European countries.
Most PSPs only offer bank payment services requiring the merchant to sign up with each and every bank in each country, but there are a few PSP where you only need ONE single merchant agreement to offer payment by bank in _all_ the countries the PSP provides.
List of payment companies offering online bank payments via single merchant agreement:
Trustly.com: Spain, Sweden, Finland, Estonia and Poland Payment-Network.com: Germany, Austria EUTeller.com: Finland
If you know if any additional online bank e-payment companies covering European countries, please reply. Thanks!
- market place for alcohol;
- high value of the items exchanged, in thousands of £.
Everywhere in the world, this would flag a business as dangerous.
If you have a simple webservice offer and if you are banking with Barclays, you can get a merchant account with BarclayCard nearly "over the phone". They take a bit of money, have a 45 day retention period per default, but at the end, they are efficient with a reasonably easy to implement interaction API (if you take the hosted payment page).
It supports recurring fees, and manage the VAT and currency issues for you. It takes those awful banks solutions away. Integration with our PHP code base went very easily. And, in the end, we only issue one invoice.
I definitively recommend.
On the other side, Ogone is just... too 90ties. And it is really hard to deal with subscription and recurring fees.
I recently blogged[1] about the need for Stripe to come to Europe whilst the market is there. Until GoCardless, Braintree Payments start making the API just as good as Stripes, then the need for them to come here is here.
Interestingly, they used to provide a fork of stripe gem for Ruby API. But they gave up on developing on their own. They have stripe compatible ruby API now. https://github.com/keikubo/webpay-ruby
I have no idea why they don't implement on their own.
only to be refused because "hosting" is considered high risk
if you are in europe dont waste time with braintree!
See http://payex.com/business/services/Payment/online.payments
Wish we had a dwolla equivalent too.
The only issue was Ayden settling the funds into our UK business account every 4 days and getting charged £6 for the privilege. A quick support email fixed that